Notes to Consolidated Financial Statements

For the years ended December 31, 2014 and 2013

  1. Cameco Corporation
  2. Significant accounting policies
  3. Accounting standards
  4. Determination of fair values
  5. Use of estimates and judgments
  6. Discontinued operation
  7. Acquisitions
  8. Accounts receivable
  9. Inventories
  10. Property, plant and equipment
  11. Goodwill and intangible assets
  12. Long-term receivables, investments and other
  13. Equity-accounted investees
  14. Accounts payable and accrued liabilities
  15. Short-term debt
  16. Long-term debt
  17. Other liabilities
  1. Provisions
  2. Share capital
  3. Employee benefit expense
  4. Finance costs
  5. Other income (expense)
  6. Income taxes
  7. Per share amounts
  8. Statements of cash flows
  9. Share-based compensation plans
  10. Pension and other post-retirement benefits
  11. Financial instruments and related risk management
  12. Capital management
  13. Segmented information
  14. Group entities
  15. Joint operations
  16. Related parties
  17. Subsequent event

10. Property, plant and equipment

At December 31, 2014 Land and 
buildings 		 Plant and 
equipment 		 Furniture 
and 
fixtures 		 Under 
construction 		 Exploration and 
evaluation 		 Total 
Cost
Beginning of year $2,971,894  $1,819,611  $97,220  $1,904,400  $1,072,242  $7,865,367 
Additions 26,688  18,288  5,716  407,492  14,640  472,824 
Transfers 143,639  152,564  17,171  (313,374) —  — 
Change in reclamation provision 228,223  —  —  —  —  228,223 
Disposals (b) (902) (24,463) (1,111) (40,664) (10,984) (78,124)
Effect of movements in exchange rates 54,194  18,721  1,076  4,646  8,817  87,454 
End of year 3,423,736  1,984,721  120,072  1,962,500  1,084,715  8,575,744 
Accumulated depreciation and impairment
Beginning of year 1,491,681  1,019,529  81,216  70,159  161,789  2,824,374 
Depreciation charge 185,238  111,980  23,574  94  161  321,047 
Transfers (4,190) 4,190  —  —  —  — 
Disposals (678) (16,736) (336) —  (7,160) (24,910)
Impairment charge (a) 66,084  38,968  —  21,368  —  126,420 
Effect of movements in exchange rates 31,391  7,038  (353) —  (284) 37,792 
End of year 1,769,526  1,164,969  104,101  91,621  154,506  3,284,723 
Net book value at December 31, 2014 $1,654,210  $819,752  $15,971  $1,870,879  $930,209  $5,291,021 
At December 31, 2013 Land and 
buildings 		 Plant and 
equipment 		 Furniture 
and 
fixtures 		 Under 
construction 		 Exploration 
and 
evaluation 		 Total 
Cost
Beginning of year $2,722,059  $1,663,769  $89,868  $1,679,571  $1,126,254  $7,281,521 
Acquisitions [note 7] —  1,070  —  —  —  1,070 
Additions 54,899  18,299  485  528,547  9,131  611,361 
Change in reclamation provision 1,958  —  —  —  —  1,958 
Transfers 161,042  141,018  6,929  (308,989) —  — 
Disposals (1,467) (14,294) (578) —  (131) (16,470)
Effect of movements in exchange rates (33,403) (9,749) (516) (5,271) (63,012) (14,073)
End of year 2,971,894  1,819,611  97,220  1,904,400  1,072,242  7,865,367 
Accumulated depreciation and impairment
Beginning of year 1,305,639  918,829  71,903  —  168,000  2,464,371 
Depreciation charge 169,561  105,101  9,531  —  258  284,451 
Transfers (185) 692  (507) —  —  — 
Disposals (378) (9,104) (155) —  —  (9,637)
Impairment charge (c) 28  344  —  70,159  7,160  77,691 
Effect of movements in exchange rates 17,016  3,667  444  —  (13,629) 7,498 
End of year 1,491,681  1,019,529  81,216  70,159  161,789  2,824,374 
Net book value at December 31, 2013 $1,480,213  $800,082  $16,004  $1,834,241  $910,453  $5,040,993 

Cameco has contractual capital commitments of approximately $99,000,000 at December 31, 2014. Certain of the contractual commitments may contain cancellation clauses, however the Company discloses the commitments based on management’s intent to fulfill the contract. The majority of this amount is expected to be incurred in 2015.

(a) During 2014, Cameco recognized a $126,420,000 impairment charge relating to its Rabbit Lake operation in northern Saskatchewan, which is part of its uranium segment. Due to the deferral of various projects that were related to planned production over the remaining life of the Eagle Point mine, the Company concluded it was appropriate to recognize an impairment charge. The amount of the charge was determined as the excess of the carrying value over the recoverable amount. The recoverable amount of the mine was determined to be $28,570,000 based on a fair value less costs to sell model, which incorporated the future cash flows expected to be derived from the mine. It is categorized as a non-recurring level 3 fair value measurement.

The discount rate used in the fair value less costs to sell calculation was 8% and was determined based on a market participant’s incremental borrowing cost, adjusted for the marginal return that the participant would expect to use on an investment in the mine. The recoverable amount is not sensitive to changes in the discount rate. Other key assumptions include uranium price forecasts and operating and capital cost forecasts. Uranium prices applied in the calculation were based on approved internal price forecasts, which reflect management’s expectation of prices that a market participant would use. Operating and capital cost forecasts have been determined based on management’s internal cost estimates. A $1/lb decrease in the uranium price assumption decreases the recoverable amount by $17,600,000.

(b) Due to extended low market conditions and continued efforts to reduce costs, certain projects were re-evaluated. As a result, the Company wrote off $40,664,000 of assets under construction on these projects.

(c) In 2013, Cameco recognized a $70,159,000 impairment charge relating to its agreement with Talvivaara Mining Company Plc. to purchase uranium produced at the Sotkamo nickel-zinc mine in Finland. The impairment charge represents the full amount of Cameco’s investment which was used to cover construction costs with the amount to be repaid through deliveries of uranium concentrate. The amount of the charge was determined as the excess of the carrying value over the fair value less costs to sell. Due to Talvivaara’s weak financial position and application to the Finnish government to undergo a corporate restructuring, as an unsecured creditor, Cameco determined the fair value less costs to sell to be nil and, as such, recognized an impairment charge for the full amount of the asset.