Cameco Corporation --- Uranium - Fuel - Electricity - Mining - Milling

Bernard Michel recently gave up the president's role at Cameco to Jerry Grandey. This week, Michel, who remains as chair of the board and CEO, looks back on his life and career so far; next week, Grandey introduces himself in the second of two profiles on the top management at Cameco.

It's probably fair to say that many people outside Cameco Corp. regard its chair and CEO as something of an enigma.

Bernard Michel, lean and fit at age 62, does have an edge of formality about him. Yet in conversation, he displays a sometimes self-deprecating sense of humour that balances his aura of gravitas.

Born in Paris, Michel has lived 30 years in Saskatchewan but has lost little of his accent—and he is entirely aware of it.

"Many people who hear me believe that I have just arrived from Paris yesterday, and I'm learning the language—which is true," he said with a smile during a recent interview.

Michel's English is actually excellent, and he can also tell a good story. For instance, he relates that he was still a small child during the Second World War when bombs began to fall on Paris.

"Our family was moved to an estate in the western part of France, which was supposed to be peaceful but just happened to be Normandy," said Michel, who was on the front line to experience D-Day in 1944.

"I have very vivid memories of that," said Michel. "I was seven years old—an age where you see things and you tend to remember them."

Michel watched the Allied paratroopers fall out of the sky just 100 metres away, before the family fled into the fields to escape the fighting.

Finally, the war was over, and Michel went on to be educated "like most French bourgeois young boys." A good student, he was accepted at Paris's prestigious Polytechnique, and graduated with an engineering degree.

He was then obliged to join the French military during the Algerian war, and served as an officer with the navy in the Mediterranean and Atlantic. The tour of duty over, he was hired by a French mining company.

"At one point, they asked me if I would go to Saskatchewan," said Michel. "Well, I didn't know where Saskatchewan was, and I thought I had a pretty good knowledge of geography."

Michel agreed, and came to commission a French and German owned potash mine at Lanigan.

"It was very exciting for a young engineer with a young family, because we were creating something totally new and technically challenging," said Michel, who quickly discovered the Saskatchewan work ethic.

"I remember being very impressed with these young farmers (the mine employees) . . . who had never seen the industrial complexity of a major mining shaft operation . . . or milling operation.

"They were very skilled and very interested in learning the trades—and very dedicated. When we started the operations we faced a lot of problems. These young men wanted to stay after the shift ended—not because they wanted more pay, but really because they were quite interested to get the thing going."

After a short time in Congo to commission another mine, Michel returned only to learn the Lanigan mine was being sold to Potash Corp. of Saskatchewan, then a Crown corporation.

Michel didn't want to work for a government and moved on to Amok, a French, publicly-traded uranium company. As fate would have it, Amok was soon absorbed (as Cogema) by the French government.

"The misfortune was hitting me from every side—always being taken over by governments," said Michel.

But a reversal of fortune was in the works. Michel was soon lured to Cameco, formed in 1988 as a joint venture of the federal government's Eldorado Nuclear and Saskatchewan Mining Development Corp., by the promise of privatization. Michel joined Cameco as Chief Operating Officer, eventually taking over as president, CEO, and chair from W.A. Gatenby.

Privatizing was no easy task.

"They were clearly very grossly overstaffed and had no focus on financial results— certainly not as much focus as you would expect in a publicly-traded company," said Michel. The new Cameco also inherited a debt of $650 million.

The challenge was to create a new company culture, but it was a painful process of job elimination and convincing the staff to think in new ways, he said.

Once privatized in 1991, Cameco increased production, decreased costs, and began to grow through acquisitions and the discovery of new reserves.

By 1998, Cameco was producing a third of the world's uranium and staying profitable in a very depressed market, said Michel. The price of uranium has fallen to just over $8 US per pound today from $16 four years ago.

"We've been able to accumulate revenues of $4.6 billion in 10 years, cash flow of $1.6 billion and net earnings somewhere close to $800 million," said Michel.

"We have grown considerably and would have tremendous financial results if the price of uranium was better."

Today, Michel points out, the company's debt is less than $300 million and its debt to equity ratio is about 16 per cent.

"We are in a very good, very strong financial position," said Michel. "We are poised to go into the future to benefit enormously from any improvements in the market and we expect that we will see a better price for uranium."

A change in the market is inevitable, since the world uses twice as much uranium as it produces every year, Michel pointed out.

A change has also recently occurred at Cameco, where American lawyer Jerry Grandey, who has been with Cameco since 1993, has taken over the president's role. Michel, who remains chair and CEO, plans to stay on for "a few years."

Over the next five years, Michel says Cameco will remain focused on its core business, although the company may consider further vertical integration in the nuclear industry.

He's wary of predicting how much further Cameco will venture into gold mining, beyond its Kumtor joint venture with the Kyrgyzstan government.

"These opportunities come only a few times in a lifetime. It's a huge deposit, and how often do you see a deposit like this? It would (also) be very bold to bet we would find another McArthur River or another Cigar Lake tomorrow."

Michel counts several highlights in his career so far, including the development of McArthur River—the world's highest-grade uranium mine—and a brief uptick in price to $16.50 during 1995-96.

"The shares, initially issued in 1991 for $12.50 were trading at $76. Unfortunately, it hasn't been sustained," said Michel. "Probably at that time the market went somewhat ahead of us, but certainly that was a period of great satisfaction because we could see our work and our hopes were being translated into reality."

But Michel counts his part in the uranium industry's economic contributions to northern Saskatchewan as possibly his greatest achievement, beginning with the Cluff Lake board of inquiry when he was still with Amok.

"That was a milestone in Saskatchewan and I was actually fairly instrumental in proposing a framework of policies ahead of government, saying we can't mine these reserves unless there are jobs, there are business opportunities, there are educational opportunities made available to the people of northern Saskatchewan in some kind of preferential way.

"The government supported that, it was part of the Cluff Lake inquiry report, and it has been implemented thereafter."

Michel stayed in Saskatchewan far longer than he originally planned. His wife, with a Ph.D. in literature, was teaching at the university. His children grew up, and it became an obvious problem to reintegrate them in the European educational system. (Today, one is a computer science business owner in Toronto, and the other a cardiologist in Montreal. Michel also has five grandchildren.)

He also, very simply, liked the people here.

"I think we have a pretty good team here, and I attach a lot of value to working with people who are capable, people I trust, people I can work in comfort with. As a result, I ended up staying here."

Michel's Guiding Hand

Ex-president reflects on turning around Cameco's finances, growing up in France