Cameco Reports Second Quarter Earnings

Business Wire, July 29, 2005

SASKATOON, Saskatchewan -- Cameco Corporation (TSX:CCO)(NYSE:CCJ) today reported its financial results for the second quarter and six months ended June 30, 2005. All numbers in this release are in Canadian dollars, unless otherwise stated. For a more detailed discussion of Cameco's financial results for the three months and six months ending June 30, 2005, see the management's discussion and analysis following this news release.

Second Quarter 2005
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                                           Three       Three
                                          Months      Months
                                           Ended       Ended       %
Financial Highlights                  June 30/05  June 30/04  Change
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Revenue ($ millions)                         287         242      19
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Earnings from operations ($ millions)         37          40      (8)
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Cash provided by operations (used in)
 ($ millions)(a)                             (45)        (21)   (114)
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Net earnings ($ millions)                     32         151     (79)
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Earnings per share ($) basic                0.19        0.89     (79)
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Earnings per share ($) diluted              0.18        0.83     (78)
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Adjusted net earnings (b)                     32          62     (48)
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(a) After working capital changes.
(b) 2004 net earnings for the three months and six months ended on
June 30 have been adjusted to exclude a net gain of $89 million
($0.52 per share) related to Centerra restructuring transactions.
This is a non-GAAP measure and Cameco believes the exclusion of this
item provides a more meaningful basis for period-to-period
comparisons of the company's financial results.

Revenue increased 19% to $287 million in the second quarter compared to the same period a year ago, due to consolidating 100% of the results from the Kumtor mine. In 2004, only one-third of the results were consolidated into Cameco's financial statements for most of the second quarter.

In the second quarter of 2005, Cameco's net earnings were $30 million lower than those reported in the second quarter of 2004. To provide a more meaningful comparison of operating results, the following adjustment was made to 2004 net earnings to exclude a gain in the gold business. In the second quarter of 2004, Cameco recorded an after-tax gain of $89 million ($0.52 per share) for restructuring transactions that led to the creation of Centerra Gold Inc. Including this one-time gain, net earnings in the second quarter of 2004 were $151 million or $0.83 per share diluted.

In the second quarter of 2005, net earnings declined due to lower earnings from Bruce Power LP (primarily as a result of increased outages) and higher charges for administration and exploration. This was partially offset by improved results in the uranium and gold businesses where higher realized prices had a positive impact on gross profits.

Cameco invested $45 million more on operating activities than it generated in cash due to increased uranium and conversion inventories as production and purchases exceeded sales. In the second quarter of 2004, we invested $21 million more on our operating activities than we generated in cash, also due to increased inventories. The second quarter is often the period of inventory accumulation in preparation for sales occurring later in the year. About 45% of uranium deliveries are expected to occur in the last quarter of 2005.

Quarterly results are not necessarily a good indicator of annual results because of a number of factors including the uneven timing of uranium and conversion deliveries as well as scheduled outages at Bruce Power.

"Uranium prices continued to rise in the second quarter and the long-term prospects for the nuclear energy business remain bright," said Jerry Grandey, Cameco's president and chief executive officer. "In each of our nuclear businesses we are making significant progress on our plans to increase production in response to continuing positive commodity price trends."

Uranium spot prices ended the quarter at a 24-year high of $29.00 (US) per pound U3O8, up 29% from three months earlier.

Year to Date 2005
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                                             Six         Six
                                          Months      Months
                                           Ended       Ended       %
Financial Highlights                  June 30/05  June 30/04  Change
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Revenue ($ millions)                         503         375      34
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Earnings from operations ($ millions)         52          48       8
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Cash provided by operations
 ($ millions)(a)                              38          29      31
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Net earnings ($ millions)                     59         191     (69)
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Earnings per share ($) basic                0.34        1.12     (70)
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Earnings per share ($) diluted              0.33        1.06     (69)
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Adjusted net earnings (b)                     59         102     (42)
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(a) After working capital changes.
(b) 2004 net earnings for the three months and six months ended on
June 30 have been adjusted to exclude a net gain of $89 million
($0.52 per share) related to Centerra restructuring transactions.
This is a non-GAAP measure and Cameco believes the exclusion of this
item provides a more meaningful basis for period-to-period
comparisons of the company's financial results.