Cameco Corporation (Cameco) (TSX:CCO; NYSE:CCJ) announced that the restructuring of Joint Venture Inkai LLP (JV Inkai) outlined in the implementation agreement dated
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JV Inkai Restructuring Takes Effect January 1, 2018
Saskatoon, Saskatchewan, Canada, December 11, 2017 . . . . . . . . . . . . .
Cameco Corporation (Cameco) (TSX:CCO; NYSE:CCJ) announced that the restructuring of
Joint Venture Inkai LLP (JV Inkai) outlined in the implementation agreement dated May 27,
2016 with Joint Stock Company National Atomic Company Kazatomprom (Kazatomprom) and
JV Inkai closed today and will take effect on January 1, 2018.
This restructuring was subject to obtaining all required government approvals including an
amendment to JV Inkai’s existing Resource Use Contract with the Republic of Kazakhstan,
which have been obtained.
“This agreement is positive for Cameco as it secures our access to a large, low-cost production
source through 2045,” said Tim Gitzel, president and CEO of Cameco. “Production decisions
will depend on market conditions and the terms of our Resource Use Contract.”
The amendment to the Resource Use Contract provides as follows:
JV Inkai has the right to increase production to 10.4 million pounds of U3O8 per year
(Cameco’s share 4.2 million pounds), an increase from the current licensed production of
5.2 million pounds (Cameco’s share 3.0 million pounds)
JV Inkai has the right to produce from blocks 1, 2 and 3 until 2045 (currently, the lease
terms are to 2024 for block 1 and to 2030 for blocks 2 and 3)
The current boundaries of blocks 1, 2 and 3 have been adjusted to match the agreed
production profile for JV Inkai to 2045.
Under the implementation agreement, Cameco’s ownership interest in JV Inkai will be adjusted
to 40% and Kazatomprom’s ownership interest in JV Inkai will be adjusted to 60% on January 1,
2018. As a result, Cameco will account for JV Inkai on an equity basis commencing on
January 1, 2018. Also on January 1, 2018, a new governance framework for JV Inkai protecting
the rights of Cameco as a minority owner will take effect.
Finally, the loan previously funded by a Cameco subsidiary to JV Inkai to fund exploration and
evaluation of block 3 was restructured to provide for priority repayment. Such priority repayment
commenced in 2017 and the balance of the loan was US $124 million at the end of the third
quarter of 2017.
The amendment to the Resource Use Contract and the adjustment to Cameco’s ownership
interest in JV Inkai results in material changes to Cameco’s mineral reserves and mineral
resources reported for Inkai.
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Inkai Mineral Reserves and Mineral Resources as of January 1, 2018
Cameco's
TOTAL Share
CATEGORY TONNES GRADE Lbs U3O8 Lbs U3O8
(thousands) %U 3O8 (millions) (millions)
RESERVES
Proven 211,852.5 0.036 167.5 67.0
Probable 166,913.0 0.028 102.1 40.9
Total 378,765.5 0.032 269.6 107.9
RESOURCES
Measured 36,680.9 0.026 21.3 8.5
Indicated 21,132.2 0.023 10.7 4.3
Inferred 116,394.6 0.029 75.0 30.0
Notes: (1) Cameco reports mineral reserves and mineral res ources separately. Reported mineral resources do not include
amounts identified as mineral reserves. Totals may not add up due to rounding.
(2) Cameco’s share is 40% of total mineral reserves and mineral resources.
(3) The geological model used for Inkai involves geological interpretations on section and plan derived from surface
drillhole information.
(4) Mineral resources have been estimated at minimum grade-thickness cut-offs per hole of 0.047 and 0.071
m%U3O8, using 2-dimensional block models.
(5) Inferred mineral resources are estimated on the basis of limited geological evidence and sampling, sufficient to
imply but not verify geological grade and continuity. They have a lower level of confidence than that applied to an
Indicated mineral resource and cannot be directly converted to a mineral reserve.
(6) There are no known environmental, permitting, legal, title, taxation, socio-economic, political, marketing or other
relevant factors that could materially affect the above estimate of mineral resources.
(7) Mineral resources that are not mineral reserves have no demonstrated economic viability and do not meet all
relevant modifying factors.
(8) Mineral resources and mineral reserves have been estimated based on the use of the ISR extraction method
with allowance for the volume contacted by the solution. The production is planned to ramp up to 10.4 million
pounds of U3O8. Annual production levels will be dependent on results of further delineation drilling and market
conditions.
(9) An average price over the mine life of US $53 per pound of U 3O8 was used to estimate the mineral reserves with
exchange rates of $1.00 US=$1.25 Cdn and 256 Kazakhstan Tenge to $1.00 Cdn.
(10) Mineral reserves have been estimated at a grade-thickness cut-off of 0.13 m%U3O8.
(11) Total pounds U 3O8 contained in mineral reserves are not adjust ed for the estimated metallurgical recovery of
85%.
(12) There are no known mining, metallurgical, infrastruc ture, permitting or other relevant factors that could
materially affect the above estimate of mineral reserves.
Compared to mineral reserves reported as of December 31, 2016, Cameco’s share of JV Inkai
mineral reserves increases by approximately 62 million pounds U3O8. Measured and indicated
mineral resources decrease by nearly 68 million pounds and inferred mineral resources decrease
by nearly 56 million pounds. Cameco will detail the changes in a new NI 43-101 technical report
for JV Inkai to be filed within 45 days.
Cameco and Kazatomprom have also completed a feasibility study to evaluate the design,
construction and operation of a uranium refinery in Kazakhstan with the capacity to produce
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6,000 tU annually as uranium trioxide (UO3). A formal joint decision has not yet been made as to
whether the refinery will be built. In the event of a joint decision to construct the refinery, further
adjustments to Cameco and Kazatomprom’s ownership interests in JV Inkai will be made.
The Inkai operation is an in situ recovery uranium mine in south Kazakhstan that is owned and
operated by JV Inkai which, in turn, is currently owned by Cameco (60%) and Kazatomprom
(40%). Cameco’s current interest in production from JV Inkai is 57.5% based on previous
agreements with Kazatomprom.
Profile
Cameco is one of the world’s largest uranium producers, a significant supplier of conversion
services and one of two Candu fuel manufacturers in Canada. Our competitive position is based
on our controlling ownership of the world's largest high-grade reserves and low-cost operations.
Our uranium products are used to generate clean electricity in nuclear power plants around the
world. Our shares trade on the Toronto and New York stock exchanges. Our head office is in
Saskatoon, Saskatchewan.
Qualified persons
The technical and scientific information discussed in this news release, including mineral reserve
and resource estimates, was approved by the following individuals who are qualified persons for
the purposes of NI 43-101:
Darryl Clark, PhD, P. Geo., President, Cameco Kazakhstan LLP
Alain G. Mainville, P. Geo., Director, Mineral Resources Management, Cameco
Corporation
Stuart B. Soliz, P. Geo., Principal Geologist, Power Resources, Inc. (operating as Cameco
Resources)
Robert J. Sumner, PhD, P. Eng., Principal Metallurgist, Technical Services, Cameco
Corporation
Caution about Forward-looking Information and Statements
Certain information in this new release constitutes forward-looking information or forward-
looking statements within the meaning of Canadian and United States securities laws. These
include: the restructuring of JV Inkai will take effect on January 1, 2018; expected production of
uranium from JV Inkai’s operations; that JV Inkai’s production will extend until 2045; this
agreement is positive for Cameco as it secures our access to a large, low cost production source
through 2045; that JV Inkai’s annual production is planned to ramp up to 10.4 million pounds of
U3O8; Inkai mineral reserve and mineral resource estimates as of January 1, 2018; a new
governance framework for JV Inkai protecting the rights of Cameco as a minority owner will
take effect on January 1, 2018; Cameco’s ownership interest in JV Inkai will be adjusted to 40%
and Kazatomprom’s ownership interests in JV Inkai will be adjusted to 60% on January 1, 2018;
and if a uranium refinery is built in Kazakhstan, further adjustments to Cameco and
Kazatomprom’s ownership interests in JV Inkai will be made. Forward-looking information is
necessarily based upon a number of assumptions that, while considered reasonable by
management, are inherently subject to significant uncertainties and contingencies. Cameco
cautions the reader that such forward looking information involves known and unknown risks,
uncertainties and other factors that may cause actual results and developments to differ
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materially from those expressed or implied by such forward-looking information. These risks,
factors and assumptions include, but are not limited to: the risk that Cameco will not achieve the
benefits expected from the May 27, 2016 implementation agreement and the amended Resource
Use Contract; the risk that the restructuring of JV Inkai does not take effect on January 1, 2018;
the risk that JV Inkai will be unable to achieve its future annual production targets; the risk that
Cameco is unable to enforce its rights under the May 27, 2016 implementation agreement or is
subject to litigation or arbitration that has an adverse outcome; the risk that our cost estimates are
wrong; risks associated with mineral reserve and resource estimation, including that they are
imprecise by nature, may change over time, and include a number of variables and assumptions
that may change or prove to be incorrect; assumptions about anticipated operations and planned
exploration, development and production activities and the risk that one or more of these
assumptions prove to be incorrect; the risk that development and operations, including any ramp
up of JV Inkai’s uranium production, are disrupted or delayed due to operating or technical
difficulties, regulatory requirements, or political risk; and the risks involved in the exploration,
development and mining business. Cameco is providing this forward looking information to help
you understand management’s current views regarding the restructuring of JV Inkai, closing of
the May 27, 2016 implementation agreement and amendment to the Resource Use Contract, and
it may not be appropriate for other purposes. Cameco does not undertake any obligation to
update or revise forward-looking information, whether as a result of new information, future
events or otherwise, except to the extent legally required.
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Investor inquiries: Rachelle Girard (306) 956-6403
Media inquiries: Gord Struthers (306) 956-6593