DBRS Releases Report on Cameco Corporation

DBRS Limited (DBRS) has today released a report on Cameco Corporation (Cameco or the Company) that provides further detail on the May 7, 2015, confirmation of the Company’s ratings and the change in their trends to Negative from Stable.

Cameco’s Issuer and Senior Debt rating of A (low) and Commercial Paper rating of R-1 (low), each with a Negative trend, reflect the Company’s business profile as one of the world’s largest and most cost-competitive uranium producers with a range of risk-aversion features in its sales contracts but dispositions have narrowed its business profile. In addition, persistently weak uranium markets since the serious nuclear accident at the Fukushima Daiichi power plant in Japan in 2011 as well as high capital expenditures, now being reduced, dividend payments and net acquisitions have materially increased Cameco’s net indebtedness in the last five years weakening key financial metrics to the point where many are weak for the Company’s ratings.

Operationally, the Company has performed well, with gross profit before depreciation growing by 5.4% over the last five years to $960 million in 2014 including a more than 50% growth in profitability of its Uranium unit partially offset by the disposition of its Electricity unit and declining Fuel Services unit earnings.

Going forward, Cameco faces the ramp-up of the new Cigar Lake operations and Canada Revenue Agency tax reassessments that could, based on DBRS estimates, result in over $2.0 billion in added costs, including interest, if the Company is unsuccessful in challenging reassessments received to date and those anticipated, adding to the uncertainty faced by the Company.

Accordingly, unless there is a significant improvement in the Company’s outlook, a downgrade in its ratings is likely.

Today’s report and the May 7, 2015, press release are available at www.dbrs.com or by contacting us at info@dbrs.com.