Cameco Corp (CCJ) 2008 Q4 法說會逐字稿

Good morning, ladies and gentlemen.

Welcome to the Cameco Corporation fourth-quarter and year-end results conference call.

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

Bob Lillie, Director, Investor Relations.

Please go ahead, Mr.

Lillie.

Thank you, operator, and good morning, everyone.

Welcome to our fourth-quarter conference call to discuss the financial results and the outlook for '09.

Thank you for joining us.

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

They are Jerry Grandey, our President and CEO; Tim Gitzel, Senior Vice President and Chief Operating Officer; Kim Goheen, the Senior Vice President and CFO; and George Assie, a Senior Vice President, Marketing and Business Development.

Both Jerry and Kim are traveling and calling in for today's session.

Here in Saskatoon, we are also joined by our colleague Rachelle Girard, Manager, Investor Relations.

Jerry will start things off with a few opening comments about Cameco's stable and predictable revenue streams during '08, including the fourth quarter and comment on the outlook for '09.

Then we will open it up for questions.

Today's conference call is open to all members of the investment community, including the media.

During the question-and-answer session, please ask one question plus one follow-up if needed.

Please note that statements made by the Company during this conference call, including statements regarding its objectives, projections, estimates, expectations or predictions, contain forward-looking information and statements within the meaning of applicable Canadian and US securities laws.

The Company cautions that such information and statements involve risk and uncertainty and that actual results could differ materially from those contained in them.

In addition, certain material factors or assumptions were applied in drawing the conclusions or in making the forecasts or projections reflected in them.

Additional information about the material factors that could cause actual results to differ materially or the material factors or assumptions that were applied are contained in the Company's annual information form dated March 28, 2008 and the Company's annual management's discussion and analysis dated February 16, 2009, both of which are available on SEDAR and EDGAR.

With that, I will turn it over to Jerry.

Okay, Bob and thank you very much.

I will add my welcome to everyone on the conference call and certainly to those listening on the web.

As we look back on Cameco's 2008 results and a little bit ahead to 2009, we are more confident than ever of our growing global reach as a supplier and participant in the nuclear power industry.

We look out on an uncertain economic landscape from a solid and secure vantage point.

Cameco's strength was evident in our fourth quarter, a time of unprecedented volatility in world financial markets.

As 2008 drew to a close and continuing into 2009, we have seen declining economic confidence in the world.

Indeed, it has been painful to watch day by day as companies in the metal, mining and energy sectors make tough decisions to cancel projects and scale back operations.

Cameco, we believe, is in a much different position.

We are able to plan and execute our long-term strategies because our revenue base, customer relations and excellent uranium reserves are built for the long term.

Let me elaborate.

First, our customers are well-established, electrical utilities, many either government owned or with regulated rate structures.

In tough times, they run their low-cost nuclear plants at full capacity, assuring demand for our products.

Our strategy of seeking price protection in our contracting has reduced the sensitivity of our revenue to softening spot prices and we are seeing the benefit now.

In 2008, we delivered record revenues of CAD2.9 billion and adjusted net earnings per share of CAD1.67 and that from our diversified portfolio of long-term contracts and stellar assets.

As you know, our customers do not have a set pattern in taking deliveries, so our quarterly revenues fluctuate.

In 2008, robust deliveries in the fourth quarter helped us close out a positive year.

Not only did we set a new high watermark for overall revenues in the quarter, the last quarter also brought with it a return to strong cash flow from operations, similar to what we achieved in 2007.

Now in 2009, while other companies defer or abandon projects, Cameco is advancing work to secure our current and our future production, including the promising new projects we acquired within the last eight months.

With predictable growing revenue, we believe the market is recognizing that Cameco's fortunes are not linked to the current gloomy outlook in the metals and petroleum sectors.

For the broader economy, we observe there is no agreement on how long or how deep the global recession will last or for that matter, how much more central bankers will have to do to thaw bank credit.

Cameco continues to watch developments on the credit front.

We can report favorable developments since we last spoke of this topic on our third-quarter call.

We can tell you today that the short-term loan we took out last June to help finance our investments in new assets, such as Kintyre and Global Laser Enrichment, has been extended on good terms.

In addition, Cameco has recently gained access to additional credit in the amount of CAD100 million.

Access to credit on favorable terms will provide us the flexibility to take advantage of opportunities that arise from this difficult economic environment.

Some players we know will have difficulty raising capital and may need to sell assets or engage new partners to advance their projects.

We are constantly assessing such opportunities and we have the capacity to make strategic investments at the right time and at the right price.

We will make these investments knowing that the prospects for nuclear energy remain strong.

Indeed, they are improving with the passing of each day.

In countries where public skepticism once reigned and phasing out nuclear power was long-standing, government policies towards nuclear continues to be reassessed.

Most recently, Sweden's leaders concluded that a country that wants to be carbon neutral cannot afford to phase out the only thermal source of baseload electricity that does not generate greenhouse gases.

As a result, Sweden is likely to see all 10 of its remaining reactors replaced with new ones over time and further reactors added at existing licensed sites.

Recently, we have seen India set a course for a large-scale expansion of nuclear power, some 35 operating reactors by 2018, double today's number.

China too continues to expand its already aggressive nuclear power program.

And while India and China lead the way, other countries are moving to expand or create nuclear capacity as well.

All of this is in keeping with our 10-year outlook of almost 100 new plants being commissioned around the world with some older and smaller ones closing.

From this new and renewed global interest in clean nuclear generation, we project annual uranium requirements will rise to 226 million pounds from the 181 million pounds we expect will be needed in 2009.

That will mean average demand growth of almost 3% annually in the next 10 years.

Cameco is intent on remaining a leading world supplier in this growth scenario.

So money invested now in advanced exploration projects such as our new joint ventures in Australia will position us to deliver new production to customers as markets expand.

We also have reason for optimism on the operational front.

At our flagship McArthur River operation, we have made good progress in developing the new ore zones that will sustain production for the next 10 years.

Successful exploration continued at Rabbit Lake last year, adding another year's production from this long-lived producer and putting total reserves at 17.6 million pounds.

At Cigar Lake, we have identified the location of the inflow they have experienced during our dewatering attempt last August.

We also gained assurance that the original inflow area was effectively sealed.

Work to seal the new inflow area is underway and is expected to take most of the year.

At Inkai, we are on track to achieve commercial production this year.

Recently, asset supplies have been adequate and the goal is to ramp up production by 2011.

We continue to work with our partner on the path forward to doubling production.

In fuel services, we safely remediated and restarted the UF6 conversion facility at Port Hope, Ontario.

Currently, we are working to secure reliable sources of hydrofluoric acid and we are making significant progress in this area and expect to resume production in the second half of 2009.

On the financial side of things, 2008 was another record year for Cameco with gross revenues increasing 24% and adjusted net earnings per share up by 8%.

Looking ahead to 2009, we expect another solid year of financial performance -- of course, depending on how market prices develop.

Unit cost of sales is expected to rise between 5% and 10% in the uranium business while administration costs are expected to decline a similar amount.

We have set a prudent course in planning for 2009 capital expenditures with approximately CAD320 million budgeted for growth and sustaining capital.

We are confident this level of expenditure will secure our producing operations, advance the revitalization work at Key Lake and the dewatering and remediation programs at Cigar Lake.

With that, I will now turn the call over to Mary Beth, the operator.

Thank you.

(Operator Instructions).

David Snow, Energy Equity Inc.

Good morning.

I hate to go first because everybody else will raise questions that I want to follow up on, but can you give us your assessment and outlook for the spot uranium price?

David, I will ask George to respond to that.

Sure.

Well, David, demand this year has really been very low so far.

I think while fuel buyers might like to add to strategic inventories given today's lower uranium prices, the fact is that, with the global financial situation, I think most utility fuel buyers are under instruction to minimize capital outlays.

And so for the most part, only utilities with real or near-term demands have come to the market.

So there has been little or no discretionary buying by utilities so far this year.

So with that lower demand and adequate supply chasing the demand that is there, we have seen prices soften and we believe that, given the global financial situation, spot prices are likely to remain quite volatile over the course of 2009.

When do you see the real demand coming in -- what year?

Well, utilities are generally well covered under existing contracts and with moderate amounts of inventory.

What is interesting is, in this period, they are going to be drawing down -- they are drawing down inventories here a little bit to avoid the market.

Uncovered utility requirements really don't grow significantly, I should say, for several more years.

So utilities can stay out of the market in the near term here for a short while, but eventually it will have to come back to the market.

And then, of course, in all of this, I have not factored in what India and China might do.

They are always a wildcard in terms of stepping into the spot market.

Okay, thank you very much.

And is there a possibility that I could ask is there any guess as to when you are going to have some visibility on restarting Cigar or starting Cigar?

David, we are still in the dewatering stage, I think making good progress.

But until we get it dewatered and can get underground, we are just speculating and so we are just not doing that yet.

And that will be the end of the year before you get the second flow stabilized and dewatered?

That is the current prognostication, yes.

Thank you.

John Redstone, Desjardins Securities.

Good morning, gentlemen.

First off, I would just like to clarify something.

On page 10 of your news release under Cigar Lake, you write, "We have confirmed that the main source of the increased water inflow observed on August 12 was from the fissure".

By saying the main source, are you suggesting that there are other sources?

John, I wouldn't read it that way, but I think as sort of caution, we just say this is the one we believe that generated the water inflow.

We did a lot of work, a lot of testing to see if we could see others and could not.

But you can't speak in terms of absolutes and we just won't do it.

All right, fair enough.

The other thing I wanted to ask is you mentioned that you see your costs coming up 5% to 10% this year.

Could you give us a little bit more detail on which factors are causing those cost increases?

I will give it a try and then, Kim, maybe you can -- certainly royalties, there is still a little bit of inflationary cost pressure, although, we are hoping that will reverse.

So royalties are a function.

Obviously, the price is a function of what we buy and when we buy in the market as we always do every year, including Russian material.

That has gone up in price as well a little bit.

So a combination of those things are what is taking it up.

Kim, have you got anything to add to that?

Yes, John, we've made some purchases in 2008 in the open market at much higher prices than we had historically.

That just goes into an average inventory system.

So some of that spills over into 2009 as well

That makes sense.

Okay, thank you very much.

Greg Barnes, TD Newcrest.

Thank you.

Kim, could you give us some idea of what the terms are on the new or the extended debt facility?

Well, I can give you the maturity dates, Greg.

The one facility was extended to the middle of June 2010 and the other one, the CAD100 million matures February of 2010.

The terms are, I thought, quite reasonable, but I really won't give you more detail than that.

I think I have an excellent bank syndicate and I had very reasonable terms from them.

So you are not going to give us something like LIBOR plus 400 basis points or --?

No, because it is a whole lot less than that, but I still won't give it to you.

It was worth a try.

Good try, Greg.

If I could follow on.

Tim, zone 2 panel 5, when do you expect the bulk of production from McArthur coming from that zone?

Well, Greg, we are looking at the second half of the year really for that zone to get started.

It is in the freezing mode right now, has been for a couple months and that is going quite well.

So I think we're looking at going in there probably in September of this year and then just ramping up our operations in there.

So some time in 2010 probably.

By 2010?

What 75% of production from McArthur will be coming from there?

Yes, I don't have the exact number, but it will be somewhere in that neighborhood.

Okay, thank you.

George Topping, Blackmont Capital.

Good morning, everyone.

Gentlemen, I have got a question on the source of uranium fills.

It was 5.4 million from production, 1.8 roundabout for the HEU and production was about 0.7 less than you originally expected early in November.

I am just wondering where the source of uranium came from to fill the gap between production and sales.

George, let me give it a try to that one.

Certainly with the purchases we made earlier, there was -- we had built some inventory and there was a slight inventory drawdown to fill that balance.

Okay, because about 3.4 million pounds I work out as the difference.

I'm just wondering is there a future liability associated with those sales in the fourth quarter?

I will answer it in a second type of way.

If you mean did we borrow material to make that sale -- absolutely not.

Okay, that's good.

Okay.

And just the second thing was, as a follow-up, there was a note to the statements mentioning a CAD75 million debt repayment from Bruce.

Was that in the fourth quarter or was that earlier in the year?

I think it was spread throughout the year, but it was -- there was a partner loan of CAD225 million that had been outstanding since 2003 and Bruce management decided this was the year to move it off the books.

So CAD75 million being our share is what we were repaid throughout 2008.

So it was equally spaced?

There wasn't the bulk of it in Q4 for example?

I don't remember the exact time, George, but something like that probably.

All right.

I will come back later.

Thanks.

Duncan McKeen, Macquarie Capital.

Yes, thank you, operator.

Just -- and I apologize if this has already been answered, but wondering if there was an actual increase in spot market purchases that you guys did in Q4 specifically and also as a second question, I am wondering if you could expand a little bit on the struggles you are having with the dissolution rate at the Inkai operation?

Okay, George, why don't you tackle the first one and Tim the second half.

Yes, there were no increased purchases in Q4, increased spot purchases.

And Tim.

So at Inkai, in our block one, which we have been working on last year, we have been putting somewhat limited acid we had been receiving into that block and just haven't seemed to be getting the production that we are looking for, the increase in grade.

And so we have done some I guess what you would call flushing of the wells over the last couple of weeks and months and sent some experts from our US operation over there to look at that and that seems to have been helping.

We see the grades coming up, the flow coming up and so we are optimistic that we will be able to get to much better production from Inkai block one in 2009.

Okay, thank you.

Borden Putnam, [Meoni Capital].

Good morning.

Tim, if I could go to you and carry on where Greg left off asking about the sources of production at McArthur.

There is a note in the third-quarter release that I want to go back to that talks about to deliver the additional or required to allow Key Lake to achieve production targets in 2009 that a short-term area is being developed in zone 2.

Is that zone 2 panel 3 or is it someplace else?

You are absolutely right, Borden.

It is back in that one, two and three, scraping the walls.

Where we had the freeze in place already, there was some remnants I guess left there and so we are back in there scraping some of that off.

You are right.

If you can split it down for us as we talked about last quarter, what is the percent of fee coming from the different zones, 1, 2 and 2, and are those the only sources of ore until panel 5 is prepared?

Yes, I don't have the percentages, but I can tell you we ended the year last year with great inventory, about 2 million pounds in inventory that we are using now in the first half, if you like, in the months of 2009 along with those panels 1, 2 and 3 production to feed Key Lake.

And as I said earlier to an earlier question, that we will move into new zones midway through the year.

Okay.

And lastly, in the MD&A, it talks about that production shortfall that took you down below 12 (technical difficulty) that you guided for that was related to various processing and equipment problems at Key Lake.

Can you give us a little more on that?

Yes, we had some issues at Key Lake for sure in 2008.

I think they are set out in our documents.

We had some oxygen plant issues at the start.

We seem to have those nailed down and we had a piece of equipment called a bird centrifuge, which is just before the calcine or the dryer and that we struggled with a bit, but we seem to have that on track now too.

So I think we have fixed those problems and we will keep it going as we work toward revitalizing the mill going forward.

Okay, thanks, Tim.

(Operator Instructions).

Lawrence Smith, Scotia Capital.

Good morning.

Congratulations on extending your line of credit.

Obviously, tough in a market like this.

Tim, I guess I will pick up where Greg left off.

If I said LIBOR plus 300, how would that sound and --?

Keep going south please?

Okay, okay.

Just on covenants, have you guys disclosed -- do you guys disclose what your financial covenants are?

There are two covenants.

They are listed in the documents or in the notes to the financials, they are in there.

And was there any change with the extension or not -- any change in the covenants or not?

No change at all.

Great.

Thank you very much.

Ian Howat, National Bank Financial.

Good morning.

Are you now still getting any material from reprocessing tails or are those contracts over?

George?

We are getting material yet in 2009, yes.

Okay, that is the last year?

Yes.

Just if I may, McArthur River projection guidance in the longer term, are you still planning to take it up to the 22.5 or 22 million tons?

Somewhere in between 20 million and 22 million depending on the mine capability after we make the transition.

And the technical report filed yesterday, you have it sort of tailing off.

Is that sort of more for the technical report and you don't believe that will actually be how it is going to progress?

If you look at it, it is really a function of what you can call proven reserves and hopefully, as the mine continues and we continue to do more drilling and bring more of the considerable resources into proven reserves, the numbers continue to look good.

All right.

Thank you.

Brian MacArthur, UBS Securities.

Good morning.

Can you just give us an update on where the Silex joint venture is just given the challenges in the economic outlook right now, what GE is doing with that, please?

Okay, George?

Yes, where we are with Global Laser Enrichment or GLE is it is fully staffed up.

I think there is in excess of 100 people there.

So work is underway.

We expect to have the test loop run the middle of this year and the project has really cashed up.

That is where our purchase price went -- into cash up the project.

So it is in good stead and moving forward.

We will know at the middle of this -- a little later this year I guess in the second half of this year just how good the technology looks.

So by midyear, you may be able to tell whether it actually works?

Well, we are convinced it works.

I guess it is the middle of this year after we have done the test loop as to how well it works and whether we have a commercial process.

Okay, great.

I wouldn't quite look for the middle of the year, Brian.

It may be a little later than that.

Okay, great.

Thank you.

You have got to have a little runtime, you know?

Okay.

Thank you.

Ralph Profiti, Credit Suisse.

Hi, guys.

Thanks for taking my question.

First one, maybe for Jerry or even George.

How have the floor prices on contracts reacted during the recent weakness and do you expect them to hold in sort of the previous guidance in say the mid-CAD40 a pound or have those slipped a little bit?

And the second --

George is on the front line -- I'm sorry, Ralph, go ahead.

Yes, my question was in relation to the movement of the floor price on contracts that maybe you've written say over the last six months.

Has it -- previously you were doing I guess in the mid-CAD40s and have those slipped at all?

And my second question is maybe for you, Jerry or Tim.

Versus the previous table of guidance, US production post 2010 is down about 25% or 30%.

Just wondering is there a permitting issue there or just a lower guidance?

Okay, George, do you want to tackle the first one?

Sure.

Well, in respect to the floor prices that we have been securing, they have generally been in that mid-CAD40 price range and most of the offers or deals that we look at are further out in time.

And so the long-term fundamentals of the industry have continued to (inaudible) pretty positive.

So we have stuck with that mid-CAD40 range on our floor prices.

We haven't moved off that.

But these are longer-term deals, so deliveries start further out in time, but when you look out there, there are fewer players in that market and (inaudible) are stronger.

Okay.

And Tim, can you talk a little bit about US production and the permitting issues?

Yes, absolutely, Ralph.

We did back it off a little bit in the US and that is due to the increasing complexity as we say in our MD&A of the regulatory situation down there.

There are several agencies in the US that oversee our activities.

All of them having taken certain greater interest, not just in our activities, but in uranium mining activities in Wyoming and Nebraska overall.

So we are trying to be realistic with our expectations as to how we can ramp up our production and that is why you see our numbers stretched out a little bit longer.

Thanks, guys.

Cliff Hale-Sanders, CIBC World Markets.

Hi, good morning, everyone.

Just a couple of quick questions if I may.

On Inkai, if you could just elaborate perhaps a little bit on the changing legal environment there, primarily on the subsoil laws and the potential impact on your stabilization agreements.

Obviously, it is still something that is under assessment, but kind of what level of risk assessment could you give us some guidance for on that one at this time?

And also on Port Hope, if there is any more clarity on the timing for renewed asset supplies there?

Obviously, 2009, they are covered, but for the longer term?

Cliff, on Inkai specifically, really what we say in the MD&A is pretty well what we know.

There is the proposition on the subsoil use agreements.

We have got the long-standing stabilization agreement, which is for the project, so it benefits both us and our partner.

Although the partner, of course, is government-owned.

But beyond that, we simply will engage in a dialogue with the government and see where it all comes out and hopefully when it is all said and done, it is viewed by all parties as mutually satisfactory.

But there is no timeline that you know of at this point?

Well, they talk about having legislation done within I think we said about a six-month period of time.

But you are dealing in Central Asia, so the timelines may be faster or shorter.

Okay.

And at Port Hope?

Okay, Tim, can you answer that one?

Yes, absolutely.

Cliff, it's Tim Gitzel.

On Port Hope, at the end of last year 2008, we did restart the [six] plant and actually it ran very well.

In the limited time we had it running, it produced just over 1000 tons of UF6 and then the HF, a situation we had to deal with, our supplier was asking for some terms for HF that we couldn't live with.

So we stopped production, but now we are negotiating with several potential suppliers.

We have made good progress.

We will have HF available to us to restart the plant in the second half.

Okay.

So longer term though, you don't expect any more I guess production problems?

Not because of HF supply (technical difficulty).

Okay.

And at this point, while the agreements aren't signed, sealed and delivered, you are quite comfortable with them?

Yes, I am.

Okay, thanks for that.

David Snow, Energy Equity Inc.

I am wondering if the Global Laser Enrichment technology is causing any effect on the enrichment market, either delaying the expansion of the alternative technologies or depressing the price as a result of anybody thinking it will work or can you give us any idea whether it is too early for it to have any impact on the market and how do you think it will impact the market?

Jerry, do you want me to answer that?

Oh, we may have lost him.

Well, it's George here.

I would answer the question by saying I think it is too early to tell what the impact will be.

I don't think it is priced into the market at this point.

So I think it is just too early to answer that.

Okay.

You will give us an update on the progress in the second half?

Yes.

(technical difficulty)

I am sorry for the inconvenience, sir.

One moment please.

I am very sorry.

This is the operator.

It does seem to be Mr.

Grandey's line, which is emitting the signal.

Thank you.

I am sorry for the inconvenience again, sir.

We will continue please, operator, with the questions.

[Vincent Lauerman], Uranium Intelligence.

Good morning.

At the beginning of this conference call, Mr.

Grandey mentioned that Cameco's business should be relatively recession-proof.

At the same time, I noticed that George mentioned that spot prices, spot uranium prices might be relatively low this year.

In addition, across your four business segments, I have noticed that your capital expenditures are about CAD125 million less for 2009 compared to actuals in 2008.

So I guess my question is is there some concern on your management front that your six-year winning streak in terms of revenue and earnings may come to an end in 2009?

Vincent, there's lots of parts to that.

So let me try and take pieces out as we go along here.

Jerry's initial comment really relates to the fact that we do believe our sales are quite insulated from the economic environment.

If you look at nuclear power plants, they are baseload electricity.

They are -- in fact, I will phrase it to you -- they are the last [plant] people will turn off.

So the demand for our product really is very, very stable going forward.

I think George's comment about the price here and volatility is just a matter of where the customers are on their own supply arrangements.

As to the capital reductions, we are exceptionally prudent when we come to financial management.

And certainly looking at what is going on in the rest of the world, it made sense to slow down activity a little bit this year.

As Jerry also mentioned, we are moving forward on all fronts to secure current and two tier production, we are just taking it at a little bit slower pace maybe than we might have in the past.

As to your final point on whether six years of increasing revenue will be at risk, well, we will let that play out as the year unfolds.

Okay.

Thank you.

Simon Tonkin, Thomas Weisel.

Yes, good morning.

For Inkai, what is the outlook for acid supply there?

And also from McArthur River, has there been any further water inflows in the development area?

Tim?

So at Inkai, we are encouraged I guess by the acid supply we have seen in the first -- I know it is early -- in the first part of 2009.

Now we have got all the acid we can handle in January and the first half here of February and December was good as well.

So we are encouraged as I say and we hope that carries on.

McArthur, nothing new on the waterfront, other than the small inflow we had at the end of last year in November.

That was easily handled by our pump and treat system.

Okay, thanks.

George Topping, Blackmont Capital.

Thank you.

Just a follow up, (inaudible) on the Canadian tax review.

The increase in 2003 says the taxable income could be up CAD43 million out of the CAD200 million that was reported back in 2003 and you made extra allowances for any tax that might come from that.

Have you worked out a range of the potential liabilities here if it goes against you -- best case/worst case type of thing?

Well, George, we are really not going to disclose more than we have out there.

I would put it this way.

We are exceptionally thorough and in the analysis we have done, the process we have used to come up and our best estimate as to what the incremental cost will be is the CAD15 million provision that we booked in Q4 there.

I see.

So that fully cover (technical difficulty)

That fully covered 2003 through 2008.

Okay.

Great.

And just secondly on this Centerra cash, it is building up inside that company there.

Is there any further news on whether you can get a dividend out of Centerra or get hold of that cash outside of the company and get it into Cameco proper?

Well, that is always a debate that is out there.

Certainly, what we would hope Centerra does instead of that, of course, is to continue to grow their business and expand their reserve resource base and production capabilities and that is their first order of business.

As to what happens with that cash over time, we will have to watch that when it is (inaudible), but paying a dividend out now would not be their first priority, no.

All right, thanks.

(Operator Instructions).

Ben Elias, Sterne Agee.

Thank you, gentlemen.

I have a question that is a little more general.

At the beginning of the conference call, you talked about customer relationships.

You also talked about the growth internationally -- India, China.

Can you sort of address the trend we have seen where China certainly looking to get in on the game themselves.

They had to deal with AREVA.

They have a lot of joint venture in Kazakhstan.

The present of Kazakhstan was at India's Republic Day parade and India is certainly forming a lot of relationships there.

How do you think Cameco -- how do you see Cameco participating in this (inaudible) of a lot of the countries?

A lot of the -- I guess the new demand is going direct to source?

Well, it's George Assie here.

With those countries, we are also working with them directly.

So no, we don't have an interest in selling them part of any of our operations or anything else.

We are interested in a long-term arrangement, a long-term supply arrangement.

And we have good dialog with them, very active and we expect to secure significant business in both of those countries as we go forward.

That is about it.

I would add also, Ben, though that it is a world market for uranium and the product, the natural product itself is fungible.

So general demand increases impact the market worldwide.

Okay.

And just as a follow-up, your fuel services business, is that well-positioned?

What is your expectation of the demand increase there?

We have seen AREVA expanding at George Bessey.

They are looking at Eagle Rock in Idaho.

Are you looking down the road and saying perhaps we do need to make a bigger push on the enrichment side in addition to your interest in the Laser Enrichment?

At this time, I think we are quite pleased with our investment in the Laser Enrichment and I think that represents, for the time being, our foray into enrichments.

So we will always look at any opportunities that might arise that makes sense, but for now, I think we are happy with the one we have.

Thank you.

Borden Putnam, Meoni Capital.

Tim, back to you if I could.

On the -- you gave a life of mine production profile for McArthur and the new 43-101 and it looks like, based on the discussion we just had a second ago and the comments about zone 4 lower coming in, like in 2010, it looks like this chart should be pushed out a little bit to the right.

Is that fair?

No, I think the chart is where it should be.

As we said, we are just waiting for the freezing to take hold in the zone 2, panel 5 and that liberates a significant number of pounds, in the order of less than 100 million pounds and so that is where we will be focused.

In zone 4, we are moving into that area.

We are going very cautiously into that area, but that will come online as well in 2010.

So I don't think the chart has to move too much.

Okay.

It just looks like zone 4 was coming in in 2009, but I'll look at that thing a little closer.

On the reserve report, maybe this is a question for Bob, in the past, you guys have given reconciliations for reserves and resources in a table and there is no tables in the MD&A this year.

Was that intentional or an oversight?

There wasn't one -- what we provided this year is the same as what we provided last year actually.

No, not exactly, because after the reserve statement, then there is a page of reconciliation and it shows throughput additions/deletions by table in a tabular form for both reserves and resources and I don't see that in the current MD&A.

I will follow up and get back to you, Borden.

Okay, thanks.

One last thing on the reserves and resources, there were some big changes at Crow Butte.

47% of the proven has now reported to probable and there is a commensurate drop in grade with an [overall], about a 63% drop in contained metal for the proven at Crow Butte and also there were some shifts in the resources there.

I know it is not a big resource, but those are big movements.

Can you give us some idea of what is going on there?

It is Tim, Borden.

We did some relooking at those again and being conservative, we wanted to make sure they were in the right category.

So we moved some of them back a bit.

They are still there obviously, but we just had to relook at them and we are relooking at them again this year to make sure we have got the feasibility work and study work to back them up.

So that was our work this year.

Okay.

Without that table that I was asking for, there is no [additions] to reserves at McArthur, no change there, just as it was basically last year net of depletion?

Tim?

Yes, I believe that is correct.

Okay, thanks.

I will wait for the table.

Thanks, Bob.

Thank you.

This will conclude the questions from the telephone lines.

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

Kim Goheen for his closing remarks.

Thank you, operator.

At Cameco, we entered 2009 on an optimistic note based on confidence in our revenue streams and the progress we have made in renewing our focus on operational excellence.

Despite the world's current economic difficulties, we are convinced that Cameco will continue to demonstrate that we have the ability to weather this storm.

Cameco's ongoing strength in the near term will allow us to prepare for the long term where steadily increasing amounts of fuel from primary sources will be required by the growing global nuclear power industry.

With that, I thank you for your participation today and for your continuing interest in Cameco.

Thank you, all.

Thank you.

The Cameco Corporation fourth-quarter and year-end results conference call has now ended.

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