CEO’s Message

Dear Shareholder,

2013 marked another challenging year for the nuclear industry. Overall, the big picture remained much the same: market uncertainty continued, as did the downward pressure on uranium prices. Despite the persistence of these market conditions, Cameco still achieved strong results, including record production, record revenue, and record annual average realized uranium price.

However, Cameco is not immune to negative market forces, which have continued for longer than expected. Those effects are more keenly felt the longer they persist. The advantage for Cameco is that we have the resources and the ability to dig deep, be innovative, weather the uncertainty, and come out the other side successful. In 2013, we took steps to do just that. We decided to pursue more aggressive cost controls and pull back on, and ultimately eliminate, our production growth target. We believe this course of action will allow us the flexibility necessary to provide the best value to our shareholders, and to benefit most when clarity returns to the market.

Cameco’s senior management team and I are very aware of the challenge this decision poses to our shareholders. A simple strategy to grow supply to 36 million pounds by 2018 provided a clear line of sight to what you could expect from Cameco. But we’ve always said that our plan to increase would not be “at any cost.” We would not sacrifice value in order to meet our target if the market didn’t call for it and, at this time, the market just is not signalling the need for the higher production level. Our primary goal is to provide value, which won’t necessarily come from adding volume, but from adding the right volume at the right time; and for now, the right time is uncertain.

What you can expect is that we will continue to pursue profitable growth through a relentless focus on capital discipline and operational excellence. Our biggest sources of production, and those that deliver the most value, will continue to be our priority. We plan to ramp up Cigar Lake and to expand the McArthur River/Key Lake operation, and to maintain our Inkai production at 5.2 million pounds per year. Any development or expansion of our remaining projects will be dependent upon how market conditions evolve.

Of course, over the long term, we remain very positive about the outlook for our industry, and particularly for Cameco. 2013 marked Cameco’s 25th anniversary, which is a long time in the life of a company. Over the past quarter-century, we’ve seen a lot—volatility in politics and global economics, uranium prices ranging from $10 to $140, and shifting supply-demand fundamentals. During those ups and downs, we have managed to grow into one of the world’s leading uranium producers and build a track record of operational and financial success.

Today, we’re doing what we have always done—putting our experience, knowledge and drive to work to position the company for continued success. That means watching the market closely, delivering strong production safely and responsibly, and always looking for ways to add value and be ever more efficient. I’m pleased with the progress we made in these areas in 2013, and proud of the team we have here at Cameco. I am confident that we will continue to deliver on our goals in 2014.

Tim Gitzel
President and CEO
March 10, 2014