Cameco Announces Operational Changes in Saskatchewan and the United States - Seite 2

As a result of these decisions, final production at Rabbit Lake is expected to be 1.0 million pounds in 2016 (previously 3.6 million pounds). In the US, 2016 production is expected to be 1.1 million pounds (previously 1.4 million pounds). Due to the nature of ISR (in situ recovery) mining and wellfield restoration requirements, production in the US cannot cease immediately and instead will decrease over time as head grades decline. Cameco will also review its corporate office activities in support of Rabbit Lake and the US operations with the objective of reducing general and administrative expenses.

In addition, given the current state of oversupply in the market, we have decided to reduce our 2016 production target at the McArthur River/Key Lake operation to 18 million pounds from 20 million pounds (100% basis). We will take the opportunity from additional downtime at the mill to further advance work needed to increase the mill's production capacity for when the market signals it is needed. This includes changes to the solvent extraction circuit, bringing some work on the crystallization circuit forward from 2017 and transitioning to the new calciner. There are no workforce impacts related to this change in production.

We continue to ramp up production at Cigar Lake and plan to produce 16 million pounds (100% basis) this year, subject to AREVA's McClean Lake mill receiving the necessary regulatory approvals to increase its licensed annual production capacity from 13 million pounds to 24 million pounds.

Cameco's annual production is now expected to be 25.7 million pounds (previously 30 million pounds).

The carrying value of Rabbit Lake is about $108 million and of the US operations is approximately $62 million (US$48 million) net of provision for reclamation. The cost of placing Rabbit Lake into care and maintenance for 2016 will be about $35 million. The expected reduction in the 2016 capital expenditures from these operational changes is approximately $48 million. The estimated severance cost is about $19 million and will be reflected in our second quarter earnings.

Keeping Rabbit Lake in a state of care and maintenance and deferring wellfield development at our US operations, rather than closing the operations permanently, gives Cameco the flexibility to increase production when market conditions significantly improve. However, with today's oversupplied market and uncertainty as to how long these market conditions will persist, we need to focus our resources on our lowest cost assets and maintain a strong balance sheet.