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THIRD QUARTER CONFERENCE CALL

Wednesday, November 2, 2005, 10:00 a.m.

CORPORATE PARTICIPANTS

Ms. Alice Wong, Cameco Corporation
Vice-President, Investor Relations and Corporate Communications

Mr. Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Mr. Terry Rogers, Cameco Corporation
Senior Vice-President and Chief Operating Officer

Mr. Kim Goheen, Cameco Corporation
Senior Vice-President and Chief Financial Officer

Mr. George Assie, Cameco Corporation
Senior Vice-President, Marketing and Business Development

CONFERENCE CALL PARTICIPANTS

Lawrence Smith
Blackmount Capital

Greg Barnes
Canaccord Capital

Terence Ortslan
TSO & Associates

Bernard Coutier
Summit Ventures

Alex Latzer
Merrill Lynch

Steve Bonnyman
CIBC World Markets

Robert Sennott
RSS Securities

Ian Howat
National Bank Financial

Tom Doust
Private Investor

Tim Rice
Rice Doelker

PRESENTATION

Operator

Good morning ladies and gentlemen. Welcome to the Cameco Corporation Third Quarter Results Conference Call. I would now like to turn the meeting over to Ms. Alice Wong, Vice-President, Investor Relations and Corporate Communications. Please go ahead Ms. Wong.

Ms. Alice Wong, Cameco Corporation
Vice-President, Investor Relations and Corporate Communications

Thank you, operator, and good morning everyone. Welcome to Cameco’s third quarter conference call to discuss the financial results and thank you for joining us today. We are pleased to have four of Cameco’s senior executives with us. They are Jerry Grandey, President and Chief Executive Officer; Terry Rogers, Senior Vice-President and Chief Operatoring Officer, Kim Goheen, Senior Vice-President and CFO, George Assie, Senior Vice-President Marketing and Business Development. We’re very conscious of everyone’s time today and I just want to note that we’ll touch briefly on the highlights of the quarter and then get right to your questions.

Today’s conference call is open to all members of the investment community and the media. During the question and answer period we’ll take questions from the investment community first followed by questions from the media. Please note that statements made during this conference call by the company regarding its objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of the applicable securities, laws and regulations.

The company cautions that such statements involve risk and uncertainty and that actual results may differ from those expressed or implied. Important risk factors are outlined in the company’s annual information form dated March 15th, 2005. With that I’ll turn the call over to Jerry.

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Thank you, Alice, and let me extend my welcome to everybody that’s participating on the call today.

Yesterday you would know that Cameco announced strong third quarter results. I mentioned in the news release, we’re certainly pleased with the higher earnings from Bruce Power, higher realized uranium prices, and we anticipate that both factors will be significant contributors to our bottom line in the years ahead.

I’d like to spend a few moments talking about one of my favourite topics and that would be Cameco’s vision. If you’ve been on this call before, you would have heard many times that Cameco wants to be a dominant nuclear energy company producing uranium fuel and generating clean electricity. We continue to pursue that vision in all of our business units. Rather than run through the many initiatives that are underway at our various facilities, I thought I would review with you today the rationale for the decisions we have recently announced, and in doing so, explain some of the principals that guide our decisions as we move toward our vision.

The most significant of these decisions was deciding or declining to participate in the four point two five billion dollar program to increase output and extend the lives of the four Bruce A reactors at the Bruce Power site in Ontario. Investing in nuclear generation certainly falls within our vision and if a different deal would have been available, I may have well have been talking about our new investment.

However one of the principals that we follow carefully is that we will only pursue disciplined growth guided by our investment criteria. And after looking at all the risks and all of the rewards including the fixed price revenue stream that effectively would have capped earnings out of the investment, we made the decision to decline the only offer that was on the table. Simply put, it did not meet our investment requirements.

The response to that decision from the investment community was overwhelmingly positive. In part I believe it’s because investors know that they can trust us to make disciplined decisions. We’ve don’t this in the past and we certainly plan to do so in the future. We also announced a plan to sell our interest in Energy Resources of Australia. As a leader in the uranium industry, Cameco strives to obtain interest in uranium operations where we can exercise some control and preferably a majority position. When the opportunity arose to redeploy a passive investment more strategically into other operations, we jumped at the opportunity.

Finally, Cameco recently announced negotiations to acquire Zircatec, an Ontario based nuclear fuel fabricator. We have not finalized the agreement but we hope to make a decision within the next two months. The reasons for this initiative are clear, we want to grow in the nuclear energy business and fuel fabrication is the only step in the CANDU fuel cycle in which we don’t participate. If this deal closes, we will be part of the entire CANDU fuel cycle from exploration to electricity generation. Opportunities like Zircatec come quite infrequently in the nuclear business and one of our guiding principals is that we will be ready to move quickly when opportunities arise.

While Zircatec would not be a large investment for Cameco, we are ready to capitalize on attractive opportunities large or small. We have the people in place and a conservative capital structure that provides the financial flexibility to make this possible. It will not be a surprise or it will not surprise you to hear me conclude by saying we are committed to our vision. And you know we are pursuing this vision with discipline and prudence, positioning ourselves to capitalize on the opportunities that meet our risk reward profile. I will now ask Kim to make a few remarks about our financial results. Kim.

Kim Goheen, Cameco Corporation
Senior Vice-President and Chief Financial Officer

Thanks, Jerry, and good morning everyone. I plan to touch on the key results for the quarter, mention a few other important milestones we reached and conclude with a brief comment on the outlook for the rest of the year. Financial results for the quarter largely unfolded as we expected other than when it came to power prices in Ontario where prices were much stronger than we had hoped for. Overall, the results reflected a very good quarter; in fact, our earnings of forty-five cents per share was one of the best quarterly results during the past ten years.

Another positive result was our year to date gross profit. All business segments have matched or are ahead of the gross profits generated during the first nine months of 2004. So we’re pleased with the results to this point in the year. Looking at important events in the quarter, we completed the successful debenture offering in September raising three hundred million dollars. Our timing was very opportune as rates were near the low point on the curve. The issue was very well received in the market and the funds were used primarily to repay commercial paper.

And as Jerry has mentioned, we are in the process of divesting our six point seven percent interest in Energy Resources of Australia which we acquired as part of the acquisition of Uranerz in 1998. Those proceeds plus the cash from the Bruce A restructuring transaction will be used to increase corporate liquidity in addition to helping fund our near term cash requirement, notably our uranium mine construction projects and the purchase of Zircatec if that proceeds.

I know many of you are interested in our approach for employing cash going forward. As we’ve mentioned before, we will focus on three key targets to create and preserve value for our shareholders. First, prudently and patiently growing Camecol into an integrated nuclear energy company; second, maintaining our world-class asset base; and third, distributing cash to shareholders through dividend and our share buybacks when we cannot effectively reinvest.

Taking a look at the fourth at the fourth quarter, bottom line results are expected to be similar to Q3 with two significant and compensating shifts within those results. First is the revenue and earnings impact of the large volume of uranium and conversion deliveries scheduled in the fourth quarter and second, we expect our share of Bruce Power’s earnings to decline from the third quarter, even though the Ontario spot price has averaged about eighty dollars per megawatt hour during October.

Another major shift in the fourth quarter is that as of November 1, we expect to start proportionately consolidating Bruce Power’s financial results. In the past, we have accounted for Bruce Power using the equity method. The move to this new method of accounting is driven by changes to how decisions will be made by the partners. All key decisions will now require the consent of Cameco, TransCanada and Borealis. As I had mentioned in a previous conference call, this is not that different from the past structure but there are a few added elements that are enough to require the accounting change.

Looking ahead to 2006, we expect growing margins in our nuclear fuel businesses driven by a continuation of sound uranium and conversion fundamentals, plus the expiry of older contracts. And at this point, I think it’s worth stating once again and uranium demand is largely insulated from economic cycles. With that, I’ll turn things over to Terry.

Terry Rogers, Cameco Corporation
Senior Vice-President and Chief Operating Officer

All right, thank you Kim and good morning to everybody. I’d like to add a bit of colour and context to the information about the operations that was presented in the quarterly news release. I’ll address uranium mining first, talk about development projects and follow it up by fuel services.

Uranium mining in Saskatchewan is right on target for the year-end forecast. We will achieve our license limit of eighteen point seven million pounds at McArthur River and Key Lake Mill. We had hoped we’d be able to increase that production this year with our application to increase to twenty-two million pounds but approvals for the increase are still under review with the regulator.

The federal regulator is considering the appropriate process to complete its review of potential impact associated with the proposed expansion. Once that process is identified, we will then be in a better position to estimate the time required for the regulator to reach a decision.

The Rabbit Lake operation is slightly ahead of target for the year and we expect to achieve plan or slightly above by years end. Exploration in and around Rabbit Lake in the Eagle Point Mine continues to hold promise for us to be able to bridge the gap between the depletion of reserves at Eagle Point and the receipt of the uranium rich solution from the Cigar Lake project beginning in 2009.

In the US, our ISL mine at Smith Ranch Highland Complex in Wyoming is falling a bit short of its annual target of one point five million pounds. We constructed new well fields as part of the expansion effort this year and while they came in on time, the flow rate and early head grades have been a bit disappointing. Remedial procedures are underway but we expect to fall short about, and end up with a total of about one point three million pounds from Smith Ranch this year. In Nebraska, Crow Butte Mine will produce as expected, probably exceeding a little bit, just over eight hundred thousand pounds.

Onto the uranium mines in development, the Cigar Lake project scheduled to begin producing in 2007 is on track for an on time start although some construction efforts are slightly behind schedule for the moment. Shaft sinking is only slightly behind this schedule and will not be a hindrance to start up. Underground development work that has to proceed the infrastructure construction is the furthest behind schedule, but to mitigate that situation, critical path development is being done on a priority basis and we have divided the plan to continue develop mining while the underground construction is underway. We have been hampered somewhat by available skipping time for development, for taking the development waste to the surface. But we expect we can eliminate this shaft time competition that has been a bottleneck to date.

As to the project costs, I’m sure everyone knows there’s a critical shortage of trades’ people due to the high level of activity in the industrial construction sector. We are impacted as are our contractors competing for trade persons against the oil spans and other mine development projects, not only in Canada but also in the western US and as a result, some contracted costs have risen substantially. That same competition for skilled workers is causing some concern at our US operations as well. Higher labour rates have resulted from increased activity in the coal oil and gas activity in the western US and also the cost of chemicals and petroleum related products like well casing and pipe have increased substantially.

Consumable products, fuel, propane, cement and other things have experienced substantial price increases in the last year as has fabricated steel. And we use cement, a lot of cement in Saskatchewan not only for construction at Cigar Lake but we use huge amounts of it for backfilling raises and stokes at the other operating mines.

In Saskatchewan we have an excellent supplier; however, the cost is increasing due to energy costs in their business. Of course all transportation dependent businesses are too, hurt by increasing fuel costs. So the bottom line of this dissertation is that the Cigar Lake project’s estimated costs have increased to about five hundred twenty million dollars on a hundred percent project basis, about fifteen percent higher than planned going in.

The Inkai project in Kazakhstan is going very well. Approval of the final design and environmental impact statement was received in August. We have commenced foundation excavations and some early infrastructure works for the main processing plant. The expansion of the test plant in block two is also underway taking that plant’s capacity to seven hundred thousand pounds per year and we expect that Inkai will come on stream commercially in 2007 at nearly two million pounds, then ramp up to four million pounds in 2008 and ultimately to five point two million.

The capital cost estimate of eighty-three million, eight for an allowance of the rising steel prices when that estimate was put together; so this has cushioned us against some of the recent price increases. At this time we are comfortable with the revised estimate but price inflation on all fronts is a concern that we keep our eye on.

In the fuel services division we have mixed results from operations. First at the Blind River refinery with production capacity to build inventory and ultimately to produce an additional five thousand tons of UO3 for the Springfields plant, we are ahead of target for the year and will finish far in excess of the original plan at a good average cost. In the conversion business while the UO2 production for CANDU fuel was going well, the start up of the UF6 plant after the summer shutdown did not go particularly well. The main problems had to do with hot, humid weather throughout the summer and with inadequate flooring generation supports making of UF6.

Restarting the plant was challenging with material flow and instrumentation issues and personnel heat stress concerns resulting in lower productivity. And once some of those issues were resolved, there were technical issues surrounding fluorine cell performance that limited fluorine generation capability. The causes are being investigated and being improved and fluorine generation capacity is slowly being restored to normal. We’re planning a shutdown earlier next year to avoid the summer heat problems. The shortfall expected this year compared to the original plan will be about nineteen hundred ton. And with that I’ll pass the discussion over to George.

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

Thank you, Terry, and good morning everyone. As was expected, spot market activity in the third quarter slowed considerably from the previous two quarters amounting to about two and a half million pounds. This volume is reflective of both the traditionally slower market during the summer months and the limited quantities of uranium available for spot sale.

However, given the large volumes in the first half of the year, spot market activity year to date totals about twenty-three million pounds which is higher than the annual total for any of the last five years. Discretionary purchases, those purchases that are not necessarily for specific near term needs continued at a higher rate than in 2004.

This demand is largely due to utility inventory building and trader and investment groups taking positions to hold uranium. The majority of transactions in the third quarter were the result of informal requests from buyers. Sellers continued to increase their asking prices for each successive offer and some resorted to simply bidding the market price at the time of the spot delivery rather than fixing a price at the time of offer thereby retaining market upside.

So in summary, despite the reduced level of activity in the spot market in the third quarter, the tightness in supply resulted in the spot price continuing it’s upward trend and the industry average price rose nine percent from twenty-nine dollars at the end of June thirty-one sixty-three at the end of the third quarter. At September 30 th of last year, that industry average spot price was twenty dollars, so year over year it’s increased almost sixty percent. Since the end of the third quarter, the spot price has increased further to thirty-three dollars and twenty-five cents.

Looking to the fourth quarter, the level of spot demand is expected to increase from last quarter and will depend upon a number of factors including whether utilities pursue additional discretionary purchases to build inventory as a hedge against further price increases and future supply uncertainties, whether uranium producers continue to make some spot purchases as they did in the third quarter and whether investment funds continue to purchase additional quantities.

Moving now to the long-term market, the average of the long-term price indicators ended the quarter at thirty-two fifty, up eight percent from the thirty dollars at the beginning of the quarter. The average long-term price has increased further to thirty-three seventy-five since the end of the third quarter.

Term market in 2005 has been extremely active. We now expect long term contracting volume to be well above two hundred million pounds this year, significantly more than the ninety million pounds that was contracted in 2004. This high level of long term contracting also maintains upward pressure on the spot market price. In comparing volume contracted in today’s long term market with that of previous years, one must take into account that contracts have increased significantly in duration. In the past, term contracts were typically shorter in duration, more in the order of three to five years.

Today’s market, they are much longer duration, more in the order of ten years or so as utilities look to cover at least some portion of their requirements for the longer term with reliable suppliers. Suppliers, including Cameco are willing to accommodate these buyers to the extent we can obtain market related prices with solid, floor price protection and market upside for alternatively attractive base prices which escalate over time. We expect the activity in the long-term market to continue at a strong pace in 2006.

Turning now to the UF6 fixed conversion market, industry average spot prices for both North America and Europe ended the third quarter at eleven fifty a kilogram, down marginally from the end of the second quarter. The slight decrease in the spot market for conversion can be attributed to the form of uranium that buyers looked to purchase in the last quarter. There have been limited supplies of U3O8 available but small pockets of excess UF6 supplies.

If a buyer desires to purchase uranium in the form of U3O8 and a seller only has UF6 available for sale, the seller may discount the conversion price in order to complete the sale in the form of UF6. Alternatively, a seller may be able to sell the U3O8 and conversion components separately, again, discounting the conversion to move it at the same time. This activity has been fairly limited and we do not expect it to be a significant factor going forward.

In the long term market, the industry average prices increased over the quarter for both the North American and European markets to twelve dollars and thirteen dollars and thirteen cents respectively, increases of one and four percent from the end of the second quarter. In summary, the markets for both uranium and conversion services remain very strong and we see that continuing through the end of this year and well into 2006. So that concludes my remarks and I’ll pass things back to Jerry.

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Okay, George; thank you very much and with that, we’ll turn it over to the operator for questions. Operator?

QUESTION AND ANSWER SESSION

Operator

Thank you. We will now take questions from the telephone lines. Please be advised that we will take questions from the investment community first followed by questions from the media. If you are from the investment community and you have a question, please press star one on your telephone keypad. If you are using a speakerphone, please lift the handset and then press star one. To cancel your question, please press the star two. Please press star one at this time if you have a question. There will be a brief pause while participants register for their questions. Thank you for your patience.

Our first investment question is from Lawrence Smith, Blackmount Capital. Please go ahead.

Lawrence Smith, Blackmount Capital

Good morning. I guess the question is for George relating to your strategy in contracting now. You know, when you’re looking at contracts falling off and putting new contracts in place, what are you targeting in terms of, you know, base plus escalators versus market related contracts?

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

Well, Lawrence, overall our targeted split between the two has not changed although, you know, we continually look at it. But it is still, today, generally sixty forty. So sixty percent market related at the time of delivery and the other fixed price.

Lawrence Smith, Blackmount Capital

And George, I know this is a sensitive topic, could you give some indication of, you know, what type of terms you’re looking at? And when I say terms, you know, what type of floor prices you’re looking at and what type of ceiling prices you’re looking at?

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

Well what we I think have indicated in the release that generally we referenced floor prices in the mid-twenties, so they’re all of that. And we look to avoid ceiling prices entirely.

Lawrence Smith, Blackmount Capital

Great, thank you very much.

Operator

Thank you. Our next question comes from Greg Barnes. Please go ahead sir.

Greg Barnes, Canaccord Capital

Thank you. George, another question on the floor prices. You say in the press release that the percentage of price insensitive contracts would not change significantly down to a twenty dollar US price range. For 2006 then, does that mean or can we infer that you believe your floor price on your realized price in 2006 will be around twenty bucks?

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

No, I don’t think we’re saying that at all, Greg.

Ms. Alice Wong, Cameco Corporation
Vice-President, Investor Relations and Corporate Communications

It just means, Greg, that it’s not sensitive to changes. Remember, we have ceilings and floors in there so it just means the sensitivity doesn’t change. If you go back and look at previous releases you would know that the sensitivity kicks in at certain ceilings.

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

Yeah, as an example, if you had a twenty-five dollar base price, you know, it’s not sensitive down at twenty. So any of the contracts with floors above that level wouldn’t be sensitive at twenty.

Greg Barnes, Canaccord Capital

Okay and for 2006, you had in 2003 and 2004 a number of contracts that ceilinged out at fourteen dollars or so.

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

Yes.

Greg Barnes, Canaccord Capital

What percentage of your contracts in 2006 would have a floor in the twenty dollar range?

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

I would—I don’t have that information in front of me. I would guess that it would not be that significant at this point. Because you know, in 2006 we’re still working off contracts that were entered into, you know, some years ago, 2002 and 3. So I don’t think there would be an exceptionally large percentage of our contracts, market-related contracts that would have even twenty dollar floors in 2006.

Greg Barnes, Canaccord Capital

Are you ceiling out on the number of contracts in 2006 then, on the opposite end?

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

We would still have certainly a number of ceilings, significant percentage that would be ceiling or capping.

Greg Barnes, Canaccord Capital

At what kind of level?

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

Again, I don’t have that—I don’t want to speculate or just guess at that price. I don’t have it in front of me Greg.

Greg Barnes, Canaccord Capital

Okay. Can I just ask one further question? At the end of the report you say you agree more or less with the World Nuclear Association’s supply and demand forecast but the only difference in their analysis versus yours is the consideration of prices required to bring on new capacity. What kind of prices do you think are required to bring on new capacity?

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

Well that’s, you know, we really don’t speculate on that and it’s dependent on so many factors, including exchange rates and you know, you have to look at HEU too, new production from (inaudible), Olympic Dam, all the rest of it. So, you know, and Alice is here ready to kick me if I sort of suggest forecasting a price grade so I won’t.

Greg Barnes, Canaccord Capital

I knew she would be.

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

Yeah.

Greg Barnes, Canaccord Capital

Thank you.

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

You’re welcome.

Operator

Thank you. Our next question comes from Terence Ortslan, TSO & Associates. Please go ahead.

Terence Ortslan, TSO & Associates

Good morning. On ERA, what’s the net gain after taxes and all?

Kim Goheen, Cameco Corporation
Senior Vice-President and Chief Financial Officer

We haven’t—the cost base for the shares or the book value of the shares Terence is in our report so we really aren’t going to speculate as to what the proceeds will be. So, you know, that depends on how the marketing efforts go and so on, so I really can’t answer that question until the deal’s done.

Terence Ortslan, TSO & Associates

But it will be secondary to the marketplace, correct?

Kim Goheen, Cameco Corporation
Senior Vice-President and Chief Financial Officer

Correct.

Terence Ortslan, TSO & Associates

So there’s no bought deals of this by the brokers?

Kim Goheen, Cameco Corporation
Senior Vice-President and Chief Financial Officer

We’re working with our advisors on that, yes.

Terence Ortslan, TSO & Associates

Okay. And you expect that to be happening this quarter obviously, right?

Kim Goheen, Cameco Corporation
Senior Vice-President and Chief Financial

Yes.

Terence Ortslan, TSO & Associates

What’s the final capital cost going to be all in for Inkai to get to the full production?

Terry Rogers, Cameco Corporation
Senior Vice-President and Chief Operating Officer

Yeah, so what we said in the press release is eighty-three million and we expect we’ll be right in that ballpark.

Terence Ortslan, TSO & Associates

But all the loans and everything else on the opposite sides, that eighty-three million dollars still holds?

Terry Rogers, Cameco Corporation
Senior Vice-President and Chief Operating Officer

Yes.

Terence Ortslan, TSO & Associates

Okay. And in view, I mean how would you judge that, um, it’s interesting they’ve opened the marketplace with another competing company in Kazakhstan with respect to the in situ leeching and they’ve got a, from what I’ve seen, quite a reasonable (inaudible) high new market cap. How would you rank your asset value in relation to that?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Terry, are you talking about Inkai relative to other projects in Kazakhstan?

Terence Ortslan, TSO & Associates

Right. And there’s one public issue right now in Canada which has received quite an attention, and to me, if that’s the guidance, then your asset value in Kazakhstan should be quite extensive, and would you agree with that and use it as a yardstick as a matter of fact?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

No, I haven’t gone back and done that calculation but I would say that, you know, Inkai is, in our view, quite an attractive property. It was one of the properties that as we surveyed the universe of properties to invest in Kazakhstan, caught our eye. It was one that was undeveloped, which was one of our criteria, and so it’s very difficult for us to do complete comparison but we know that there’s extensive from the soviet era that we continue to confirm as we do our test mining and the work on the development of the new commercial mine.

We believe the soviets did a very, very good job in delineating resources and as I have said historically, this is a property that’s got extensive resources even though we can’t show them today on our balance sheets as reserves. We carry about a hundred and fourteen million pounds as (inaudible), but that’s just right around our test mine and our commercial development. So we think Inkai is a very good property and we’ll be there for many, many years and beyond that, I can’t make any comparison with others.

Terence Ortslan, TSO & Associates

Jerry, the fact that the other ones also got some ISL, was it an opportunity for you that you declined or was it too much of open exposure in Kazakhstan that (inaudible) participate as well and be competing with you?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

We didn’t really have an opportunity in the recent past to pick it up, but as I said, Inkai is a very large property. I think it will keep us occupied for many years, not just in the areas that we’re presently developing but, you know, we are doing and will be doing in future years, additional drilling and test mining in other areas of that property. So I think Inkai is big enough to keep us occupied for a while.

Terence Ortslan, TSO & Associates

I agree, I agree. The, ah, just for us to gage though beyond five point two in the ramp-up process, what do you think in a global sense that potentially Inkai may be?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Well there’s no reason why, in the next ten-year horizon you couldn’t double the production above five point two. But that’s market dependent, dependent upon getting permits and regulations, and remember, Terry, we have a forty percent owner or joint venture partner in Inkai and ultimately it’s going to have to be a mutual agreement on just where it goes.

Terence Ortslan, TSO & Associates

Okay. And just, last question on Inkai is that if the production gets ramped up, what does the cost scale look like in terms of the percentage degrees in the operating costs?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

We really, you know, Terry, we don’t like to speculate on cost.

Terence Ortslan, TSO & Associates

Yeah, but I mean I’m not talking dollars per pound. I’m saying, from a base of hundred, (inaudible), starting to go (inaudible), how would you define the costs?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Go ahead, Terry.

Terry Rogers, Cameco Corporation
Senior Vice-President and Chief Operating Officer

Well you know, Terry, just because of the economies of scale, the unit cost does go down as production ramps up.

Terence Ortslan, TSO & Associates

Yeah, but what is it, like one hundred base goes to what, fifty, forty, sixty?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

If you take a look at where we are today in the test mine and you ultimately project that the commercial production, it’ll go down by probably half.

Terence Ortslan, TSO & Associates

Okay. And I think I’m done. Thank you very much.

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

You’re welcome, Terry.

Operator

Thank you. Our next question comes from Bernard Coutier, Summit Ventures. Please go ahead.

Bernard Coutier, Summit Ventures

Thank you very much. First I’d like to congratulate Jerry and your team for all the good work you're doing at creating shareholder value. My question is, assets under sixteen, you made positive comments about UEX, a junior installation company where you hold a significant stake. You talked about significant asset resolve at Shea Creek. Since then, more astonishing assets were announced at Shea Creek. So what can you tell us about your involvement with UEX and the Shea Creek prospect to become a major mining, um, in the Athabasca Basin?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Bernard, we continue to hold, I think it’s around a twenty-two percent interest in UEX and on certain properties, our geologists provide consulting advice, not on Shea Creek because that’s run by their joint venture partner, AREVA or COGEMA/UEX, and that project is earning by spending money, a forty-nine percent interest. And you’re right; the results have been quite interesting, high grade results over some pretty good intersections and thicknesses.

But like any of these exploration plays, particularly in the Athabasca Basin, given the depth and the geologic environment, there’s a lot more exploration drilling that needs to be done before anybody could conclude that it’s a discovery that’s got economic potential. It’s quite encouraging from an exploration perspective, but in the basin over the last thirty years there’s been lots of drill holes that have looked encouraging that haven’t panned out to be full discoveries. So we watch with great interest as they try to put lateral extent on this drilling that they’ve done and vertical extent on it. So encouraging, but a long way from an economic ore body.

Bernard Coutier, Summit Ventures

Thank you.

Operator

Thank you. Our next question comes from Lawrence Smith, Blackmount Capital.

Lawrence Smith, Blackmount Capital

Thank you. Just a follow up question and unlike Terry, I’ll limit myself to one question. Other income, I guess this is a question for Kim, there’s a write down of portfolio investments around six point three million, just sort of what that is. Thank you.

Kim Goheen, Cameco Corporation
Senior Vice-President and Chief Financial Officer

We had a few small investments and general hydrogen and such and another small one that, when we looked at them, they didn’t really pass the test as to keeping them on our books so it was time to take them off.

Lawrence Smith, Blackmount Capital

Thank you very much.

Operator

Thank you. Our next question comes from Alex Latzer, Merrill Lynch. Please go ahead.

Alex Latzer, Merrill Lynch

Thanks good morning. A question on the Bruce Power as we look ahead in the fourth quarter. I know that the comments were made that it’s significantly lower earnings there but the spot price as you pointed out, still is holding up in the eighty dollar range and I was just wondering to what extent can you further detail that for us with respect to the impact of the new accounting, the fact that two of the A units that are operating are no longer on a go forward basis I think as of November 1 st. Just what’s going on in the market? I’m trying to get a sense of the ongoing earnings.

Kim Goheen, Cameco Corporation
Senior Vice-President and Chief Financial Officer

There are several aspects to that. Certainly you identified that A3 and 4, we no longer have an interest in those units and that will have an impact but there’s also unit B5 that’s on a scheduled outage right now and will not be back I believe until early December. So that has a big impact on the quarter to quarter comparison.

Alex Latzer, Merrill Lynch

And then from the perspective of the accounting, it’s just pretty much the same thing, it’s proportionately accounting.

Kim Goheen, Cameco Corporation
Senior Vice-President and Chief Financial Officer

Yeah, the distinction between the two really is, we highlighted just so that people aren’t surprised when the revenue and expense lines change but the net earnings impact is no different whether it was proportionate accounting or equity accounting.

Alex Latzer, Merrill Lynch

I see. Okay great, thanks for that.

Operator

Thank you. Once again if you are from the investment community and you have a question, please press star one at this time.

Thank you. Our next question is from Steve Bonnyman, CIBC. Please go ahead.

Steve Bonnyman, CIBC World Markets

Yeah, good morning. Within interest and other items you’ve got the foreign exchange loss and losses on derivatives; can I assume that all of those are non cash and that the derivatives are strictly your FX?

Kim Goheen, Cameco Corporation
Senior Vice-President and Chief Financial Officer

That is correct.

Steve Bonnyman, CIBC World Markets

Okay, and second question, on sort of SG&A and exploration, good operational results, but if you look back over the last couple of years, we’re getting some really substantial creep in SG&A. Can you give us some guidance going forward as to what those numbers should look like and what sort of expenditure rate we should be looking at on an annual basis?

Kim Goheen, Cameco Corporation
Senior Vice-President and Chief Financial Officer

Well one of the items you have to pick up and be appreciative of is that in those SG&A items, we have a stock compensation charge and that is a very big impact. Through nine months of this year it’s eleven million dollars and certainly that’s, that’s one aspect of enjoying very high share prices as we are today. So I wouldn’t want that one overlooked.

As to other activities, certainly what we’re, built into those G&A costs is a fair bit of business development expenditures and what we’re thinking of doing is pulling that one up to identify for people going forward. It does certainly look like there’s increases year over but we have the creation of Centerra. That is a separate G&A burden that was not there before. We have the stock compensation charges which are a significant item and then again we have the business development activities which have increased and are really buried in there, not identifiable at this point.

Steve Bonnyman, CIBC World Markets

Super. And last question if I may and this is for George and I apologize, it sounds like we’re beating a dead horse a little bit. But as we get out to ’07 and ’08 and we talk about price insensitive contracts, of those, for 2007 and 2008, the seventy-one and fifty-four percent, how many of those are completely spot insensitive, i.e., you know, you’ve always said that these market related contacts are price insensitive at the spot of thirty-three. What percentage of those have absolutely no relationship to the spot market?

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

I just don’t have that number in front of me Steve, I’m sorry.

Steve Bonnyman, CIBC World Markets

I’m thinking in order of magnitude. Is it a small portion or a large portion?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Those years in particular as a percentage?

Steve Bonnyman, CIBC World Markets

Well I’m thinking as we go forward because certainly one of the key challenges that we’re facing is trying to determine what sort of price realizations you deal in there. So if you’re writing long term contracts at this point which would make those completely price insensitive, then I think the market can look and say, the long term contract price is X now plus an escalator, use that as guidance. Would that be appropriate?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Well I think the target so far, the target that we’ve had is still in that forty percent fix which would be escalated by inflation. So if you use that in your model, I think that’s probably a safe bet. You know, we are in, even on that side, trying to preserve some upside but that’s a function of how much the market has changed and remember, we’re just into the second year of this changed market.

Steve Bonnyman, CIBC World Markets

Jerry, on that question then, you know, preserving some upside is an interesting statement given the bullish comments that we continue to hear about the uranium market. You know, why is it not possible within the market to preserve all of the upside? You know, as a leading producer of an exceptionally scarce product, why do we continue to see caps in this market at all?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

I don’t think you’re seeing caps so much any longer on the market side of the portfolio. We are a pretty significant presence in the market and we think it’s important that we are on that responding to some of the desires for fixed prices as time goes on. But as you point out and we’re continually reviewing that, you know, where does that proper weight between predictability and total exposure to a very thin spot market make sense.

We still point out that the spot market is not without risk given the fact that it’s only ten to fifteen percent of the total volume moving and you know, it’s basically our judgment as to where we ought to be in that balance given the risk reward profile and obviously trying to capture as much value as we can and protect it, now, not just three or four years but ten years and in duration in some of these contracts. You know, it’s not, we know that the market’s not unidirectional. It’s not going to go up forever.

Steve Bonnyman, CIBC World Markets

Understood certainly but I think the agreement from most perspectives is that we have a serious structural problem here and it would be very disappointing to get out four or five years and see contract prices again locked in at half of where the market is. Anyway, thank you very much.

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

You bet.

Operator

Thank you. Our next question comes from Robert Sennott, RSS Securities. Please go ahead.

Robert Sennott, RSS Securities

Hi, congratulations on a good quarter.

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Thank you.

Robert Sennott, RSS Securities

Future acquisitions of small exploration or juniors out there, there are a lot of exciting things happening with very, very small uranium exploration companies as far as stock price goes and I wanted to find out what Cameco’s vision is as far as acquisition, mergers and acquisitions in the uranium mining?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

If you look Robert, historically we’ve been active at acquiring uranium properties and companies engaged in uranium mining. We pointed to Uranerz back in 1998, Smith Ranch, a number of properties in Wyoming and Nebraska. So over the past decade, we’ve been quite active in doing that. We’re at a point, a point now where there’s just a limited number of opportunities because of the lack of exploration drilling that’s gone on for two decades.

And the opportunities that we see out there right now are not all that interesting. We obviously continue to watch all the time. And as we talked about it with UEX earlier, those that we think are quite interesting, well we try to engage with. Over time, as you point out, there’s now a lot of junior exploration companies that have appeared in the last two years and they’re spending money. For the first time they can go out and raise capital and take the risk of exploration.

We watch them all the time and we’ve got quite a number of experts on our geological staff that have been with us for many, many years and we’re augmenting that group. And so they watch world developments all the time and my guess is that as the juniors succeed in the future and have a discovery that might be interesting, maybe you’ll find Cameco becoming more active. But I’d say that’s several years down the road. We’ve got to get into this next exploration cycle enough that the monies that are being spent produce results.

Robert Sennott, RSS Securities

So other, so you’re saying that right now, there really are no attractive possible acquisition targets at this time?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Right now we continue to watch.

Robert Sennott, RSS Securities

Okay, I know that there’s some recent exploration announcements coming out of Australia that are pretty exciting and a few companies come to mind, Laramide being one. You know, if the political environment changes there, Laramide could become a very exciting company to look at. What is Cameco’s thoughts on something like that?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Well as I indicated, we continue to watch and we’re obviously quite aware of the political situation in Australia. We’ve got our own exploration efforts. I think we probably are the biggest explorer for uranium in Australia spending about six million dollars a year and have met here in August with the Australian government and testified before parliament. We continue to watch to see what’s going on and watch the political environment and when we think it’s opportune, then you’ll see Cameco, you know, looking for possible acquisitions.

Robert Sennott, RSS Securities

Appreciate your time. Thank you.

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Ian Howat, National Bank Financial. Please go ahead.

Ian Howat, National Bank Financial

Yeah, good morning. I think you used to provide or just it’s my failing memory that sort of some guidance of how much poundage you actually had under contract and some sort of aspect of when it was rolling over?

Ms. Alice Wong, Cameco Corporation
Vice-President, Investor Relations and Corporate Communications

We had the pounds disclosed at the quarter end, or sorry, the fourth quarter or the year end for, we do that at a year end report, Ian.

Ian Howat, National Bank Financial

Okay, but you don’t update it quarterly?

Ms. Alice Wong, Cameco Corporation
Vice-President, Investor Relations and Corporate Communications

No.

Ian Howat, National Bank Financial

Okay.

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Your memory is not failing you.

Ian Howat, National Bank Financial

Okay, what was it at year end?

Ms. Alice Wong, Cameco Corporation
Vice-President, Investor Relations and Corporate Communications

Now you’re testing our memory.

George Assie, Cameco Corporation
Senior Vice-President Marketing and Business Development

I believe that in the past we said we had in excess of a hundred million pounds under term contracts, that’s generally what was included.

Ian Howat, National Bank Financial

Okay, thank you.

Operator

Thank you. We will now take questions from the media community. If you are from the media and you have a question, please press star one at this time. To cancel your question, please press star two. Thank you. Once again if you are from either communities and you have a question, please press star one.

Thank you. Our next question comes from Bernard Coutier, Summit Venture. Please go ahead.

Bernard Coutier, Summit Venture

Thank you very much. Just a quick question for Terry Rogers, what are the challenges that you’re facing with the processing of the Cigar Lake ore when it comes to the mill head for the Rabbit Lake plant like in terms of diluting the high concentration ore to the mill head concentration requirements?

Terry Rogers, Cameco Corporation
Senior Vice-President and Chief Operating Officer

Well Bernard, the ore from Cigar Lake actually goes to the mill at McLean Lake for leaching. The solution coming to Rabbit Lake is the leached product and we start from that aspect at that mill. So it’s no challenge as far as the concentrations at Rabbit Lake.

Bernard Coutier, Summit Venture

All right, thank you.

Operator

Thank you. Our next question comes from Tom Doust, a private investor. Please go ahead.

Tom Doust, Private Investor

Hi. As a former resident of Port Hope, I followed with interest the story of the slightly enriched uranium project (inaudible) and then the startling announcement (inaudible) with that initiative, and I really just had a question in my mind as to, you talk about the vision of the organization and that. What implication if any does that have for the vision of going forward of Cameco as a uranium (inaudible) and its vision as a company?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Tom, could you please repeat the last part of your question?

Tom Doust, Private Investor

Well what I just don’t really understand is like there was, it seemed to be a significant project, you made a determination that you could not provide, you required product and time, but what does that mean for the company going forward in terms of its vision, if anything?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Not a thing, Tom. We are, as I indicated in my preamble, absolutely dedicated to the vision that we have of being in the nuclear energy business and being vertically integrated, expanding our uranium production. You’ve seen in the last year we’ve increased our inversion capability with the Springfields opportunity by almost half. And that meant almost doubling the amount of UO3 we produce at Blind River operation.

So I wouldn’t look at the SEU decision in Port Hope as anything other than a recognition that, you know, given the process that we had to go through and the interest of the community, it was simply a recognition we could not deliver fuel, SEU fuel in time to meet Bruce’s needs and in the meantime, we found some attractive commercial opportunities that could meet the time schedule because they were already licensed and permitted in the US at attractive, economic terms.

And in consultation with Bruce, we decided that was proper way to go and meet their needs. So I wouldn’t read anything into it. In fact we’re sitting here right in Port Hope right now having had, yeah, absolutely, having had just a wonderful evening last night with community leaders, the town council, Cobourg, a lot of business leaders and some people that were opposed to SEU. And so we’re with our board of directors here taking a tour of the facility and enjoying the community. I don’t know why you moved away. Why’d you move away? It’s a very nice place.

Tom Doust, Private Investor

Well other than your company there, there wasn’t a lot to do, but…

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

We’re happy to have you as a shareholder.

Tom Doust, Private Investor

All right, just one follow up then. To say then that there wasn’t a big market, that there was no sole market for this product, is that correct?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Only Bruce Power

Tom Doust, Private Investor

I see. All right then, thank you.

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

You’re welcome.

Operator

Thank you. Our next question comes from Tim Rice, Rice Doelker. Please go ahead.

Tim Rice, Rice Doelker

Good morning. My question is kind of a follow up to the previous question about potential acquisitions. How would you characterize the relative attractiveness or unattractiveness of properties in the United States relative to other geographic areas?

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

I guess if you take a look at our operations in Wyoming and Nebraska, using the in situ leach technology, these are low cost operations. And you know, as long as you can use that technology in the right environment, shallow enough and permeable, then ISL operations, even though their quite low grade can be competitive. When you look beyond that, well you’ve got a couple of categories; you’ve got those that perhaps are co-product with vanadium and as long as vanadium prices stay high, then uranium will be quite cheap.

Now there’s a very limited number of those and unfortunately there’s only four uranium mills left standing out of the twenty-six that existed at one point in time. Other properties that you look at in the US that are not co-products were all built in a market environment where uranium prices were, you know, thirty to forty dollars a pound. So you know, you need to keep in mind what the cycle was like, what the prices was like when a lot of the, when the US was producing as it was back in the late seventies, forty-three million pounds a year. Today they produce about two and a half or three.

Tim Rice, Rice Doelker

Thanks very much.

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

You’re welcome.

Operator

Thank you. This concludes the questions from the telephone lines. I would now like to turn the meeting back over to Ms. Alice Wong for her closing remarks.

Jerry Grandey, Cameco Corporation
President and Chief Executive Officer

Okay, well I’ll just interject and thank you all for joining us and Alice says the same thing by the way. We appreciate your interest in Cameco and have a good day.

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Source: Cameco Q3 2005 Earnings Call Transcript
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