Thank you for standing by. This is the conference operator. Welcome to the Cameco Corporation Fourth Quarter 2018 Results Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Rachelle Girard, Vice President of Investor Relations. Please go ahead, Ms. Girard.

Thank you, operator, and good day everyone. Thanks for joining us. Welcome to Cameco's conference call to discuss our fourth quarter and annual financial results. With us today on the call are Tim Gitzel, President and CEO; Grant Isaac, Senior Vice President and CFO; Brian Reilly, Senior Vice President and Chief Operating Officer; Alice Wong, Senior Vice President and Chief Corporate Officer; and Sean Quinn, Senior Vice President, Chief Legal Officer and Corporate Secretary. Tim will begin with comments on our results and the markets, after we will open it up for your questions. If you joined the conference call through our website events page, you will notice there will be slides displayed during the remarks portion of this call. These slides are also available for download in a PDF file called Conference Call Slides through the conference call link at cameco.com. Today's conference call is open to all members of the investment community, including the media. During the Q&A session, please limit yourself to two questions and then return to the queue. Please note that this conference call will include forward-looking information, which is based on a number of assumptions and actual results could differ materially. Please refer to our annual information form and MD&A for more information about the factors that could cause these different results and the assumptions we have made. With that, I will turn it over to Tim.

Well, thank you, Rachelle, and welcome to everyone on the call today. We appreciate you taking the time to join us to discuss Cameco's fourth quarter and annual results and our outlook for 2019. You will see from our result that we had a strong finish to 2018. That said and as we expected, our 2019 outlook points to a weaker performance from a gross profit point of view. Let me be clear, this is not an accident. This is the result of a deliberate strategy on our part to build long-term shareholder value and this is what I will spend most my time today discussing. But before we do that, there were some significant company developments in 2018 that weren’t reviewed as they contributed to the strong finish and have strengthened our foundation, setting the course for our future success. The first development was the January 2018 implementation of the 10 month production suspension at our McArthur River Key Lake operation. Remember, this decision was consistent with our strategy to focus on our Tier 1 assets and profitably produce at a pace aligned with market signals, and it was largely motivated by company specific factors. The main objectives of our decision were to preserve the value of our Tier 1 assets, the drawdown our excess inventory under the protection of our contract portfolio, and to build cash on our balance sheet positioning the Company to self manage risk. We successfully achieved all of those objectives. At the end of 2018, we held about 8 million pound of inventory compared to 27 million at the beginning of the year and in line with our target working inventory. We also had more than $1 billion of cash on our balance sheet and we extended the mine life at McArthur River. The next significant development was the decision we made in late July to extend that suspension indefinitely. This decision resulted from the evaluation of our strategy in the context of our marketing framework and our analysis of the macro factors impacting our business. In other words, we found ourselves in a market where we are unable to commit our Tier 1 pounds under acceptable long-term contracts. We were unwilling to risk having to sell those pounds into an oversupply at spot market at some point in the future, and we were unwilling to tie up our financial capacity and create an overhang in the market by producing only to place the pounds in inventory. The other significant development in 2018 that I would be remised, if I didn't mention is, of course, the unequivocal win in our court case with the CRA covering the tax years 2003, 2005 and 2006. As you know, the CRA has filed an appeal which is very disappointing given the thorough and decisive decision in our favor. It's also disappointing because it could be another two years before we have a decision on the appeal, but we expect the original decision will be upheld and furthermore see no reason why it should not apply in principle to subsequent tax years. The CRA has not yet filed its complete written submission on the appeal, so the basis of its arguments is still unclear. We do know that it dropped the sham argument which is very good news and the focus of the appeal is on the transfer pricing provisions in the income tax activity. In accordance with the decision, we have made a submission to the Tax Court for costs in the amount of about $38 million and we await Mr. Justice Owen's decision in that regard, so more to come on that file. Let's now turn our focus forward. As I said earlier, based on current uranium prices from a gross margin perspective, 2019 could be a week or year for us. Our current committed sales volumes are between 5 million and £7 million pound lower than in 2018 and the average utilize prices expected to be about 4% lower. On the cost side, our average unit cost of sales is expected to be between 2% and 7% higher than in 2018. The increased costs are not unexpected and are largely driven by the greater proportion of purchase material making up our uranium supply. In addition, the average unit cost of sales will continue to be impacted by care and maintenance costs associated with our standard shutdown at McArthur River Key Lake and our idled Rabbit Lake and U.S. operations. Somewhat offsetting the care and maintenance costs are lower expected exploration and admin costs. These costs are lower as a result of the additional cost cutting measures taken in 2018. Our capital expenditures in 2019 and 2020 have also come down from where they were and in 2021 we'll be in a similar range assuming production at McArthur River Key Lake remain suspended. For my cash perspective, we expect to continue to maintain the significant cash balance even if we decide to retire the 500 million in-depth maturing later this year. I want to be clear we will continue to generate cash from operations in this difficult time. However, the cash generated will not be as robust as in 2018 given the weaker outlook and without the release of working capital associated with the inventory drawdown in 2018. I also want to remind you that we report our results and outlook based on a calendar year basis at a point in time. However, as I pointed out before under our marketing framework, this is not how we plan our business. We plan on enrolling 12 month basis. Therefore, you should think about our sales, inventory and purchases all as variables and shouldn't be surprised to see as the year progresses, variances from the outlook we provided in our MD&A. And of course in mining production always comes with the potential for variability but this year the potential is a bit greater given the expiring union contract at Orano’s McClean Lake mill where our Cigar Lake ore was treated. So, this is not a static recipe we are following, it is a dynamic market and we will adapt our activities accordingly. Also keep in mind, there's some potential upside to our outlook. Our current outlook does not factor in any award of cost from our CRA case. In recall, I said we have applied to recover about $38 million. In addition, our outlook does not factor in any potential award for damages in the arbitration of our dispute with TEPCO. You'll recall our claim for damages and the TEPCO dispute is about $700 million U.S. plus interest in legal costs. The arbitration hearing for this dispute has just wrapped up. There are a number of posts hearing steps that we expect they will be completed by mid May. The timing of the final decision will depend on how long the arbitrators deliberate following receipt of the post hearing submissions. I should also tell you that we are limited with respect to the information we were able to disclose in this matter due to a confidentiality order. Before I move on, I want to come back to the point I made earlier. Our 2019 outlook and the diminishing sales commitments in our portfolio are the result of a deliberate strategy. We will make decisions that have a cost in the near-term while we expect the benefit over the long-term will far outweigh those costs. It was a careful analysis that led us to our decision not to produce from our Tier 1 assets to deliver into an oversupply spot market. And it was carefully considered decision not to commit our Tier 1 pounds under contract that do not reflect the future value of those pounds. Our decisions meant that in 2018 we incurred about $168 million in severance and care and maintenance cost, maintaining operations we have on standby. In 2018, we expect we will incur between a $130 million and $160 million in care and maintenance costs. Those costs go straight to the bottom line as part of our cost of sales. Had we kept producing a full capacity, we would have minimized our unit cost to production, we would not have incurred any care and maintenance or severance costs. However, we would still have a significant amount of cash tied up in the inventory and that inventory would be an overhang on a market that would still be in an oversupply situation. In that scenario, we would have successfully achieved a volume strategy at the expense of long-term value creation. To better understand our strategy, the actions we are taking are results and the future prospects for Cameco, you need to examine them in the market context in which we are operating both near-term and longer-term. I will start with the near-term market dynamics, but I also want to spend some time on a bigger picture for nuclear energy as that’s ultimately what we are focused on. In 2018, we began to see the revival of the spot market, day the spot prices is more than 20% higher than it was at the beginning of 2018, so spot is hot as we like to say. This improvement was largely driven by two important market factors. One of those factors was on the supply side and the other was on the demand side. On the supply side, there were significant supply curtailments. We saw meaningful production cuts and reductions in producer inventories, which led to an increase in demand for uranium in the spot market from producers and financial players. We saw a number of producers abandoned have failed volume strategy in favor of the value strategy. In uranium business, real value comes from term contracting. Selling material into an oversupply of spot market just delays the market recovery. These actions have helped to remove excess material from the spot market. And our suspension of production at McArthur River Key Lake, the drawdown in our inventory and the resulting demand we have for uranium to meet delivery commitments, have clearly played a role in that cleanup. So that was the first market factor contributing to the improvement. As I said, the second factor was on the demand side. In 2018, the market finally reached the point where on an annual basis consumption return to pre-2011 levels, we filled in the pot hole of lost demand and that demand continues to grow, not at a rocket ship rate, but with 50 reactors under construction, there is steady growth. I’ll come back to this growth a bit later. Despite these improvements in the spot market, we will continue to proceed cautiously. In contrast to the spot market, the long-term market is best described as tentative, while we are beginning to see some interest in long-term contracting, uranium prices and acceptable contracting opportunities are still not where we need them to be and there are couple reasons for that. First reason for the lack of acceptable contracting opportunities is a direct result of a number of moving parts in our market. Those moving parts have shifted the sentiment from one of complacency and discretion, one of uncertainty and concern which has led to paralysis. You might say there is an unprecedented level of noise in the market and a lot of that noise like in many other commodities today centers on market access and trade policy issues. These issues are a large factor in why our market tends to be sentiment driven rather than purely driven by fundamentals. It is both the origin disconnect in our industry the gap between where supply is produced and where it is needed, and it is the role of state-owned enterprises that rates concerned about security of supply. With McCarthy River Key Lake production indefinitely suspended, at least 70% of primary production is in the hands of state-owned enterprises and as a country, Kazakhstan accounts for at least 40%. That is why from a security of supply perspective, origin matters in a world where geopolitics are creating trade distortions. And of course, the most significant trade issue today is the investigation under Section 232 of the Trade Expansion Act in the United States. The investigation has no immediate impact on our existing contracts with deliveries continuing as usual. Meanwhile, we are heavily involved in the investigation process, trying to help find a commercial solution that makes sense for all parties. Remember, we were the largest producer in the U.S. before we put those assets on care and maintenance. The U.S. is looking for more domestic production. Our assets would be among the best and quickest to start producing. But until the investigation is complete and the potential impact positive or negative can be determined, it is a moving piece that contributes to the uncertainty I talked about earlier. I have highlighted many of the other moving parts in previous quarters. Some of the more significant issues being the supply curtailments by a few of the larger producers including the indefinite suspension of production at our McArthur River Key Lake operation, Kazatomprom's actions including its supply reductions, sequestering it more than 8 million pound of its inventory in investment fund and its initial public offering accompanied by its stated market-centric production and sales strategy, shifting away from a focus on volume to focus on value. There is also the role of financial players who Ux estimates purchase almost 15 million pounds in 2018 and that are expected to continue to purchase material in 2019. It is from second reason for the tentative term market a bit earlier when I talked about some producers abandoning failed volume strategies. The limited long-term contracting activity we’re seeing as being aggressively pursued by these producers in an attempt to win business and build or rebuild a long-term contract portfolio. Ultimately, this is good news for the uranium market longer term. It will help keep material out of the spot market, but in the near term is delaying the recovery of long-term uranium price. All this makes for interesting times in our industry. So despite some signs of green shoots, today we find ourselves in the tentative market lacking an adequate level of acceptable long-term contracting opportunities. There are couple other risks to keep an eye on in 2019, each of which could have the opposite effect. Much of the supply that has been removed from the market is a result of supply curtailments, not supply disruption. This is capacity that can comeback online relatively quickly with the right market signals. Remember, when we announced the extended shutdown at McArthur River Key Lake, we said that the conditions for restart would be met when we were able to capture acceptable long-term business in our market, business that allows us to commit those tones under long term contracts, contract that provide an acceptable rate of return on these assets for our owners, rewarding them for their continued patience and support our strategy to build long-term value. While we are seeing some positive developments, we have not yet seen the type of response needed from the uranium market to restart. Unfortunately, today's prices are still nowhere near, not even close to the levels needed. There is plenty of ideal Tier 1 production and Tier 1 expansion capability as well as Tier 2 production and expansion capability. Then, you have to consider what price incents the material sitting with the financial players to come back to the market because that material isn't gone forever and it needs to be factored into any supply investment decisions. That is why until you see our existing Tier 1 assets restarted and/or expanded and a potential home for all of the other near-term sources I just listed, investment in new growth makes zero commercial sense. Any plans or decisions to develop new supply would pose a significant risk to the uranium market recovery. Today even the promise of supply or new investment in supply could create a headwind which will put downward pressure on uranium prices. Earlier I mentioned the risk we can't lose site up in 2019. That is the expiring union contract at Orano’s McClean Lake mill in May. With Cigar Lake supplying 18 million pounds of uranium annually to the market and our only operating mine, any labor disruption could create a significant swing in supply, not only with production plans be impacted there will be additional purchasing required to meet commitments, which will mean additional pressure on the spot market. And I don't raise this because I'm expecting the disruption, but really just to illustrate the important of security of supply and how vulnerable the market could be the supply shock. Of course, we shouldn't forget about the really big picture for nuclear either. We operate in a business where progress is not measured in weeks and quarters, but in years. And when you think about the role nuclear power can play in solving some of the world's energy problems, the future for nuclear energy is actually quite exciting. Today, we're seeing many organizations formally oppose the nuclear power, starting to recognize that there is no near-term solution to climate change and air quality issues without the use of nuclear power. The global population of about 7 billion people of which 2 billion have little or no access to electricity with another 2 billion expected on the planet by 2050, electricity demand is only going to continue to grow. Within that context, what is needed is large scale baseload electricity that 24 hour power that makes things like healthcare, education, communication and transportation systems possible. And when countries consider their options for clean baseload electricity, nuclear looks pretty attractive an option that can provide the power they need not only reliably but also safely and affordably and in a way that avoids emitting greenhouse gases and avoids adding to the air pollution that plagued so many countries with developing economies. Countries like China, India, and those in the Middle-East are figuring that out. That's why we are seeing these countries adding significant amount of nuclear generation to their grids. Let's look at China, the fastest-growing nuclear energy market in the world. In 2018, China added 6 new reactors to its electricity grid. It now has 44 reactors in operation with 12 under construction. China continues to target 58 gigawatts of installed nuclear capacity by 2020 with another 30 gigawatts under construction. And while there have been some delays in its newbuild approvals, in 2018 it hits some important milestones. China has successfully connected the world's first new generation of reactors, the EPR and AP1000 reactors to its electricity grid. This is a significant accomplishment and one which we believe will clear the path for additional newbuild projects in that country. In fact just recently, new stories have been coming out of China that the newbuild program will resume and that certainly good news for our industry. India is also good new story. The Indian government announced that by 2025, nine reactors under construction will be completed. In addition, it indicated another 12 reactors have received administrative and financial approval for the target startup of 2031 that's significant growth. In the Middle East, the United Arab Emirates have 4 reactors under construction. In addition, a number of other countries such as Bangladesh, Turkey, and Saudi Arabia all continue with their nuclear energy construction programs and plans. Every year, we're seeing more countries add to that list which really gives us optimism for the future, and there is growing acknowledgement that adherence to clean-air and global climate change goals requires a material dedication to all non-emitting energy sources including nuclear. Perhaps the best example of this is right here in Canada, but the reactor refurbishments going on in Ontario, extending the lives of the units and their contribution to clean baseload power. Further, for the first time, the United Nations Economic Commission for Europe has included nuclear on its agenda. The Director stated that the search for a solution to climate change must include a discussion of nuclear power. The union of concerned scientists, who have not traditionally supported nuclear, has also acknowledged that in order to combat to climate change, nuclear has to be one of the considerations. So, those are just some of the bigger picture items that will drive demand for nuclear and therefore uranium over the longer term. At Cameco, we are well-positioned to respond to changing market dynamics and benefit from the long-term growth driven by the need for clean baseload electricity. In today's noisy market, we believe we can distinguish ourselves from other uranium producers. We are a commercially motivated supplier with a diversified portfolio of assets, including the Tier 1 production portfolio that is among the best in the world. And we have the ability to restart and expand these assets should we see the right signals. Keep in mind these would be among the first and lowest cost pounds in the market. We believe, we have the best global exploration portfolio and are the only producer in Canada with licensing, permitting and operating experience and a proven community development track record. Our decisions are deliberate, driven by the goal of increasing long-term shareholder value. We can't control the timing of the market recovery, but we are taking action on the things we can control. Ultimately, our goal is to remain competitive and position the Company to maintain exposure to the rewards that will come from having uncommitted low cost supply to deliver into a strengthening market. So, thanks again for joining us today, and with that, we would be pleased to take your questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Ralph Profiti with Eight Capital. Please go ahead sir.

Tim, I seem to recall in the early days of Cigar Lake planning that there was a strategy to process some of that at the Key Lake mill. Could you correct me if I'm wrong and whether or not that’s an option for contingency as you mentioned the McClean Lake potential for disruption a couple times?

Yes, Ralph, never a Key Lake, there is no road access between the two sites, so the thinking was at Rabbit Lake at the time, we would send some material over there, but that’s not an option at the moment either Ralph.

And a question for you or Grant, can you remind us what's happening in the realized price metrics because we continue to see quarter-over-quarter, lower prices particularly at the high-end of the range for prices in the outer years?

I'll let Grant to answer that one.

Yes, Ralph, thanks for the question. The realized price table first of all our, it rolls over with new years and as contracts have been delivered into, so we updated for that purpose. It's also quite susceptible to changes of pennies rounding to the dollar. So sometimes you see that in the table as well. But ultimately, it is reflecting part of the strategy that Tim outlined in his opening comments and that strategy is to say that, this is not a market where we believe we have to chase business, this is a market where we look at the growing uncovered requirements of utilities, we look at the trade challenges and the potential distortions that are coming from different origins. We like what we're seeing there with that demand profile, we know some of its coming our way and we prefer to price our pound in a market that's more attractive. And so for the near term, we are well covered. You see our guidance for 2019 and we are just going to take the strategic and deliberate decision, not to chase this market down as a consequence you are going to see that price sensitivity open up a little bit, but it also has the upside that when the market does start pricing at a higher rate will achieve those prices.

Our next question comes from Andrew Wong with RBC Capital Markets. Please go ahead.

So just regarding the McArthur River shutdown and the decision to restart, how do the care and maintenance cost factor into like that decision for research? So does the hurdle price for go up, the longer the mines are shutdown and you accumulate more cost? How does that work?

I don’t think so. I think we have a good sense of what the care and maintenance costs are included non-cash. I think we disclosed those $7 million to $9 million a month. I can tell you, we’re looking at Brian Reilly. We're working hard to really hone was down as much as we can going forward, but I don’t think you will see those change much. Obviously, we do an analysis it’s not every day almost on, what our cost are to produce versus what they are to buy and we made that strategic decision to leave those low cost pounds in the ground to till the market improve. So, no change on that front and we will continue to watch how things go.

Maybe could you just elaborate a little bit around the timing for the labor agreement that McClean Lake mill? And like when would we know little bit more about the negotiations? And what are some of the difference action that you could take based on different scenario that could come out of it?

I believe the agreement expires at the end of May, this year, and so we know that our partners at Orano have been in discussions. They can’t go any further than that. I don't know any more than that, but it's just something we wanted to put on the risk register for everyone to keep their eye on. Because as I see or as we said in our comments, that's the producer at the moment in Saskatchewan here and a significant amount of 80 million pound coming out of our plants, so something to keep your eye on.

Our next question comes from Greg Barnes with TD Securities. Please go ahead.

Grant, just question on your unit cost guidance of $41 to $43 a pound. How much of that is that DNA? And I know that numbers changing as you purchase more pounds. Just trying to get a sense of how that you breakdown that $41 to $43 a pound?

Yes, Greg, and I'm sure I don't have the exact number right at my fingertips. When we think about 2018 relative to 2019, there is a lot of moving pieces in how the DNA factored in and so amortized over the produced pounds, but not the purchase pounds. But on balance, we think it's not going to be materially different than the 2018 number, Greg. And then as we go through the year and we make purchases, and those purchases are timed and that time reflects the prices and then we produce and those production pounds come into our inventory will just be able to clear that up as we go, but I'm happy to take that one off line on little bit more. I don’t have the exact number.

And then secondarily on the required purchases to 2019 that’s come down to 7 million to 9 million pounds and I know you roll that into committed purchases, but it just means you have less higher power in the spot market, and how do you see that?

Well, keep in mind and I think the comment that Tim made earlier was that, our guidance table is really bound by December 31, but of course we don't think about the world that way, that’s a kind of meaningless day for us. So, when we look at 2019 and we were in late 2018, we started buying materials for 2019 and 2018. We expect to do the same as we go through 2019 here as we get closer to 2020 we expect to start making purchases, so that sliding-scale of purchases that we need to make, we expect to be very active in the market. All that guidance table is telling you is that, that's the material we will have to buy for deliveries by December 31st. But as we start to make purchases for early 2020 and 2019, that's going to go up. We'll just be very active in the market, again this, in fact a lot more active than we were last year.

And if I can, those required purchase commitments, they had specific price and how does that work the 10 million to 12 pounds?

The ones that are listed as committed have already reflected a pricing mechanism. Some of them might have been market related, some might have been fixed. We just don't have that -- we don't disclose what that breakdown is. The remainder will purchase in the market. Some will purchase on-market. Some will purchase off-market. We might go through brokers, if we -- if that makes sense to us. It will be the same pattern is 2018, but just a lot more activities in 2018.

Our next question comes from Lawson Winder with Bank of America Merrill Lynch. Please go ahead.

On the CRA, I guess last time you spoke to us in this forum. On the Q3 call, you mentioned that you had not yet read or seen the actual paperwork of the submission from the CRA to the tax court -- to the appeal court. I'm just curious. Have you seen that now? And if so, is there anything that you can share with us in terms of the thrust of the argument, if there's any sort of tweak to their view on the transfer pricing in that?

We haven't seen the paper yet, but I'm going to just pass over to Sean Quinn to just give the -- just a little update on the CRA piece?

Sure, I get what I'd add to Tim's comment earlier is that we've arranged the schedule with the Department of Justice on the timing for the appeal, which means we will be seeing the crown submission their factum towards the end of May and then have to respond ourselves later in August. So that will give us a better view as to what the thrust of their arguments are. And mentioned as Tim earlier, we do know that they've dropped sham from their appeal. So, that is the one categorical statement that I can make about what we know they won't be arguing.

And then, just in terms and I think somebody asked this on last call, but I guess it's sort of to update your review in this respect now that three months have passed. Do you expect that the CRA will continue to pursue audit for the years now that, that have not yet been named by the CRA in terms of being an under audit? Or do you think that activities should just sort of dry up at this point in anticipation what comes out of the appeal?

We would hope that it would dry up pending the outcome of the appeal, but we don't have anything dependent from the CRA on that at this point.

Our next question is from Fai Lee with Odlum Brown. Please go ahead.

Tim, I'm just wondering about your expectation around the contracting on some of these reactors that China is building. Please around 2010, they were signing 10-year contracts that might be up and around next year or two. Just wondering what your thoughts around when do they come back to market and the timeframe with that?

Fai, thanks for the question. In fact, they've never left the market. They've been -- they're always in the market. And you're right about the 2010 data that was an important period of time June of that month that their program was really ramping up and you could see they had a lot of reactors under construction and coming on. And so, they went out to the market and bought about 150 million pound in almost the period of one month. 15 from us, I think the French sold 15 and the Kazak the same. And so -- and you saw with the priced did. They got old days as we call them, I think, it ran from about $40 up to $73, $74. And then, it was just before the Fukushima piece. So, we've seen them constantly in the market since that as recently as this year already. And so, they never leave --they're building up the strategic inventory. We think for their fleet which continues to grow. And so they're always around

Yes, the 10 million I think I might -- the only thing that I might add to that is we've actually I think seen a bit of a change in the overall strategy of sourcing out of China. There was a time early on in their build out of these reactors, which are going to run for 60 or 80 years, they have a very long life in front of them. And it was a sourcing strategy based upon a third, a third, a third where they were going to source a third of their needs from domestic sources of uranium, a third from foreign assets that they owned abroad, and the third that they would buy from the market. And what we're seeing in fact is it's more like a half, a half because those domestic sources just aren't there. They seem to either not to be producing at the rate and anticipated perhaps early on, or they have other purposes, perhaps for fueling the nuclear Navy program and the reactors that are behind those ships. And so we're seeing the more dependence upon foreign assets abroad, as well as market purchases. And even on the foreign assets abroad, and we just I don't think have seen the performance out of those assets. You think about the Husab project and nameplate capacity at one time being 16 million pound, and perhaps it's lower than that now. And so I think the dependence on those assets and has meant that there's going to be more of a reliance upon purchases going forward, all that to say, we do expect them to still be in the market, we expect them to be part of the market, buying spot material when they can, but not left out of a contracting cycle. When you're building reactors that are going to run for 60 or 80 years, you might have a big one time inventory but you're not going to be left out of the runway requirements if other people start locking them up. So we do expect that to be part of the dynamic one term contracting cycle begins.

Okay. But just to be clear, when some of those contracts in 2010 expire in the next year or two, you're not expecting a surgeon contracting because if they've been in the market through this time period, or am I interpreted incorrectly?

Well, I don't think we can categorically rule that out. So first of all this term contracts that were signed in 2010, because they return many of them didn't start delivery until 2012, 2013. That's the normal gap between signing a term contract and delivering into it. So there is a bit of life left on those initial term contracts. But having said that, just because there might be a little bit of light lag, we don't expect to see the fuel buyers from China sitting on the sidelines during a contracting cycle, because remember, they'll want their share of that run rate volume, especially if they're reliant upon market related to a higher degree than they thought they would be. So we don't expect to see complacency there.

And the 50 reactors under construction that you annual forecast obviously there is some closures. What's your forecast in your planning for closures in terms of the reactors over the next whatever timeframe you are looking at?

Yes, I don’t have that number in front of me. It's net growth but it's you have to -- it's net for sure you are going to see some units going down and I don’t have that number in front of me, but we can get back to you, Fai.

Our next question comes from Brian MacArthur with Raymond James. Please go ahead.

I was just hoping, if you could clarify something. You talked about you've got your inventory levels down to 7.7 million pound which is sort of the way you wanted to be, but then in your forecast you also talked about purchasing excess NUKEM inventory. Is that different inventory? Or is that included in the 7.7 million pound? I thought it was all just one pile now that you've used.

Brian, keep in mind that while NUKEM has been wound up as an operating segment for us, NUKEM themselves had some committed purchases that they had to take as part of a going concern as we wound that down. They come into NUKEM and that chemical sweeps them out, that’s the purchase from NUKEM as we sweep out the material that's just going into their run rate going concern business. In the future, they are not layering in new business so this is temporary.

But that's still material that’s coming out of the market?

Yes, absolutely.

Like physically I mean like it is not an extra stockpile sitting around there or something it’s a flow through.

Yes, and the purchase commitment that was discovered awhile back and now we are just continuing to honor that book of business as it winds down. And then the future purchasing we do is through the uranium segments.

And the second thing just any industry, there has been a little more chatter about GLE actually going somewhere. Can you just update us on what's actually going on there?

Yes, Brian, you've seen in the press reports from last week that an arrangement was made with us Cameco and Silex to take control of GLE from GE Hitachi. It’s a -- and you will see the contents of the deal. We didn't pay a lot upfront. That’s a technology that we think has a future. We really do. I'm not sure when in the future, but it was just something we didn’t want to see disappear and so we were able among the partners to strike a deal to take over the technology. We will be moving in along not at a rapid pace or not an expensive pace, but we will be moving it along. And so, that's where it's at today. In a better market and I joke with Grant that I was around to see the enrichment technology move from gaseous to fusion to centrifuge. We think this is an excellent that’s coming in the future we just don’t know when.

But if prices they go up back to 50, you reopener your Tier1. Would it have a higher capital priority than reopening say your Tier 2 assets?

That’s not even in our consideration Brian, not at the movement.

Our next question is from Oscar Cabrera with CIBC. Please go ahead.

Just wanted to ask you about Inkai. If I look at the technical report that you shared with us a couple years ago, the production expected in 2019 is 8.3 million tons according to your disclosure, which is in line with that technical report except that for 2020 and going forward, you’re looking at 10.4 million tons. So that’s effectively a 2 million pound increase. And I just wondering, how you’re thinking about this extra pound with your partners? If it is something that you’re thinking of bringing to the market or do you -- should we expect that production to be flatter, over the next couple of years?

Yes, Oscar, thanks for the question. We are just complying with Kazakhstan and Kazatomprom from where they have directed all of the joint venture to dial back production at their sites. And so that’s what you’re seeing in ours, I think we’ve produced both 6.9 million pounds last year's total, obviously something similar going forward, little more perhaps this year because our subsurface right agreement allows us to move up a bit. But we’re following what they are dictating on that one and so, at some point when the market improves, we would hope to get up to that level up 10, but right now we’re dealt back like everyone else.

Thank you, Tim. And your comments on the market are always helpful. Just wondering, if you could provide -- last time you mentioned the fact that Section 232 was making people hesitant to participate in the contract market. Just wondering, if you can provide an update on that as well as if you have seen many more of that aggressive pricing you described last quarter?

Yes, well 232 we could spend a lot of time on that one because we have spending a lot of time on that one. I can tell you in down to Washington more times in the last five or six months than I think in the last 10 years. But we’re heavily involved obviously, trying to find the solution that might work for everybody and it's in -- it’s really a no one's interest to put hurt on the utilities. I mean the U.S. nuclear utilities are fighting against the $2 the $3 gaps right now, trying to keep their plants moving in economic and we saw some good performance through the polar vertex. So, this idea that quotas we put in place or tariffs, we’re not in favor of that. We are prepared to compete on the market with anybody whether it's in the U.S. or anywhere. So, the petitioners are still moving ahead, the 232 piece is moving ahead, you have seen few dust ups in the last few days between the petitioners and the utilities. We’re just trying to find the solution that works so that as I say, the utility is we’re concerned for our customers that they are not in a more difficult position than they are now. And so, we’ll see I think the process, I think the process is still moving ahead. I understand that all comments and surveys and everything that’s out there now have to be in by April because they want to stick to the timeline, which is for the Department of Commerce to give their views to the White House by April, and then there is about 90 days after that the President of the United States has to think about it and come up with the decision. So, it's -- when I say it's frozen the market in the U.S., I think that’s true. People don’t know what to do and including the many of the utilities we deal with, they just -- they're just kind of waiting to see what happens there. And so, it's -- that’s a real wildcard for 2019 that we'll see how it plays out probably in the first six months.

Once again, in the interest of time, we ask you to limit questions to one with one supplemental. Our next question comes from Orest Wowkodaw with Scotiabank. Please go ahead.

I was wondering how we should think about the potential timing for the recovery of the 300 million you have with the CRA and whether it's reasonable to expect that that could come back to you before the appeals process plays out?

Orest, but we'll -- I'll let Sean talk to the nice of that one.

Sure and I mentioned on the one question earlier, we don't have any information from CRA. The definitive information from the CRA as to their plans and we go to future reassessment activity or what’s happening with cash and letter of credit that have been paid over with expected prior year.

And then secondarily, just a clarification on Greg's earlier question, Grant, with respect to depreciation. When you say it should be similar to 2018, are you talking a gross dollar basis or on a per pound of production basis?

On a total basis, Orest.

Okay so just dollars basis.

Yes.

So then, our depreciation on a per pound produce spend would go way up I guess to get to the same number?

Well, I think our plan is for the same level of production in 2019 as we have in 2018. So the only change there would be the inventory effect on it.

Yes.

So, Orest, you mean the same total going into the inventory bucket.

Yes, okay. And finally just a standby cost, 130 million to 160 million. Is that all cash?

No, some of that is cash but some of it is non-cash. So I think we are saying, seven of it is cash, another two is non-cash, and that is straight line depreciation primarily from McArthur Key items that it doesn’t matter that we’re not producing we still have to depreciated it. So, it's two buckets there.

So, Orest, you can see that in that reconciliation table on Page 47 of the MD&A, you can see that non-cash portion.

Our next question comes from Jim Ostroff with Platts. Please go ahead.

I want to clarify two quick points. The math of inventory you expect to have this year and the spot purchase volume you expect this year?

The amount of inventory we expect to have is what we had at the end of the last year, we’re not going to build our inventory and so we keep normal inventories about 4.5 months forward sale, so that's what we…

That was 7.7 million. Is that correct?

I believe that's what…

And the amounts of material at Orano as you expect to purchase in the stock market this year?

Well, I think if you read through our documents, you will see we have required pounds of 7 million to 9 million, but as Grant just explained that that's on a calendar year basis. We don't run off the calendar year. So that would be probably the minimum and then if we want to forward some purchases for next year to this year, we will do that as well.

Previously, you would certainly see 11 or what's 9 million to 11 million pounds?

Yes, Jim, if you look at and as Grant explained, we purchased some of those pounds last year at the end of the year. So, our committed number, the pounds were committed to, has gone up from where we announced last year and the required has breakdown. But as I said, it's not a calendar year basis.

One very quick thing, if the market signals are there with respect to the U.S. facilities. Approximately how long would it take to for really if some ramp up production 4 points or actually producing?

Let me ask Brian Reilly, our Chief Operating Officer to maybe speak to that.

So just to be clear on the question, we're talking about U.S. production.

That is correct.

All right, so we estimate 18 to 24 months to get back to a production rate about a 1 million pound a year and that would require bringing back staff, some training and some minor capital investments. So get to something sustainable in the 3 million, 4 million pound annual production. We're probably talking 3 to 5 years and some significant capital investments. So right now, the site is an account maintenance mode, but.

Correct, correct.

We made a couple of couple of years to respond to ramping up production.

Our next question comes from John Tumazos with John Tumazos Very Independent Research. Please go ahead.

There is some indications of slower economic growth in some places in the world. European auto sales were down about 8% late last year, Chinese 12% in the second half. China was exporting LNG are reselling at the Japan in the last few months. And they ended up not cutting I'll put in a lot of industries as they had last winter or the increased 10%. Are you concerned that the macroeconomic picture will impact the uranium market?

That's a great question, John. This is a long-term game, as we've always talked about and if you want to talk from 30,000 foot level, we're talking about 7 billion people on the planet, 2 billion, no electricity, 2 billion more coming in rapidly growing economies that are going to need electricity in a now world, that's pretty concerned, I think with global warming and climate change, and especially clean air. And so, you see out of the U.S. and knew these new deal green plans, and everybody is got a plan and they all involve, I think, wind and solar which is wonderful. But I think you've got to have something to back it up, and we really believe that there's a role for nuclear and we're seeing countries that have recognized that China, India, South Korea that are now in the Arab states so nuclear is both growth and replacement and for moving enough of coal and other carbon there is a roll for nuclear so we try not to go by the quarter-by-quarter growths in any country we look at the long-term picture and we think there is a big role to play for nuclear.

Our next question comes from Philip Chaffee with Energy Intelligence. Please go ahead.

I just had quick follow-ups on those GLE questions. The first I'm just curious if you see this as an enrichment play or as a uranium play, particularly this prospect of [Indiscernible] enrichment plant. And then secondly, as part of that deal it sounds like there was just option for Cameco to increase its stake to 75% in GLE. I'm just curious what you would be looking to see before you did something like that?

Thanks Philip. And I thought your article nailed this pretty good quite frankly on the February 8th. It's both an enrichment and a U play for us, we're quite interested in those GLE tales and they are quite interested in our technology and two together could make for a happy marriage, we think someday so that piece is out there. And then as I said, we think this is next-generation technology on enrichment and are we there yet no we don’t have the plans yet, but there -- when we were doing the gaseous diffusion nobody thought about centrifuge, and not it's all centrifuge. And we think laser beams are going to be the way the future. So it's both for us. Now, we wanted to keep an option to move a little higher in the equity part, if the conditions were right. So, right now, I have this deal goes ahead than we have a term sheet, but if it went ahead it's a 51:49 split, but we do have the optionality to go up to 75%, if the conditions are right. So, that's were that's where we are at and will see -- I can't tell you what those conditions are at the moment, but that's it's where we are today.

Our next question comes from Lawson Winder with Bank of America Merrill Lynch. Please go ahead.

Just a couple of follow-ups from me after you're taking the two follow-ups. So, one just on the on the CRA thing again, just on the attempt to recover the $38 million. Can you help us at all on a timeline and when that might happen first?

Sean.

The applications to Justice Owen are in. He has got both of them including a short rebuttal from us and he will make up his mind when our work with his scheduled. I'm anticipating a 3 to 4 to 5 month window on that, but I can't give you anything more precise on that.

And then, just one other question on this, on the cost guidance there -- costs per pound guidance. Just to be abundantly clear. Any guidance that you can provide us whether now or after the call it would be very helpful just on what that depreciation component is? And then what the rest of it, just help us getting to an EBITDA numbers? So I don’t know if there's anything you had right now, but just sort of along the lines of -- you mentioned something on the inventory, but yes, it was not that you can buy right now then just to be great to have a follow up I think for all of us on that?

Thanks Lawson. We hear you and others lot and clear about your interest in something you never interest in before. So, we'll absolutely go back and provide some answers, but we're not going to get into it right now.

Our next question is from Fai Lee with Odlum Brown. Please go ahead.

Thanks for taking the follow up. The $500 million of debt that's coming due in September, are you planning and terming out? Or are you going to pay down with the cash or with the short -term investments you have on the balance sheet?

Yes, that's the great question. And Grant, we have a great answer for that.

We've been looking at the maturities that's coming up, $500 million in 2019 for some time now, and we've been looking at it from the framework that we operate under which as we navigate by our investment grade rating that matters for us. And so what matters then is net debt to EBITDA as it is important metric for us. So when we think about that our debt load, it really comes down to what is the run rate of the business. And our guidance table as Tim talked about is, it's structured to say, today's prices exist for the rest of the year. And so, if we assume that kind of scenario that the guidance and the outlook that we provided is what prevails. Then we probably will move to a position to retire that 2019 maturity because that would make sense for us. We've got a strong cash position. Our deployment of it would be deliver and that would help keep our investment grade metrics in a good range for us. If on the other hand, we start to see a market that begins to improve, the market that starts to recognize the need to incent uranium, and we start to see better prices which are not only flowing through our committed sales portfolio, and therefore we're getting the earnings and the cash flow uptick from that. But also prices that are sufficient to layer in new business the type of new acceptable term contracts that we need in order to contemplate or restart of McArthur. And if those two things are happening, between now and the middle of the year when we'll have to make that final decision, well then maybe we won't have the same view to deliver. And in fact, we would just brawl over the 2019 maturity at that point. So, it really is going to come down to what the market is offering us through the first half of this year. What we're seeing? What the prospects are? And really based upon the run rate, so things like and they've come up the few times in this call, things like, if we ever saw a way to have the CRE release the $300 million, lots of one time event that's not a run-rate event. And a positive decision on TEPCO, that's a onetime event not a run-rate. So, it really will come down to the run rate of the business, what that, we'll update it again in Q1 where our plans are. We'll have a good sense of how the market is evolving through the year. So, that's the framework that we look at. And it really pivots around its view that we self manage risk and we navigate by our investment grade ratings.

Okay that's helpful. And if you do decide to pay down, are the short-term investments available to pay you -- can you those proceeds to proceeds to pay off the debt or partially paid off?

Yes.

This concludes the question-and-answer session. I would like to turn the conference back over to Tim Gitzel for any closing remarks.

Okay. Well, thank you very much operator. And with that, I just want to say thanks to everybody who joined us today. 2018 was an eventful year and we expect nothing less in 2019. So, we appreciate your interest and your support. And let me assure you that we will continue to manage effectively through this, what we call a noisy market and make the decisions necessary to keep the Company strong and viable for the long term. So with that, thank you everybody and have a great day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.