Cameco Corp (CCJ) 2007 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, welcome to the Cameco Corporation third quarter results conference call.

I would now like to turn the meeting over to Mr.

Bob Lillie, Director of Investor Relations.

Please go ahead, Mr Lillie.

Thank you, operator, and good afternoon, everyone.

Welcome to Cameco's third quarter conference call to discuss the financial results.

Thanks for joining us.

With us today are three of Cameco's senior executives.

They are -- Gerry Grandey, President and CEO; Kim Goheen, as Senior Vice President and CFO; and Tim Gitzel, Senior Vice President and Chief Operating Officer.

George Assie, Senior VP Marketing and Business Development, is travelling and not able to be on the call today.

Also with us today is Alice Wong, Vice President of Investor, Corporate and Government Relations.

Gerry will start things off with comments on the highlights of the quarterly financial results, provide operational updates and a few words on Cameco's strategy and then we'll 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 session, we would ask that you ask one question only followed by one follow-up question.

If you have additional questions, please return to the queue until others have had a chance to ask theirs.

Please note that statements made during this call by the Company regarding the subjectives, projections, estimates, expectations or predictions, may be forward-looking statements within the meaning of 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 30, 2007.

With that I'll turn things over to Gerry.

Okay, Bob, thank you very much.

And let me add my welcome to everyone on the call.

During my remarks today, I'm going to comment briefly on our earnings, provide updates on activities at Port Hope and Cigar Lake, as well as how we're responding to both those issues.

And then comment on our strategy and how it is unfolding.

Cameco had another good quarter.

We continue to see increasing realized prices for uranium.

In fact, we recorded the highest realized price in Cameco's history, even though the spot price of uranium actually fell during the quarter.

These higher realized uranium prices generated an outstanding gross profit margin of 67% for uranium in the quarter and made a significant contribution to Cameco's earnings and cash flow.

The earnings are particularly satisfying.

Our adjusted quarterly net earnings after unusual items are more than five times higher than last year.

And our nine-month earnings are more than double last year's total, coming in at $539 million, another Cameco record.

These strong earnings are driven by our uranium business, anchored by a powerful portfolio of uranium contracts that will continue to deliver superb results year after year even with market fluctuations.

Let me summarize by saying we are in great financial shape.

And we are returning value to our shareholders.

Over the past couple of years, we have committed to consider buybacks as a way to return excess cash to shareholders if acquisition targets are too richly valued.

In early September, we announced an open market share repurchase program to buyback a maximum of 17.7 million shares and we have followed through.

To the end of September, we have purchased almost 40% of this target.

Now to the Port Hope conversion facility.

In the MD&A we indicated that we expect to restart production in the latter part of the first quarter of 2008.

We have sufficient inventory on hand to meet delivery commitments through that time, assuming deliveries proceed as planned.

U02 production is unaffected and continues at the site.

Since discovering contamination at the U06 facility in July, we have drilled numerous test wells to identify the key affected area.

We've completed a root cause analysis to identify the cause.

We've begun corrective actions and we've developed plans for improved monitoring.

It is important to note that there has been no affect on the safety or health of employees or the public and we are already taking steps to contain and extract the very low levels of contamination.

The staff at Port Hope have worked long hard hours to deal with this situation and keep the local community informed.

We look forward to getting the plant running again in the coming months.

Now, moving onto Cigar Lake.

There, too, we're making good progress.

We have completed the holes necessary for dewatering and reinforced an adjacent tunnel.

The concrete barrier plugging the tunnel where the inflow occurred last October is nearing completion.

We are now working on sealing the top and bottom of the plug.

Once that's complete, we will finish pouring concrete behind the plug to fill the void and rock pile where the inflow occurred.

We expect this to take about six more weeks.

Prior to dewatering, there are three more activities to complete.

First we will confirm that the plug works as designed.

Then we'll assess if additional measures are required in two other areas of the mine, and we'll submit an application and receive regulatory approval to dewater the mine.

I'd say we're making good progress on each of these activities.

At the same time, we are carrying out other assessments to develop mine plans for future development and the completion of the second shaft.

You'll find more detail on these and subsequent steps in the MD&A.

Tomorrow the Canadian Nuclear Safety Commission will be reviewing our application to renew and amend the Cigar Lake construction license that is scheduled to expire at the end of the year.

We anticipate a decision from them in December and will provide an update on remediation progress at that time.

Production startup remains 2011 at the earliest.

Until the mine has been dewatered and the condition of the underground development has been assessed and incorporated into new mine development and production plans, we will not be able to provide a firmer production startup date.

As a final note on this topic, there is no off-the-shelf manual to guide remediation at Cigar Lake.

We know it's challenging work.

The precise process and timeline are difficult to predict.

At the same time, I assure you that Cameco has the technical expertise and management systems to meet this challenge.

As I mentioned in our last conference call, the events at Cigar Lake and elsewhere, led our management to renew its commitment to excellence and accountability throughout the organization.

We continue to put in place the new management structure for all our operations lead by Tim Gitzel, as I announced on the last conference call.

That structure will provide the foundation for increased focus and accountability across our operations.

Further, I have challenged every Cameco employee to get back to basics in order to focus on our core business and achieve operational excellence.

We have worked with our operating sites and divisions to identify key priorities and make sure all of our activities are in line with these priorities.

We have deferred or eliminated tasks or projects that are not considered mission critical and asked each of our divisions to continue to evaluate all work with this same lens.

I have also followed up with direct communication to every employee as well as personal visits to the Saskatchewan sites.

In the months to come, I will be getting to our other sites as well, with an aim to meet people, talk to them directly about what excellence and getting back to basics means for them.

These visits have given me great confidence in our ability to meet our challenges, because of the enthusiasm and dedication I saw in our people and the example of excellence at each site.

Our assets are world-class and our talent is topnotch.

I know if we tighten our execution, we will remain a leader in our industry and that's what our renewed internal focus is all about.

I would now like to discuss our strategy for growth.

I spend a few moments on this topic since we continue to get questions from investors.

And when I say strategy, those of you familiar with Cameco will know that we have over the many years consistently positioned Cameco for long-term growth.

In our pursuit of value, our preference would have been to make a few large acquisitions.

However, rocketing uranium prices and rejuvenated nuclear industry sent evaluations far beyond what we consider to be sustainable, profitable levels.

So let me be clear, on my watch we will not heed the public musing of short-term thinkers who want us to grab some headlines with a quick purchase.

We will not pay inflated prices just to acquire a company with the word "uranium" in its name.

Cameco acquisitions must promise a significant contribution to our bottom-line.

While we monitor the industry for larger acquisitions, we have been steadily making strategic alliances and equity investments with uranium companies around the world.

These announcements extend Cameco's reach in northern Canada, the United States, Australia, Paraguay, Russia and Kazakhstan.

These investments are likely to pay handsome rewards to investors after exploration and development.

And we continue to work aggressively behind the scenes to evaluate other opportunities for growth in the nuclear industry.

While we don't issue a news release every time we think of making an acquisition, our uranium conversion and enrichment teams are actively networking around the world in pursuit of growth opportunities.

Our network of relationships throughout the industry provides critical market intelligence on opportunities we might pursue as well as those we would be wise to stay away from.

We are ready to strike when we see the right value, which strengthens Cameco over the long-term.

And as I mentioned at the beginning of the call, we have the financial strength to strike quickly when the right deal comes along.

I thank you for your attention.

We'll now open the call to questions and either I or other members of the management team will respond.

Operator.

(OPERATOR INSTRUCTIONS) Our first question is from Raymond Goldie of Salman Partners, please go ahead.

Good day, gentlemen, and lady.

My question relates to uranium, one which talked about the inhibition of their operations in Kazakhstan because of the shortage of sulfuric acid.

I'm not even sure whether Inkai, your project uses sulfuric acid.

Are you affected in any way by this situation?

Ray, it is using sulfuric acid.

We, too, are affected, as we've said in the MD&A.

We haven't been affected to date through the end of the quarter.

But if the acid shortage were to persist, then it would begin to affect us in quarter four.

Kazatomprom, which is the government owned enterprise, sees the acid situation coming back into balance sometime in the first half of the year.

Maybe by March, hopefully.

In the interim, we and others that are affected are looking for alternate supplies of acid in other jurisdictions.

But I think one of the impediments there is transportation.

But not affected yet but will be if we don't find alternative sources.

Thanks for your courtesy in taking a question which the answer was in MD&A.

There has been a remarkable concatenation of -- .

It's a long MD&A, right?

There's a lot of earnings releases that come out and within the last 24 hours.

Not a problem at all.

Thank you.

You bet.

Thank you.

The following question is from Mark Caruso of Millenium Partners.

Please go ahead.

Good morning.

My question actually pertains to Cigar Lake.

Is there any potential impact on the review of the application that could push back the timing more as far as is there a chance that they could be a little more stringent with the process and the way that you're going about your mediations and what not?

Mark, I think in this circumstance the regulator is paying a lot of attention.

That's been true since the event.

So we're trying to on almost a daily basis work with them and make sure that questions that they have are answered in a timely way.

So it is -- there is more scrutiny.

You'd expect there to be more scrutiny.

We just try to work through it day by day.

Just one final question.

As far as expanding the business, would you look to grow enrichment or is that not something that you have an interest in?

No, we have said consistently over the years that we would like to get into enrichment.

We've looked at the available opportunities that are out there.

They are few and far between.

But in pursuing enrichment as an objective, the guiding principle is that we won't do it unless we see a way that it makes economic sense for Cameco and its shareholders.

Great, thanks.

Thank you.

The following question is from Greg Barnes of T.

D.

Newcrest, please go ahead.

Thank you.

Gerry, you mentioned the two other areas of Cigar Lake that you're investigating for potential weakness, I guess.

Could you give us some idea of where those areas are and what it means.

Greg, there are two other areas that are kind of sense a larger openings that were done in the underground excavation.

They have got technical names.

One of them was established for the installation eventually of the clarifier and the other one was for run of mine production.

Those areas, because they are larger openings, when we de-pressure by dewatering the mine and there's a pressure differential, we're just trying to make sure that the support that was put in place and that the geological structure is properly understood before we do it.

So what we're doing is just simply doing some geotechnical drilling into the areas just to understand the relative strength, weakness and reinforcement that's already there.

Is there a potential you'll have to pour concrete, or pump concrete into those areas as well?

At this stage of the game we don't know.

I'd say we don't think so.

That certainly would be the last thing we would do to reinforce.

But this stage of the game, I think we're optimistic that there are other ways of making sure that it remains okay.

One quick other question on the big broader strategy discussion you had, where does Bruce Power sit now?

Bruce Power remains a core holding for Cameco.

I think that, as we've said from the beginning, it adds from Cameco's perspective the ultimate in vertical integration, where we take our own uranium and ultimately realize the value of nuclear electricity.

It does, by virtue of being the only independent operator, nuclear operator in Canada, provide us growth opportunities not just at the Bruce site but perhaps elsewhere in Canada where they are looking for additional nuclear as well.

That would be Ontario and perhaps Alberta.

Are you still looking at nuclear opportunities in the U.S.

or have you backed away from that?

We've backed away from it.

I'd say we are always looking.

But in terms of active pursuit, recognizing that our cost to capital is a little bit higher than most utilities that are regulated, these things became very expensive.

Again, when we do something, as we tried to demonstrate in the south Texas project where we prevailed in the bid but ultimately had the rights of first refusal to take it away from us, we'll only do it in a way where it that adds value, we think, to shareholders.

Thanks, Gerry.

You bet.

The following question is from Brian MacArthur of UBS Securities.

Please go ahead.

Good afternoon.

I want to go back to the updated chart here and just clarify exactly what you've done with Cigar Lake contracts and I'm talking about the chart on page 21 that shows your realized price at a number of spot prices.

If you look at it, the values actually are using a lower spot price now quarter over quarter but your values realized go up in 2010 and 2011.

I assume that's because we've deferred the Cigar Lake contracts and just put in spot.

Is that right?

Brian, let me first say there is a lot of information and assumptions behind these tables.

Sure.

So more than anything, I hope people are using them more as an indication of a trend that we see and not trying to hang their hat on the last dollar that is there.

It is simply intended to give people a pretty good glimpse of where the realized prices would be trending over time.

The farther out you go, the less certainty there is, as with any forecast.

One of the things we're considering is since it becomes so vague way out in the future, is there much utility for going beyond three to five years.

But we'll take a look at that in future quarters.

But I wouldn't get too hung up beyond all this.

I think in terms of technical detail and your specific question, Alice probably better than anybody can talk about what is the underlying assumption in '09, '10, '11, vis-a-vis Cigar Lake.

Alice, can you respond to that?

Brian, the change in '09 through '11 is the assumption, while the decision hasn't been finalized yet, is the assumption that we will make some additional deferrals under our supply protection language in our contract.

Right.

So I mean basically we're getting the same affect as you saw this quarter, where you are getting a much higher realized price because we're taking up material under a lower contract and it's being pushed out to 2000, whatever it is, 18 or 16 or whatever it is, and you're putting in the spot price now of $80 instead of $120 versus last quarter.

But last quarter you basically had the old contract in.

Is that correct?

The last price table would not have assumed any additional deferral.

Okay.

So we [deferraled] through -- I just can't figure out -- you very clearly laid out a lot of, as Gerry says, a lot of assumptions on this table, but I just want to be clear.

You deferred Cigar through 2011 now in this table or '12?

Brian, it's not -- it's the impact of reduction in production and the largest impact was Cigar.

But you do remember that the Cigar Lake base load contract we've already accounted for.

If we think they have been impacted, that's always been in the price table.

So the new assumption is that under the other contract where we have the right to reduce or defer or cancel deliveries, where we pro rata can reduce some of that.

That's the change based on -- yes, that's what we're doing.

The Cigar Lake base load has always, we've always had that in for the last couple of tables, I believe.

Well, I know that.

So the change really is this additional reduction in supply due to the rights that we have under the other contract.

Okay.

I'll follow up with the rest of it off line.

Thanks.

Thank you, Brian.

The following question is from John Redstone of Desjardins.

Please go ahead.

I'm sorry to belabor this point about the table with realized prices, so I'll try to make this as painless as possible.

The table shows that if you realize a price average of $100 over the course of this year, your average realized price is around $39.

And if you keep that going next year it's $46 and change and yet you've got $53 in the third quarter.

Could you give us a little bit more detail as to why that was so high?

John, just simply the timing of sales in the particular contracts.

We had a certain amount of material we were able to sell at the, literally at the height of the spot market in this quarter.

Of course, then the spot price came down through the quarter.

it is just simply the way the contract and sales and deliveries have fallen in quarter three.

Okay.

So can I assume then that that shall we call it premium, for want of a better word, is not sustainable.

Quarter to quarter, we've always said that you shouldn't read too much into results.

Look at the table.

Okay, fine.

Can I ask one follow-up question.

Absolutely.

Go right ahead.

The expansion of the McArthur River, any news on that?

Still planning and still in the regulatory approval.

We, in past quarters, have said that we need to demonstrate that the technology that we've developed for reducing the selenium and molybdenum content in the effluent stream that that technology is successful.

Once we demonstrate that, we firmly believe that it will and that should be starting in the early part of '08.

Then we should be able to begin making progress on the environmental permitting and licensing of the expansion.

So still I think we're still several years away.

Fair enough.

Thank you.

Okay.

Thank you.

The following question is from Borden Putnam of Eastbourne Capital.

Please go ahead.

Hi, Gerry, Borden here.

Thanks, first of all, for the increased disclosure on the McArthur expansion plan site.

I've done a bunch of work on that and we talked about in previous calls and it's good to see you talking about -- .

Try to be responsive, Borden.

I appreciate it because it was kind of a murky topic.

I want to go back to the question that Greg Barnes introduced about the two additional areas.

You said that one of them was the clarifier area and the other is a run-of-mine storage bin.

Looking at some diagrams that I have compiled over the years of following this, that zone looks like it would be about 130 meters distance from the area of the rock fall horizontally and at least 15 meters vertically.

That's right at the bottom sort of of number one shaft and I would have thought that was pretty high integrity ground.

Is there a thawing affect from the loss of the freezing circulation that's affecting the integrity of that ground or - ?

No, that ground has never been frozen.

Freezing has gone -- the freezing that's been done has been going on in the ore body itself.

Why would this ground around the base -- ?

We want to make sure that what we're doing is successful here, so we're looking at every eventuality.

It's interesting.

I wouldn't have expected that to have a loss of integrity in that area.

It hasn't had a loss of integrity, we just want to make sure it doesn't.

Right.

Poor choice of words on my part.

You mentioned in your start that you were going to test the plug before you begin dewatering.

How will you do that?

Lower the water level in shaft one, then begin to watch its rebound.

Okay, so that's not included in the dewatering.

And another way to do it is to pressure up a little bit on the upstream side of the plug where the fall is, because we've got a hole drilled in there, and then see what affect from a pressure perspective occurs on the other side.

Okay.

Last, as a follow-up for this round, back at the Key Lake there was an issue about isodecanol and the treatment of concrete from backfill that was getting through the mill.

Has that, Tim and I talked about that last call, has that issue been resolved or is your progress along that improving.

No, I think that issue is pretty well resolved.

We put in a hydrogen peroxide circuit.

That seems to be working quite well.

Tim, I don't know if you have anything you want to add to that.

That's exactly right.

We've pretty well got that cleared up.

Okay.

Thanks.

Thank you.

The following question is from Jay Miller, private investor.

Please go ahead.

Yes, my question is about the hexofloride plant in Ontario, the shutdown there is now in its fourth month, I believe.

And it sounds like you're looking at another four.

What are you expecting it will cost to fix that problem?

And are there any circumstances that might take the reopening of that plant beyond the first quarter, as you say?

First quarter is our best estimate from what we know right now.

We're now on kind of the road getting the remediation in place, working with the regulator, which is a requirement.

It will require regulatory approval before we restart.

In order to understand the extent of the contamination under the building, we ended up removing a fair bit of piping and we're looking now at what needs to be done to make sure the situation doesn't persist.

So best guess of putting all of this back together and getting started on the prevention is by the end of the first quarter of 2008.

That's our best estimate right now.

Is it a big price -- ?

Really not so big.

Okay.

Just one follow-up.

In view of the age of the plant and the expected strong demand internationally for enrichment material, what are your long-term plans for that plant?

Long-term plans are to get it back up and running.

We've got something called vision 2010 that we've been pursuing both scribing it locally, involving the citizens into a very, very large refurbishment of that plant that would see it upgraded, see it get ready for production for many decades to come.

So we're committed to remaining in the Port Hope area.

We're committed to getting this plant back up and running.

The vision the implementation of 2010 does require regulatory approval, but we hope to begin doing the refurbishment in that timeframe.

It will take a few years, obviously, but that's the objective we have.

Thank you very much.

You bet.

Thank you.

The following question is from [Ralph Sear] of [Searco Investments].

Please go ahead.

Good afternoon and thanks for taking my question.

It revolves around UEX, which talked about some significant percentages of uranium find.

What is the relationship of Cameco to UEX?

Might that be a very good possibility for an acquisition?

Cameco was one of the founding shareholders of UEX.

We, my recollection is, have about 20% or 21% ownership in UEX.

Yes, they have had some very interesting drill results in the western part of the Athabasca Basin, a lot of drilling ahead.

While we look at everything, we don't make specific comments on acquisition targets.

Thank you.

You bet.

Thank you.

The following question is from Steve Smith, private investor.

Please go ahead.

Yes, good afternoon.

Thanks for taking my call.

My question is regarding the strategy for growth through the long-term and more specific to the labor market as it is the lowest that it's been in three decades.

Saskatchewan is below 4% and you refer to your topnotch talent.

I'm just curious as to how you're planning on sourcing that out in the future.

It's a challenge for anybody in the mining industry and certainly anybody in the nuclear industry these days.

We are affected like others in terms of the hot market and booming economy.

I would say given the division and the mission we have in Cameco and the asset quality, that we've been able, we've been successful in attracting the kind of talent that we need to operate the facilities that we have.

We talk a little bit about it in terms of trying to achieve a higher level of operational excellence.

It does mean more experts and more geologists and more people to look after some of the technical details.

Over the last six or seven months, even with the tight labor market, we've been remarkably successful in attracting people to come help us do what we do and ultimately that's to produce uranium to generate clean, clean energy.

So we have another advantage in that we've got 26 or so communities that are in the area of our northern operations where we fly in, fly out people.

And we have very, very strong relationships with those communities and their inhabitants.

Of course it's seven days on, seven days off.

There again, it's kind of like growing talent in your backyard making sure that the benefits that are coming out of the business are flowing back into these communities and that the communities remain supportive.

So it's not without a struggle but so far we seem to be managing through it.

Great.

Do you see a push of, I guess, importing workers from abroad or increasing your foreign talent pool?

We really haven't seen a need to go down that track.

We obviously have been attracting people from abroad over the years.

We've got a number of nationalities that are working for us.

But we're not targeting any particular country or source.

Even though other resource industries might be, we seem to see enough success just drawing on the available talent pool by advertising locally and through North America when we need to.

Perfect.

Thank you very much.

You bet.

Thank you.

The following question is from Cliff Hale-Sanders of CIBC World Markets.

Please go ahead.

Hi, good morning, everyone.

Two quick questions if I may.

The first one is on Rabbit Lake where you outlined a radon gas problem that you've encountered over the past while, which has resulted in a loss of production for '07.

Just wondering if we should be concerned about your production forecast going out, if you are going to have to essentially go slow on production there just to moderate exposure levels for the employees there.

If you just clarify that one.

Tim, can you respond to that one?

We're into that 02 next area, which is a little deeper, a little farther down.

We've got water in there that is the source of the gas.

We're taking the steps we need to to deal with that, which has caused us to reduce a bit our production for 2007.

But you see some of our projections going forward.

It won't be easy down there.

It's a little bit farther, a little bit deeper.

But I think we're taking the measures we need to to make the production levels that we have set out in our quarterly report.

So we should '08 and beyond we should still be comfortable going forward with those.

Yes.

Okay.

My second question really relates to your various foreign exchange hedging contracts that you have out there.

Unfortunately I don't have access to some of my technology I would like.

Just wondering if you could dumb it down a little bit, in the sense that what should we expect you to bringing into your earnings profile over the next couple of years, both from your uranium business and the Bruce Power contracts and in effect what sort of impacts should we really be looking for?

Obviously it's going to move around quite a bit but a little bit of guidance just to clean it up would be nice.

Cliff, we can talk about philosophy.

We don't forecast earnings but I'll let Kim address that.

Sure.

Cliff, on page 15, 14 and 15 of the MD&A, we show you -- top of page 15, we show you a little table there that as of September 30th how those numbers would flow into earnings.

Okay.

And so that's the gain.

The page 14 really shows you the balance by year.

Okay.

That's the problem.

I just can't see that.

So that is in there.

Yes.

I don't actually have that in front of me.

Top of page 15.

Could you just address what was in the Q3 numbers for me?

The Q3 numbers we had year-to-date was $49 million of gains from the derivative contracts themselves, made up of some hedges that were taken out of the accounting qualified hedges, and then some other currency hedges we have in place that did not qualify for hedge accounting.

The two pieces together year-to-date is about $49 million.

Okay.

I think that does it for me.

Thanks.

Thank you.

The following question is from Ian Howat from National Bank Financial.

Please go ahead.

Yes, good afternoon.

Just with regards to Bruce Power, can you give some guidance on what the contract price was for power, what it would be going forward next year and what percentage or how much is actually under contract for 2008.

Ian, I don't have those statistics.

Maybe Kim does.

We might have to deal with that off line.

Kim, do you have all that?

Ian, realized price year-to-date is about $52 per megawatt.

We don't forecast 2008 material at this stage in time.

Through this fourth quarter we will come out with some more information.

So far year-to-date we've had roughly about one-third, a little over one-third of their portfolio has been under contract.

Okay.

So what is your plan going forward with your percentage of amount being contracted?

Again, kind of the same avenue.

We look at the opportunities as they come forward.

But again, we really don't forecast forward any kind of specific -- any specific numbers.

Bruce Powers is not actually -- doesn't have a set target amount for how much it wants under contract or spot.

Well, there is a philosophy of having a balance.

When I say balance, not 50-50.

You see it this year at about 30.

Kim, I don't know what the discussions have been going forward for -- .

Really, Ian, it's not something that we put a whole lot, disclose into any great depth.

We have partners in that business, as Gerry said, we do look for a balance of contracted amounts and spot exposure.

In the last quarter obviously if only a third was contracted, the spot price was 47 and you did 53, maybe you should have more under contract.

Well, that's always the debate.

If you look at 2006, it was about 50%.

If you look at this year, as I said, it would be about 36%.

It really does depend on the opportunities that are available.

Okay.

Thank you.

Thank you.

The following question is from Fadi Shadid of Friedman Billings, Ramsey.

Please go ahead.

Hi, good afternoon.

Back to Inkai, if I may.

Your forecast rebounds back to the original 3 million pounds or so in '09.

Does that assume that these shortages go away and we're back to normal?

Fadi, it does.

All of the conversations going on to date is that the acid supply should become available once again by first or second quarter of next year.

And it's primarily the fire and the delay at this new acid facilities?

Is that what defines this temporary shortage?

That's correct.

Okay.

And longer term, no reason at this point to think there's not enough sulfuric acid to go around.

Longer term there's plenty of sulfur in Kazakhstan and surrounding countries.

And making sulfuric acid is relatively simple.

Thank you.

You bet.

Thank you.

The following question is from Greg Barnes of T.

D.

Newcrest.

Please go ahead.

Thanks, Gerry or Tim, I guess.

The levels of freezing at Cigar Lake, now that it's effectively been off line for a year, is the freezing disappearing, I guess?

What is the situation on that front?

Tim, go ahead and respond to.

Well, the freezing obviously will start to dissipate over time.

And we're anticipating that we'll have to go back in and reestablish the freezing and refreeze.

I think it holds, I don't have the exact time line as to how long it takes for it to dissipate.

It's over a year.

We've got some time but we'll have to go back in and refreeze those areas and probably freeze more areas than we'd anticipated.

Where was the freezing prior to the flood?

How much has been done?

Well, the freezing was up in the north end, right around the ore body.

That's were we'd started the freezing getting prepared.

That's where we'll go back in.

I think we're relooking at all of the freezing.

I think I said that last quarter, the quarter before, as to how much freezing we will do going forward and whether we'll freeze more because it not only stops the water but provides some ground support.

We're relooking at that.

I assume that's all built into the 2011 at the earliest restart date.

Yes.

That's part.

Greg, it is.

With all the caveats, we've got to get the mine dewatered and then look at it all, including how much of that existing freezing remains.

I will say that in the test mining phase when we froze ground to do the test mining and then stopped freezing, it remained frozen for quite a long period of time measured in years not just one year.

Okay.

Good.

Thank you.

Thank you.

The following question is from Murray Lyons of Saskatoon Star Phoenix.

Please go ahead.

Yes, gentlemen.

Because of the timing of your third quarter results you follow the financial update from Ottawa.

Assuming that our parliament is more stable than the one in the Kyrgyz Republic, I'm just wondering what you think the eventual corporate tax rate that was proposed yesterday would do to your operations in the future and an investment decision say versus investing in Australia or the U.S.

Kim, can you respond to that the day after it was done?

Yes, Tim.

Murray, we are looking at the impact of those rate reductions.

We don't at this point believe they will be as large a onetime impact as we've shown in prior years.

As to the decision whether we develop here or elsewhere, certainly all such decisions are welcomed and will impact all decisions that we make and the economic analysis that's done.

But too early to describe it as making a sea change in any way.

I was just wondering whether 15% would put Canada on a basis that would be competitive with the other jurisdictions that you already operate in?

It's one factor to consider only, Murray.

There's so many others that come into such a decision.

But it's certainly welcome news, Murray.

Very good.

Thank you.

Thank you.

(OPERATOR INSTRUCTIONS) The following question is from Borden Putnam of Eastbourne Capital, please go ahead.

Gerry, on the Cigar Lake license, the original license was issued in 2004 and expires in December this year.

Would a normal renewal also have a three-year term or would it be different?

There is no standard term, Borden.

Tim, can you better respond to this?

In fact when we're admitting there, just this afternoon we have a hearing tomorrow morning and that's part of it.

The recommendation, I think, from staff is for a two-year period going forward.

But there's no fixed -- fixed time limit set out for these.

It's just that they think that's a reasonable amount of time to come back to the commission with an update.

So that's what we're looking at, two years.

Okay, but you're asking, if I've understood the documents, for an indefinite license period.

Why is that?

Do you think you might get done sooner or that some of these -- I don't understand why the --

It was more an activity-based request that we were saying let us do the remediation plan and drive the license off our progress on the remediation.

Okay.

And they have come back, the staff has come back with a license condition called license condition 1.5, which they would hope to have risk assessments, third party reviews and so forth as part of each step in the process.

I wonder, would any documents, like a 43101 come out of that, that we might have better insight into what's being found and being recommended by your third party, if this is agreed by CNSC commission of.

Yes, if you look at our submissions to the CNSC there's really focus in three areas, and it's governance, quality and our safety culture.

The documents that flow around that, including our corrective action plan and progress on that.

I see.

That's all part of it.

All right.

Thank you.

Thank you.

The following question is from Orest Wowkodaw of Canaccord.

Please go ahead.

Hi, a question for Kim.

You obviously had a pretty low tax rate this year, what can we anticipate next year for overall effective tax.

And then of that what portion do you think would be deferred versus cash tax?

Orest, the last question I'm not going to get into on a forecast basis.

Effective rates, what we've said in the past is, again, we'll come out with more specifics in Q4.

But at this point I don't see any real dramatic change from where we are, what we've been telling you for this year.

Next year could be just as low as this year potentially?

That's a good comment for right now.

Thanks.

Thank you.

This will conclude the questions from the telephone lines.

I will now like to turn the meeting back over to Mr.

Gerry Grandey for his closing remarks.

Okay, operator, thank you very much.

I thank everyone both those that have asked questions and those that have been listening by phone or certainly on the website.

We appreciate, as always, your interest in Cameco.

As I said at the beginning, it's an exciting time for both the company and the industry.

We look forward to taking advantage of our financial strength, the opportunities that we see out there to create additional long-term value.

In the coming days, we're going to be hosting investor luncheons in New York and Toronto.

And we'll be providing more detailed information about the company during those luncheons.

And those events will take place on November 6 and 7 with live webcasts that are available from the Cameco website.

That's Cameco.com.

So we encourage everyone to go ahead and get on the website and listen or attend in person.

So again, thank you very much for your interest in the company.

Bye-bye.

Thank you, gentlemen.

The Cameco corporation third quarter results conference call has now ended.

Please disconnect your lines at this time.

We thank you for your participation, and have a great day.