Cameco and Kazatomprom Sign Agreement to Restructure JV Inkai

SASKATOON, SASKATCHEWAN--(Marketwired - May 27, 2016) -

ALL AMOUNTS ARE STATED IN CDN $ (UNLESS NOTED)

Cameco Corporation (Cameco) (TSX:CCO)(NYSE:CCJ) signed an agreement with Joint Stock Company National Atomic Company Kazatomprom (Kazatomprom) and Joint Venture Inkai LLP (JV Inkai) to restructure and enhance JV Inkai. The agreement was signed during the annual foreign investors meeting with the president and government officials in Astana, Kazakhstan at a ceremony attended by Bakytzhan Sagintayev, First Deputy Prime Minister of the Republic of Kazakhstan.

"This agreement strengthens our partnership with another global leader in uranium mining and moves both Cameco and Kazatomprom closer to realizing the full potential of their investment in JV Inkai," said Cameco president and CEO Tim Gitzel. "For Cameco, the agreement advances our strategy of building on our low-cost production assets that helps to mitigate the risk of today's uncertain uranium market and positions us to maximize returns when the market recovers."

"Kazatomprom and Cameco have, for many years now, been engaged in a highly co-operative and mutually beneficial relationship where commitments have always been upheld," said Askar Zhumagaliev, chairman of the board of Kazatomprom. "Therefore, we intend to further expand our partnership, balancing the economic interests."

The Inkai operation is an in situ recovery uranium mine in south Kazakhstan that is owned and operated by JV Inkai which, in turn, is currently owned by Cameco (60%) and Kazatomprom (40%). Cameco's current interest in production from JV Inkai is 57.5% based on previous agreements with Kazatomprom.

The new agreement replaces the memorandum of agreement signed by Cameco and Kazatomprom in September 2012 and, subject to closing, provides as follows:

• JV Inkai will have the right to produce 4,000 tonnes of uranium (tU) (10.4 million pounds of U₃O₈) per year (Cameco's share 4.2 million pounds), an increase from the current 5.2 million pounds (Cameco's share 3.0 million pounds).

• JV Inkai will have the right to produce from blocks 1, 2 and 3 until 2045 (currently, the lease terms are to 2024 for block 1 and to 2030 for blocks 2 and 3)

• subject to further adjustments tied to the refinery as described below, Cameco's ownership interest in JV Inkai will be adjusted to 40%, and Kazatomprom's ownership interest in JV Inkai will be adjusted to 60%

• a governance framework that provides protection for Cameco as a minority owner

• the current boundaries of blocks 1, 2 and 3 will be adjusted to match the agreed production profile for JV Inkai to 2045

• the loan made by a Cameco subsidiary to JV Inkai to fund exploration and evaluation of block 3 (currently US $160 million) will be restructured to provide for priority repayment.

This agreement is subject to obtaining all required government approvals, including certain amendments to JV Inkai's existing Resource Use Contract, which is expected to take 18 to 24 months. The government approvals are conditional upon submission of certain technical reports and other documents. The agreement provides for annual production at the Inkai operation to be ramped up to 10.4 million pounds U₃O₈ over three years following receipt of required approvals.