6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 Under
the Securities Exchange Act of 1934

For the month of April, 2011

Cameco Corporation

(Commission file No. 1-14228)

2121-11th Street West
Saskatoon, Saskatchewan, Canada S7M 1J3
(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F o           Form 40-F þ

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o           No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

TABLE OF CONTENTS

EX-99.1

EX-99.2

EX-99.3

EX-99.4

EX-99.5

Page 2

Exhibit Index

Exhibit No.	Description	Page No.
99.1	Notice of 2011 Annual Meeting of Shareholders
99.2	Cameco Management Proxy Circular
99.3	Cameco Proxy Form
99.4	Cameco 2011 Business Overview Brochure
99.5	Cameco 2010 Annual Financial Review

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: April 5, 2011	Cameco Corporation By:
	/s/ Gary M.S. Chad Gary M.S. Chad, Q.C.
	Senior Vice-President, Governance,
	Law and Corporate Secretary

EX-99.1

Exhibit 99.1

Notice of our 2011 annual meeting of shareholders

You are invited to our 2011 annual meeting of shareholders

When	Where
Tuesday, May 17, 2011	Cameco Corporation
1:30 p.m.	2121 — 11th Street West
	Saskatoon, Saskatchewan

Your vote is important

If you held common shares in Cameco on March 21, 2011, you are entitled to receive notice of and to vote at this meeting.

The attached management proxy circular describes who can vote, what the meeting will cover and how to vote. Please read it carefully.

By order of the board,

(signed)

Gary M.S. Chad, Q.C.
Senior Vice-President
Governance, Law and Corporate Secretary

Saskatoon, Saskatchewan

April 5, 2011

EX-99.2

Exhibit 99.2

Notice of annual meeting of shareholders to be held May 17, 2011

ON THE
DOUBLE
KEEPING PACE WITH GLOBAL URANIUM DEMAND

[CAMECO LOGO] MANAGEMENT PROXY CIRCULAR
April 5, 2011

April 5, 2011

Dear Shareholder,

As a shareholder, you are invited to attend our annual meeting of shareholders on Tuesday, May 17, 2011, at Cameco’s head office in Saskatoon. Attending the shareholder meeting gives you an opportunity to hear first hand about developments at Cameco, vote in person on the items of business and meet with management, our board of directors and your fellow shareholders. If you cannot come to the meeting, you can vote by proxy.

It’s important to vote your shares. The attached circular contains important information about the meeting, voting, the nominated directors, our governance practices and how we compensate our executives and directors. It also describes the board’s role and responsibilities and the key activities the five board committees undertook in 2010.

On behalf of the board, I would like to thank George Ivany for his contributions and support as a director for 12 years on Cameco’s board, and Gerald Grandey, who has announced his plans to retire as CEO and a member of our board at the end of June. Mr. Ivany served on each of the five standing committees and brought a valuable perspective with his background and experience in education and science. Mr. Grandey was appointed CEO in January 2003, and was appointed president and elected to Cameco’s board in May 2000. He joined Cameco as senior vice-president, marketing and corporate development in 1993 and was appointed executive vice-president in 1997. Under Mr. Grandey’s leadership, Cameco has achieved considerable growth and developed a solid management team with great abilities and experience, and we wish him much success.

After an extensive director search, the nominating, corporate governance and risk committee has nominated Daniel Camus to be elected to our board. Mr. Camus brings extensive international business experience to the board, including his experience as a senior executive of a major European energy operator with significant transactional experience in China and India.

Timothy Gitzel, president of Cameco, has also been nominated as a director of our board. The board has appointed him the new CEO of Cameco as of July 1, 2011, succeeding Mr. Grandey. Mr. Gitzel joined Cameco in January 2007 as senior vice-president and chief operating officer, and was appointed president last May. He brings extensive experience in Canadian and international uranium mining activities to the board and his role as president through 17 years of senior management experience.

2010 marked another very successful year for Cameco. The board and management thank you for your confidence in Cameco. Please remember to vote.

Sincerely,

(signed)

Victor J. Zaleschuk
Chair of the board
Cameco Corporation

What’s inside
Notice of our annual meeting of shareholders	1
Management proxy circular	2
About our shareholder meeting	3
What the meeting will cover	3
Who can vote	4
How to vote	6
About the nominated directors	8
About the auditors	21
Amendments to our bylaws	22
Having a say on our approach to executive compensation	23
Governance at Cameco	24
Compensating our directors and executives	45
Shareholder proposals	91
Other information	91
Appendixes	92
A Interpretation	92
B Board mandate	93

Notice of our 2011 annual meeting of shareholders

You are invited to our 2011 annual meeting of shareholders

When	Where
Tuesday, May 17, 2011	Cameco Corporation
1:30 p.m.	2121 — 11th Street West
	Saskatoon, Saskatchewan

Your vote is important

If you held common shares in Cameco on March 21, 2011, you are entitled to receive notice of and to vote at this meeting.

The attached management proxy circular describes who can vote, what the meeting will cover and how to vote. Please read it carefully.

By order of the board,

(signed)

Gary M.S. Chad, Q.C.
Senior Vice-President
Governance, Law and Corporate Secretary

Saskatoon, Saskatchewan

April 5, 2011

notice of our 2011 annual meeting of shareholders     1

Management proxy circular

You have received this circular because you owned Cameco common shares on March 21, 2011. Management is soliciting your proxy for our 2011 annual meeting of shareholders.

As a shareholder, you have the right to attend our annual meeting of shareholders on May 17, 2011 and to vote your shares in person or by proxy.

To encourage you to vote, you may be contacted directly by Cameco employees or representatives of Laurel Hill Advisory Group (Laurel Hill). If you have any concerns or need any help voting, please contact Laurel Hill at 1.877.304.0211. If you are outside North America, call 416.304.0211 collect, or email assistance@laurelhill.com.

We are paying Laurel Hill approximately $30,000 for their services.

The board of directors has approved the contents of this document and has authorized us to send it to you. We’ve also sent a copy to each of our directors and to our auditors.

Your package may also include our business overview brochure and 2010 annual financial review (if you requested a copy). This information is also available on our website (cameco.com).

(signed)

Gary M.S. Chad, Q.C.
Senior Vice-President
Governance, Law and Corporate Secretary

April 5, 2011

In this document, you and your refer to the shareholder. We, us, our and Cameco mean Cameco Corporation. Shares and Cameco shares mean Cameco’s common shares, unless otherwise indicated.

The information in this management proxy circular is as of March 7, 2011, unless otherwise indicated.

Your vote is important. This circular describes what the meeting will cover and how to vote. Please read it carefully and vote, either by completing the form included with this package or by attending the meeting in person.

2     cameco corporation

About our shareholder meeting

Our annual meeting gives you the opportunity to vote on items of Cameco business, receive an update on the company, meet face to face with management and interact with our board of directors.

What the meeting will cover

Directors — see page 8

You will elect 13 directors to our board. About the nominated directors starting on page 8 tells you about the nominated directors, their background and experience, and any board committees they currently sit on. All of the directors are elected for a term of one year.

Auditors — see page 21

You will vote on reappointing the auditors. The board, on the recommendation of the audit committee, has proposed that KPMG LLP (KPMG) be reappointed as our auditors. See page 21 for information about the services KPMG provided in 2010 and the fees we paid them. The board has invited a representative of KPMG to attend the meeting.

Financial statements — see our 2010 annual financial review or go to cameco.com/investors/financial_reporting

You will receive the consolidated financial statements for the year ended December 31, 2010, and the auditors’ report on the statements. These are included in our 2010 annual financial review, which has been mailed to you if you requested a copy. You can also download a copy from our website.

Amendments to our bylaws — see page 22

You will vote on confirming two amendments to our general bylaws to increase the quorum for any meeting of our shareholders to at least two people who hold, or represent by proxy, at least 25% of our total shares issued and outstanding, and to clarify that the quorum for any meeting of our board of directors is at least a majority of our directors. The board approved these changes at meetings on November 4, 2010 and February 11, 2011.

Both of these changes reflect good governace practices. Previously the bylaws only required a quorum of 5% of our total shares issued and outstanding to hold a meeting of shareholders and transact business, and directors could unilaterally amend the quorum requirement for meetings of our board of directors.

Having a say on our approach to executive compensation — see page 23

In 2011, you will vote on our approach to executive compensation as disclosed in this circular. Your vote is advisory and non-binding, and will provide the board and the human resources and compensation committee with important feedback.

Other business

If other items of business are properly brought before the meeting or after any adjournment, you (or your proxyholder, if you are voting by proxy) can vote as you see fit. We did not receive any shareholder proposals for this meeting, and are not aware of any other items of business to be considered at the meeting.

We need a quorum

We can only hold the meeting and transact business if at the beginning of the meeting we have a quorum — where currently the people attending the meeting hold, or represent by proxy, at least 25% of our total common shares issued and outstanding.

See Amendments to our bylaws, below for information about the vote to confirm the increase in quorum.

2011 management proxy circular     3

Who can vote

We have common shares and one class B share, but only holders of common shares have full voting rights in Cameco.

If you held common shares at the close of business on March 21, 2011 (we call this the record date), you or the person you appoint as your proxyholder can attend the annual meeting and vote your shares. Each Cameco common share you own represents one vote, except where noted below.

As of March 7, 2011, we had 394,645,418 shares issued and outstanding, and all of these shares are entitled to be voted at the meeting.

Ownership and voting restrictions

There are restrictions on issuing, transferring and owning Cameco common shares whether you own the shares as a registered shareholder, hold them beneficially or control your investment interest in Cameco directly or indirectly. These are described in the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada) (ENL Reorganization Act) and our company articles.

The following is a summary of the limitations listed in our company articles. See Appendix A for the definitions in the ENL Reorganization Act.

Individuals

A Canadian resident, either individually or together with associates, cannot hold, beneficially own or control shares or other Cameco securities, directly or indirectly, representing more than 25% of the votes that can be cast to elect directors.

Non-residents

A non-resident of Canada, either individually or together with associates, cannot hold, beneficially own or control shares or other Cameco securities, directly or indirectly, representing more than 15% of the total votes that can be cast to elect directors.

Voting restrictions

All votes cast at the meeting by non-residents, either beneficially or controlled directly or indirectly, will be counted and pro-rated collectively to limit the proportion of votes cast by non-residents to no more than 25% of the total shareholder votes cast at the meeting.

Enforcement

The company articles allow us to enforce the ownership and voting restrictions by:

• suspending voting rights

• forfeiting dividends

• prohibiting the issue and transfer of Cameco shares

• requiring the sale or disposition of Cameco shares

• suspending all other shareholder rights.

To verify compliance with restrictions on ownership and voting of Cameco shares, we require shareholders to declare their residency, ownership of Cameco shares and other things relating to the restrictions. Nominees such as banks, trust companies, securities brokers or other financial institutions who hold the shares on behalf of beneficial shareholders need to make the declaration on their behalf.

If you own the shares in your name, you will need to complete the residency declaration on the enclosed proxy form. Copies will be available at the meeting if you are planning to attend in person. If we do not receive your signed declaration, we may consider you to be a non-resident of Canada.

The board will use these declarations or other information to decide whether there has been a contravention of our ownership restrictions.

How Cameco was formed

Cameco Corporation was formed in 1988 by privatizing two crown corporations, combining the uranium mining and milling operations of Saskatchewan Mining Development Corporation and the uranium mining, refining and conversion operations of Eldorado Nuclear Limited.

Cameco received these assets in exchange for:

• assuming substantially all of the current liabilities and certain other liabilities of the two companies

• issuing common shares

• issuing one class B share

• issuing promissory notes.

The company was incorporated under the Canada Business Corporations Act.

Ownership restrictions were put in place so that Cameco would remain Canadian controlled. The uranium mining industry has restrictions on ownership by non-residents.

You can find more information about our history in our 2010 annual information form, which is available on our website (cameco.com/investors).

Questions?

If you have questions about completing the proxy form or residency declaration, or about the meeting in general, contact our proxy solicitation agent, Laurel Hill Advisory Group:

Phone:	1.877.304.0211
	(toll free within North America)
	1.416.304.0211
	(collect from outside North America)
	1.416.304.0211
	(institutional investors or brokers)

4     cameco corporation

Principal holders of our common shares

Management, to the best of its knowledge, is not aware of any shareholder holding 5% or more of our common shares.

About Class B shares

The province of Saskatchewan holds our one class B share. This entitles the province to receive notices of and attend all meetings of shareholders, for any class or series.

The class B shareholder can only vote at a meeting of class B shareholders, and only as a class if there is a proposal to:

• amend Part 1 of Schedule B of the articles, which states that:

• Cameco’s registered office and head office operations must be in Saskatchewan

• the vice-chairman of the board, chief executive officer (CEO), president, chief financial officer (CFO) and generally all of the senior officers (vice-presidents and above) must live in Saskatchewan

• all annual meetings of shareholders must be held in Saskatchewan

• amalgamate, if it would require an amendment to Part 1 of Schedule B of the articles, or

• amend the articles, in a way that would change the rights of class B shareholders.

2011 management proxy circular     5

How to vote

You can vote by proxy, or you can attend the annual meeting and vote your shares in person.

Voting by proxy

Voting by proxy is the easiest way to vote. It means you are giving someone else the authority to attend the meeting and vote for you (called your proxyholder).

Gerald W. Grandey, CEO of Cameco, or in his absence Gary M.S. Chad, senior vice-president, governance, law and corporate secretary (the Cameco proxyholders), have agreed to act as proxyholders to vote your shares at the meeting according to your instructions. Or, you can appoint someone else to represent you and vote your shares at the meeting.

If you appoint the Cameco proxyholders but do not tell them how you want to vote your shares, your shares will be voted:

• for electing the nominated directors who are listed in the form and management proxy circular

• for appointing KPMG LLP as auditors

• for confirming the amendments to our bylaws

• for the advisory resolution on our approach to executive compensation.

If for any reason before or during the meeting a nominated director becomes unable to serve, the Cameco proxyholders have the right to vote for another nominated director at their discretion, unless you have directed that your shares be withheld from voting.

If there are amendments or other items of business that are properly brought before the meeting, the proxyholder you have appointed can vote as he or she sees fit.

Proxy voting process

Non-registered shareholders

If you plan to vote by proxy, follow the instructions on the enclosed voting instruction form to vote your shares by mail or on the internet. If you plan to appoint yourself or another person as proxyholder to attend the meeting for you, indicate this on the enclosed voting instruction form (see Voting in person on page 7 for details).

If you are voting by proxy, you are subject to an earlier deadline to give your nominee enough time to send your instructions to our transfer agent, CIBC Mellon Trust Company (CIBC Mellon) before the meeting, so be sure to send your completed form right away. If you have any questions or need help voting, please contact our proxy solicitation agent, Laurel Hill Advisory Group, at 1.877.304.0211. If you are outside North America, call 416.304.0211 collect, or email assistance@laurelhill.com.

Registered shareholders

You have four ways to vote by proxy:

1.	by fax
2.	by mail
3.	on the internet
4.	by appointing someone else to attend the meeting and vote your shares for you

By fax

Complete the enclosed proxy form, including the section on declaration of residency, sign and date it and fax both pages of the form to:

CIBC Mellon Trust Company	1.866.781.3111 (toll free within North America)
Attention: Proxy department	1.416.368.2502 (from outside North America)

By mail

Complete your proxy form, including the section on declaration of residency, sign and date it, and send it to CIBC Mellon in the envelope provided.

If you did not receive a return envelope, please send the completed form to:

CIBC Mellon Trust Company
Attention: Proxy department
P.O. Box 721
Agincourt, Ontario M1S 0A1

The voting process is different depending on whether you are a registered or non-registered shareholder

You are a registered shareholder if your name appears on your share certificate.

You are a non-registered shareholder if your bank, trust company, securities broker, trustee or other financial institution holds your shares (your nominee). This means the shares are registered in your nominee’s name, and you are the beneficial shareholder.

6     cameco corporation

On the internet

Go to www.eproxyvoting.com/cameco and follow the instructions on screen. You will need your control number, which appears below your name and address on your proxy form. We need to receive your voting instructions before 1:30 p.m. CST on Friday, May 13, 2011.

By appointing someone else to attend the meeting and vote your shares for you

Print the name of the person you are appointing as your proxyholder in the space provided. This person does not need to be a shareholder. Make sure the person you are appointing is aware and attends the meeting. Your proxyholder will need to check in with a representative of CIBC Mellon when they arrive at the meeting.

Signing the proxy

If you are an administrator, trustee, attorney or guardian for a person who beneficially holds or controls Cameco shares, or an authorized officer or attorney acting on behalf of a corporation, estate or trust that beneficially holds or controls our common shares, please follow the instructions on the proxy form.

Send us your proxy form right away

Your vote will only be counted if CIBC Mellon receives your voting instructions:

• before 1:30 p.m. CST on Friday, May 13, 2011, if you are submitting your voting instructions online

• before 1:30 p.m. CST on Monday, May 16, 2011, if you are sending the proxy form by fax or mail.

Make sure the proxy form is properly completed and that you allow enough time for it to reach CIBC Mellon if you are sending it by mail.

If the meeting is postponed or adjourned, CIBC Mellon must receive your voting instructions at least 24 hours before the meeting is reconvened.

Voting in person

If you want to vote in person, your vote will be taken and counted during the meeting. Follow the appropriate instructions below. Please also call Stephanie Oleniuk at Cameco (306.956.6340) to add your name (or your proxyholder’s name) to the attendee list.

Non-registered shareholders

Follow the instructions on the enclosed voting instruction form to appoint yourself as proxyholder, or to appoint someone else to attend the meeting and vote on your behalf. You or the person you are appointing will need to check in with a representative of CIBC Mellon when they arrive at the meeting.

Registered shareholders

Do not complete the enclosed proxy form. Check in with a representative of CIBC Mellon when you arrive at the meeting.

Changing your vote

If you have voted by proxy, you can revoke your vote in the following ways:

Non-registered shareholders

Instructions that are provided on a voting instruction form with a later date, or at a later time in the case of voting on the internet, will revoke any prior instructions provided they are received at least 24 hours before the meeting. Otherwise, contact your nominee if you want to revoke your proxy or change your voting instructions, or if you change your mind and decide to vote in person.

Registered shareholders

Instructions that are provided on a proxy form with a later date at least 24 hours before the meeting, or at a later time at least 48 hours before the meeting in the case of voting on the internet, will revoke any prior instructions. Otherwise:

• send a notice in writing to the corporate secretary at Cameco, at 2121 — 11^th Street West, Saskatoon, Saskatchewan S7M 1J3, so he receives it by 1:30 p.m. CST on May 16, 2011. If the meeting is postponed or adjourned, the corporate secretary will need to receive the notice by 1:30 p.m. CST at least one business day before the meeting is reconvened.

• give a notice in writing to the chair of the meeting, at the meeting.

The notice can be from you or your attorney, if he or she has your written authorization. If the shares are owned by a corporation, the written notice must be from its authorized officer or attorney.

Voting results

CIBC Mellon, our transfer agent, counts the votes on our behalf. This is carried out independently to make sure the individual shareholder votes are kept confidential.

CIBC Mellon only sends a proxy form to us when:

• it is clear that a shareholder wants to communicate with management

• the law requires it.

Go to cameco.com/investors or sedar.com after the meeting to see the voting results.

2011 management proxy circular     7

About the nominated directors

Our board of directors is responsible for overseeing management and Cameco’s business affairs. As shareholders, you elect the board as your representatives. This section tells you about the directors who have been nominated to serve on our board.

This year the board has decided that 13 directors are to be elected. Eleven of the nominated directors currently serve on the board. George Ivany is retiring from the board because he turned 72 (the retirement age for our directors) prior to our 2011 annual meeting. This is the first year that Daniel Camus and Timothy Gitzel have been nominated as directors.

You can vote for all of these directors, vote for some of them and withhold votes for others, or withhold votes for all of them. Unless otherwise instructed, the named proxyholders will vote for all of the nominated directors listed on pages 9 to 17.

Our goal is to assemble a board that operates cohesively, and challenges and questions management in a constructive way. Being financially literate, independent minded and a team player are three core skills or attributes we expect of all directors serving on our board.

Our vision is to be a dominant nuclear energy company producing uranium fuel and generating clean electricity, and we are focusing our growth strategy on our uranium segment and plan to double our annual uranium production to 40 million pounds by 2018 to strongly position Cameco to meet the growing needs of our customers.

When assessing directors for our board, the nominating, corporate governance and risk committee looks at:

• the overall mix of skills and experience on the board

• how active they are in understanding our business and participating in meetings

• their character, integrity, judgment and record of achievement

• diversity (including gender, aboriginal heritage, age and geographic representation such as Canada, the US, Europe and Asia).

Given our stage of development, the committee also recognizes the value of recruiting a new director who has international experience as a senior executive, working in Asia and conducting mergers and acquisitions, and it retained a director search firm in 2010 to assist in the recruitment process. The committee also looked at a director’s ability to contribute to our board, the time they have available and their other directorships because these are important factors that enhance the quality of the board’s decision-making and its oversight of management and our business affairs overall. See Skills and experience on page 18 and Recruiting new directors on page 34 for more information.

Mr. Camus brings extensive international business experience to the board, including his experience as a senior executive of a major European energy operator with significant transactional experience in China and India. Mr. Gitzel brings extensive experience in Canadian and international uranium mining activities to the board, and his role as our president, through 17 years of senior management experience. This includes responsibility for global uranium, gold, exploration and decommissioning operations in 11 countries around the world, prior to joining Cameco in 2007. Mr. Gitzel will become our CEO on July 1, 2011, succeeding Mr. Grandey.

All of the nominated directors are independent, except for Gerald Grandey, our CEO, Timothy Gitzel, our president, and Donald Deranger, president of Points Athabasca Contracting Ltd., which provides construction and other services to Cameco. See Assessing independence on page 28 for more information.

Each of the nominated directors is eligible to serve as a director and has expressed his or her willingness to do so. Directors who are elected will serve until the end of the next annual meeting, or until a successor is elected or appointed.

See the following pages for key information about the directors:

Director profiles	9
Meeting attendance	17
Skills and experience	18
Continuing education and development	19

Serving together on other boards

Anne McLellan and Victor Zaleschuk serve together on the boards of Agrium Inc. and Nexen Inc. They are both on Agrium’s audit committee and Nexen’s finance committee and health, safety, environment and social responsibility committee.

John Clappison and Oyvind Hushovd serve together on the board of Inmet Mining Corporation, but will no longer serve on Inmet’s board if the creation of Symterra Corporation proceeds as planned. They do not sit on any of the same committees.

8     cameco corporation

Our policy on majority voting

Directors require a plurality of votes to be elected, however, if a director receives more withheld votes than for votes, he or she must offer to resign. Our nominating, corporate governance and risk committee will review the matter and then recommend to the board whether or not to accept the resignation. The director will not participate in any board or committee deliberations on the matter.

The board will announce its decision within 90 days of the meeting. If it rejects the offer, it will disclose the reasons why. If the board accepts the offer, it may appoint a new director to fill the vacancy.

The board adopted this policy in 2006 on the recommendation of the nominating, corporate governance and risk committee, and we believe it reflects good governance.

Director profiles

The table below provides information about each nominated director as of March 7, 2011, including their background and experience, main areas of expertise and other public company and registered investment company boards they are members of. The information about their meeting attendance in 2010 and Cameco securities they held is as of December 31, 2010.

Daniel Camus
58

Paris, France

Citizenship — Canadian and French

New director

Independent

Main areas of experience

• Finance

• Electricity industry

• International

• Mergers and acquisitions

• Nuclear industry

Daniel Camus is the former group chief financial officer and head of strategy and international activities of Electricité de France SA (EDF), a France-based integrated energy operator active in the generation, distribution, transmission, supply and trading of electrical energy with subsidiaries in various countries around the world. Mr. Camus brings extensive business experience to Cameco’s board, including eight years with EDF and the previous 25 years in various senior roles with Aventis Group and Hoechst AG Group in Germany, the US, Canada and France.

Mr. Camus received his PhD in Economics from Sorbonne University, an MBA in finance and economics from the Institute d’Études Politiques de Paris and a masters of economics degree from Nancy University in France.

Mr. Camus serves on the public company boards listed below and is the chair of the audit committee of Valeo, SA, France’s largest supplier of car components. He is also a former member of the board of directors of ENBW AG (2003-2010), Constellation Energy Group, Inc. (2010) and Edison SpA (2005-2009).

	Overall attendance – n/a
	In person	Telephone
Cameco board and board committees	meetings	meetings	Other public company boards
n/a			Morphosys AG, Munich
			Valeo, SA, Paris
			Vivendi SA, Paris
			SGL Carbon AG, Wiesbaden

Securities held: nil

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): nil

2011 management proxy circular     9

John H. Clappison

64

Toronto, Ontario

Canada

Citizenship — Canadian

Director since 2006

Independent

Main areas of experience

• Finance

John Clappison is the former managing partner of the Greater Toronto Area office of PricewaterhouseCoopers LLP. He is a fellow of the Canadian Institute of Chartered Accountants and worked with PwC (or its predecessor firm) for 37 years. Mr. Clappison brings extensive financial experience to Cameco’s board with his accounting expertise and as a financial expert and chair of the audit committee.

In addition to the public company boards listed below, Mr. Clappison serves as a director of the private company, Summitt Energy Holdings GP Inc., and is actively involved with the Canadian Foundation for Facial Plastic and Reconstructive Surgery, Shaw Festival Theatre Endowment Foundation and The Massey Hall and Roy Thomson Hall Endowment Foundation. Mr. Clappison served on the board of trustees of Canadian Real Estate Investment Trust from 2007 until February 15, 2011.

	Overall attendance – 100%
Cameco board and committee	In person	Telephone	Other public
membership	Meetings	Meetings	company boards
Board of directors	6 of 6	5 of 5	Inmet Mining Corporation
Audit (chair)	5 of 5		Rogers Communications Inc.
Human resources and compensation	3 of 3	2 of 2	Sun Life Financial Inc.
Safety, health and environment	2 of 2

Securities held:

							Total value of
					Total Cameco		Cameco		Meets share
	Cameco				shares and		shares and		ownership
Fiscal year	shares		DSUs		DSUs		DSUs		target
2010		2,000		12,368		14,368	$	579,016	Yes – by 138%
2009		2,000		7,494		9,494	$	322,131
Change		—		4,874		4,874	$	256,885

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $579,016 in 2010, $322,131 in 2009

Joe F. Colvin

68

Sante Fe, New Mexico

USA

Citizenship — American

Director since 1999

Independent

Main areas of experience

• Nuclear industry

• Operational excellence

• International

Joe Colvin is a board director and the president of the American Nuclear Society, a not-for-profit organization that promotes the awareness and understanding of the application of nuclear science and technology. He was elected president emeritus of the Nuclear Energy Institute Inc. (the Washington-based policy organization for the US nuclear energy industry) in February 2005, after serving as the Institute’s president and CEO from 1996 to 2005. Mr. Colvin also held senior management positions with the Nuclear Management and Resources Committee and the Institute for Nuclear Power Operations, and served as a line officer with the US Navy nuclear submarine program for 20 years. Mr. Colvin also serves as a director of the Foundation for Nuclear Studies. Other than the public company board listed below, he has not served on any other public company boards over the past five years.

Mr. Colvin has a bachelor of science degree in electrical engineering from the University of New Mexico, has completed advanced studies in nuclear engineering and is a graduate of Harvard University’s advanced management program. Mr. Colvin brings a wealth of knowledge of the nuclear industry to the board and his role as chair of the safety, health and environment committee.

	Overall attendance – 86%
Cameco board and committee	In person	Telephone	Other public
membership	meetings	Meetings	company boards
Board of directors	5 of 6	4 of 5	US Ecology, Inc.
Nominating, corporate governance and risk	4 of 4	1 of 1
Safety, health and environment (chair)	4 of 5

Securities held:

							Total value of
					Total Cameco		Cameco
	Cameco				shares and		shares and		Meets share
Fiscal year	shares		DSUs		DSUs		DSUs		ownership target
2010		4,000		82,281		86,281	$	3,477,137	Yes – by 828%
2009		4,000		81,502		85,502	$	2,901,083
Change		—		779		779	$	576,054

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $3,477,137 in 2010, $2,901,083 in 2009

10     cameco corporation

James R. Curtiss

57

Brookeville, Maryland

USA

Citizenship — American

Director since 1994

Independent

Main areas of experience

• Nuclear industry

• Government relations

• Executive compensation

James Curtiss has been the principal of Curtiss Law since April 2008. He was a partner with the law firm of Winston & Strawn LLP in Washington, DC, where he concentrated his practice in energy policy and nuclear regulatory law from 1993 until March 2008. He was also a commissioner with the US Nuclear Regulatory Commission from 1988 to 1993. Other than the public company board listed below, Mr. Curtiss has not served on any other public company boards over the past five years.

Mr. Curtiss received a bachelor of arts and a juris doctorate from the University of Nebraska. He is a frequent speaker at nuclear industry conferences and has spoken on topics such as licensing and regulatory reform, advanced reactors and fuel cycle issues. Mr. Curtiss brings legal experience in the nuclear industry to the board, particularly in the area of nuclear regulatory law. Mr. Curtiss has been the chair of our human resources and compensation committee since 2002, and has kept abreast of the wide range of issues in executive compensation through various director education seminars.

	Overall attendance – 100%
Cameco board and committee	In person	Telephone	Other public
membership	meetings	Meetings	company boards
Board of directors	6 of 6	5 of 5	Constellation Energy Group
Human resources and compensation (chair)	5 of 5	3 of 3
Nominating, corporate governance and risk	4 of 4	1 of 1

Securities held:

					Total Cameco		Total value of
	Cameco				shares and		Cameco shares		Meets share ownership
Fiscal year	shares		DSUs		DSUs		and DSUs		target
2010		7,185		93,001		100,186	$	4,037,483	Yes – by 961%
2009		5,700		92,120		97,820	$	3,319,033
Change		1,485		881		2,366	$	718,450

Options held:

Date				Total		Value of in-the-money
granted	Expiry date	Exercise price		unexercised		options
March 10/03	March 9/11		5.880		12,000
Sept 21/04	Sept 20/14		15.792		3,300	$	493,916

Total amount of equity at risk (Cameco shares, DSUs and options): $4,531,399 in 2010, $3,875,226 in 2009

Donald H.F. Deranger

55

Prince Albert, Saskatchewan

Canada

Citizenship — Canadian

Director since 2009

Not independent

Main areas of experience

• Aboriginal affairs

Donald Deranger has been the Athabasca Vice Chief of the Prince Albert Grand Council since 2003. He has won a number of awards for his initiatives in employment, training and economic development for members of the Athabasca sector in northern Saskatchewan.

Mr. Deranger is an advisor to the Athabasca Basin Development Corporation and president of Points Athabasca Contracting Ltd., which does business with Cameco. He is the president of Learning Together, a non-profit aboriginal organization that works to build relationships with the mining industry. He also serves as a director of the Prince Albert Development Corporation, Northern Resource Trucking Limited Partnership, Mackenzie River Basin Board, Keepers of the Athabasca Watershed Council, and the City of Prince Albert Board of Police Commissioners, and is a member of the Saskatchewan Fisheries Advisory Committee. Mr. Deranger has not served on any other public company boards over the past five years.

As a leader in the Saskatchewan aboriginal community, Mr. Deranger brings to the board a deep understanding of the culture and peoples of northern Saskatchewan where Cameco’s richest assets are located. Mr. Deranger also worked as a uranium miner many years ago and brings this personal experience to the board and as a member of the safety, health and environment committee.

	Overall attendance – 100%
Cameco board and committee	In person	Telephone	Other public company
membership	meetings	meetings	boards
Board of directors	6 of 6	5 of 5	none
Reserves oversight	2 of 2	1 of 1
Safety, health and environment	5 of 5

Securities held:

					Total Cameco		Total value of
	Cameco				shares and		Cameco shares		Meets share ownership
Fiscal year	shares		DSUs		DSUs		and DSUs		target
2010		0		5,257		5,257	$	211,844	No – has met 50% of target.
2009		0		1,739		1,739	$	59,004	Has until May 27, 2016
Change		—		3,518		3,518	$	152,840	to acquire additional shares and DSUs equal to $420,000

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $211,844 in 2010, $59,004 in 2009

2011 management proxy circular     11

Timothy S. Gitzel

48

Saskatoon, Saskatchewan

Canada

Citizenship — Canadian

New director

Not independent — President

Main areas of experience

• Nuclear industry

• Mining

• Operational excellence

• International

Timothy Gitzel is president of Cameco Corporation. He joined Cameco in January 2007 as senior vice-president and chief operating officer, and was appointed to his current position in May 2010. He will become president and CEO as of July 1, 2011. Mr. Gitzel has extensive experience in Canadian and international uranium mining activities through 17 years of senior management experience. Prior to joining Cameco, he was executive vice-president, mining business unit for AREVA based in Paris, France with responsibility for global uranium, gold, exploration and decommissioning operations in 11 countries around the world.

Mr. Gitzel received his bachelor of arts and law degrees from the University of Saskatchewan. He serves on the boards of the Mining Association of Canada and the Canadian Nuclear Association. He is past president of the Saskatchewan Mining Association, and also served on the boards of SaskEnergy Corporation, the Saskatchewan Chamber of Commerce and Junior Achievement of Saskatchewan. Mr. Gitzel was also co-chair of the Royal Care campaign for Royal University Hospital in Saskatoon, and vice-president, communications for the 2010 World Junior Hockey Championships.

	Overall attendance – n/a
Cameco board and committee	In person	Telephone	Other public company
membership	meetings	meetings	boards
n/a			none

Securities held:

							Total value of
					Total Cameco		Cameco
					shares and		shares and
	Cameco		Qualifying		qualifying		qualifying		Meets share ownership
Fiscal year	shares		PSUs		PSUs		PSUs		target
2010		3,100		3,100		6,200	$	249,860	No – has met 12% of executive target for president. Has until December 31, 2015 to reach the target for president.

Options held: see Incentive plan awards on page 83

Total amount of equity at risk (Cameco shares, qualifying PSUs and options): $2,039,160 in 2010

James K. Gowans

59

Toronto, Ontario

Canada

Citizenship — Canadian

Director since 2009

Independent

Main areas of experience

• CEO experience

• Mining

• Exploration

• Operational excellence

• International

James Gowans is the managing director of the Debswana Diamond Company in Botswana (a diamond exploration and mining company). From February 2010 to December 2010 he was chief operating officer and chief technical officer of DeBeers SA and from March 2006 to December 2010, he was CEO of DeBeers Canada Inc. (a diamond exploration and mining company). Prior to that, he was the senior vice-president and COO of PT Inco in Indonesia (a nickel producing company) from 2002 to 2006. Mr. Gowans is the past-chair of The Mining Association of Canada. He served on the board of Bison Gold Resources Inc., a junior exploration public company, from 2006 to 2008, and currently serves on the public company boards listed below.

Mr. Gowans received a bachelor of applied science in mineral engineering (mining and mineral processing) degree from the University of British Columbia and attended the Banff School of Advanced Management. Mr. Gowans brings to the board experience in exploration and mining and as a CEO of a mining company. His mining knowledge and perspective on the importance of corporate social responsibility are valuable as a member of our reserves oversight and our safety, health and environment committees.

	Overall attendance – 100%
Cameco board and committee	In person	Telephone	Other public
membership	meetings	meetings	company boards
Board of directors	6 of 6	5 of 5	PhosCan Chemical Corp.
Nominating, corporate governance and risk	4 of 4	1 of 1
Reserves oversight	2 of 2	1 of 1
Safety, health and environment	5 of 5

Securities held:

					Total Cameco		Total value of
	Cameco				shares and		Cameco shares			Meets share ownership
Fiscal year	shares		DSUs		DSUs		and DSUs			target
2010		1,000		5,911		6,911	$	278,523		No – has met 66% of target.
2009		1,000		3,179		4,179	$	141,793		Has until May 27, 2016 to
Change		—		2,732		2,732	$	136,730	acquire additional shares and DSUs equal to $420,000

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $278,523 in 2010, $141,793 in 2009

12     cameco corporation

Gerald W. Grandey

64

Saskatoon, Saskatchewan

Canada

Citizenship — Canadian and American

Director since 2000

Not independent — CEO

Main areas of experience

• CEO experience

• Nuclear industry

• Mining

• Operational excellence

• International

• Government relations

Gerald Grandey is the CEO of Cameco Corporation. He has a degree in geophysical engineering from the Colorado School of Mines and a law degree from Northwestern University. Mr. Grandey’s presence on the board is fundamental to maintaining the necessary level of communication between the board and management for a well run organization. He also provides the board with knowledge and insights to further their understanding of all aspects of the nuclear industry.

In addition to the public company board listed below, Mr. Grandey currently serves on the board of the Nuclear Energy Institute, and the boards of the Saskatoon Chapters of the YMCA and Junior Achievement. He served on the public company board of Centerra Gold Inc., a gold mining company and former Cameco subsidiary, from 2004 to 2007.

	Overall attendance – 100%
Cameco board and committee	In person	Telephone	Other public company
membership	meetings	meetings	boards
Board of directors	6 of 6	5 of 5	Sandspring Resources Limited
Not a member of any committee because he is CEO

Securities held:

					Total Cameco		Total value of
					shares and		Cameco shares
	Cameco		Qualifying		qualifying		and qualifying			Meets share
Fiscal year	shares		PSUs		PSUs		PSUs			ownership target
2010		674,666		45,200		719,866	$	29,010,600		Yes – meets executive
2009		314,666				314,666	$	10,676,617	target for CEO by 711%
Change		360,000				405,200	$	18,333,983

Options held: see Incentive plan awards on page 83

Total amount of equity at risk (Cameco shares, qualifying PSUs and options): $41,761,182 in 2010, $32,231,359 in 2009

Nancy E. Hopkins

56

Saskatoon, Saskatchewan

Canada

Citizenship — Canadian

Director since 1992

Independent

Main areas of experience

• Legal

• Board governance

Nancy Hopkins, Q.C. is a partner with the law firm of McDougall Gauley, LLP in Saskatoon, where she concentrates her practice on corporate and commercial law and taxation. In addition to the public company boards listed below, Ms. Hopkins is chair of the board of governors of the University of Saskatchewan, chair of the board of the Saskatoon Airport Authority and serves as a director of the Canada Pension Plan Investment Board. Except for the public companies listed below, she has not served on any other public company boards over the past five years.

Ms. Hopkins has a bachelor of commerce degree and a bachelor of laws degree from the University of Saskatchewan. She is an honorary member of the Institute of Chartered Accountants of Saskatchewan.

Ms. Hopkins brings to the board extensive experience in the Saskatchewan business community. Her board experience with a wide range of respected organizations has provided her with a strong governance background and a wealth of knowledge for assuming her new role as chair of our nominating, corporate governance and risk committee.

	Overall attendance – 90%
Cameco board and committee	In person	Telephone	Other public company
membership	meetings	meetings	boards
Board of directors	5 of 6	5 of 5	Growthworks Canadian
Audit	4 of 5			Fund Ltd.
Nominating, corporate governance and risk (chair)	4 of 4	1 of 1	Growthworks Commercialization Fund Ltd.

Securities held:

					Total Cameco		Total value of
	Cameco				shares and		Cameco shares		Meets share ownership
Fiscal year	shares		DSUs		DSUs		and DSUs		target
2010		20,500		15,130		35,630	$	1,435,903	Yes – by 342%
2009		11,500		13,443		24,943	$	846,316
Change		9,000		1,687		10,687	$	589,587

Options held:

				Total		Value of in-the-money
Date granted	Expiry date	Exercise price		Unexercised		options
Mar 10/03	Mar 9/11	$	5.880		27,000	$	929,340

Total amount of equity at risk (Cameco shares, DSUs and options): $2,365,243 in 2010, $1,843,273 in 2009

2011 management proxy circular     13

Oyvind Hushovd

61

Kristiansand S., Norway

Citizenship — Norwegian

Director since 2003

Independent

Main areas of experience

• CEO experience

• Mining

• Operational excellence

• International

Oyvind Hushovd is a corporate director and the former chair and CEO of Gabriel Resources Ltd. (a precious metals exploration and development company), retiring in 2005. Prior to that, he was the president and CEO of Falconbridge Limited (a nickel and copper mining company) from 1996 to 2002. In addition to the public company boards listed below, Mr. Hushovd is the board chair of Nickel Mountain Resources AB and sits on the boards of Ivanhoe Nickel & Platinum Ltd, Libra and Sorlaminering, privately held corporations. During the last five years, he served on the public company boards of Gabriel Resources Ltd. (2002-2006), Lionore Mining International Limited (2002-2007) and Western Oil Sands Inc. (2003-2007).

Mr. Hushovd received a master of economics and business administration degree from the Norwegian School of Business and a master of law degree from the University of Oslo. He brings many years of experience as a mining executive to the board. His mining knowledge is very important as a member of the reserves oversight committee, and his financial experience as chief financial officer of Falconbridge Limited is valuable as a member of the audit committee.

	Overall attendance – 100%
Cameco board and committee	In person	Telephone	Other public company
membership	meetings	meetings	boards
Board of directors	6 of 6	5 of 5	Inmet Mining Corporation
Audit	5 of 5		Nyrstar NV
Human resources and compensation	5 of 5	3 of 3
Reserves oversight	2 of 2	1 of 1

Securities held:

					Total Cameco		Total value of
	Cameco				shares and		Cameco shares		Meets share
Fiscal year	shares		DSUs		DSUs		and DSUs		ownership target
2010		0		26,566		26,566	$	1,070,625	Yes – by 255%
2009		0		22,825		22,825	$	774,452
Change		—		3,741		3,741	$	296,173

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $1,070,625 in 2010, $774,452 in 2009

14     cameco corporation

A. Anne McLellan

60

Edmonton, Alberta

Canada

Citizenship — Canadian

Director since 2006

Independent

Main areas of experience

• Government relations

• Corporate social responsibility

The Honourable Anne McLellan is a former Deputy Prime Minister of Canada and has held several senior cabinet positions, including federal Minister of Natural Resources, Minister of Health, Minister of Justice and Attorney General of Canada, and federal interlocutor of Métis and non-status Indians. Prior to entering politics in 1993, Ms. McLellan was a law professor and administrator at the University of Alberta. Since leaving politics, she has been appointed distinguished scholar in residence at the University of Alberta in the Institute for United States Policy Studies and is counsel in the national law firm of Bennett Jones, LLP.

Ms. McLellan holds a bachelor of arts degree and a law degree from Dalhousie University, and a master of laws degree from King’s College, University of London. In 2007, Ms. McLellan completed the Directors’ Education Program through the Corporate Governance College. She brings an understanding of government regulatory matters and international affairs to the board. As a member of the human resources and compensation committee, nominating corporate governance and risk committee and the safety, health and environment committee, Ms. McLellan brings diverse management experience gained as a senior Minister and Deputy Prime Minister of the Government of Canada and from her work on other boards and with non-profit organizations.

In addition to the public company boards listed below, Ms. McLellan serves on the boards of Canadian Business for Social Responsibility, the Royal Alexandra Hospital Foundation, the Edmonton Regional Airport Authority, the Edmonton Chapter of Habitat for Humanity and the TD Securities Energy Advisory Board. She is a Trudeau Foundation mentor and the chair of the 2010 campaign for the United Way, Alberta Capital Region (Edmonton). Except for the public company boards listed below, she has not served on any other public company boards over the past five years.

	Overall attendance – 97%
Cameco board and committee	In person	Telephone	Other public company
membership	meetings	meetings	boards
Board of directors	6 of 6	5 of 5	Agrium Inc.
Human resources and compensation	5 of 5	2 of 3	Nexen Inc.
Nominating, corporate governance and risk	4 of 4	1 of 1
Safety, health and environment	5 of 5

Securities held:

							Total value of		Meets share
	Cameco				Total Cameco		Cameco shares		ownership
Fiscal year	shares		DSUs		shares and DSUs		and DSUs		target
2010		100		16,161		16,261	$	655,318	Yes – by 156%
2009		100		13,331		13,431	$	455,714
Change		—		2,830		2,830	$	199,604

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $655,318 in 2010, $455,714 in 2009

2011 management proxy circular     15

A. Neil McMillan

59

Saskatoon, Saskatchewan

Canada

Citizenship — Canadian

Director since 2002

Independent

Main areas of experience

• CEO experience

• Mining

• Government relations

Neil McMillan is the president and CEO of Claude Resources Inc. (a Saskatchewan-based gold mining and oil and gas producing company). He previously served on the board of Atomic Energy Canada Ltd. (a Canadian government nuclear reactor production and services company). Except for the public company boards listed below, Mr. McMillan has not served on any other public company boards over the past five years.

Mr. McMillan received a bachelor of arts degree in history and sociology from the University of Saskatchewan, and is a former member of the Saskatchewan legislature. Prior to joining Claude Resources Inc. in 1995, Mr. McMillan worked with RBC Dominion Securities Inc. as a registered representative and the Saskatoon branch manager.

Mr. McMillan’s experience as the CEO of a Saskatchewan-based mining company gives the board access to a ground level view of many of the daily mining risks and opportunities faced by Cameco. His background as an investment adviser and legislator are valuable when the board is reviewing investment opportunities.

Mr. McMillan’s knowledge and experience of the mining industry assist in the board’s oversight of regulatory matters and are important attributes as he assumes his new role as chair of our reserves oversight committee.

	Overall attendance* – 68%
Cameco board and committee	In person	Telephone	Other public company
membership	meetings	meetings	boards
Board of directors	5* of 6	3* of 5	Claude Resources Inc.
Audit	3* of 5		Shore Gold Inc.
Reserves oversight (chair)	1* of 2	1 of 1

* Mr. McMillan’s overall attendance was 100% in 2009, 97% in 2008 and 94% in 2007. He was unable to attend one set of meetings (consisting of three meetings) because of an important family commitment. Mr. McMillan is an effective director with much to contribute, and is committed to improving his attendance going forward.

Securities held:

							Total value of
	Cameco				Total Cameco		Cameco shares		Meets share ownership
Fiscal year	shares		DSUs		shares and DSUs		and DSUs		target
2010		600		21,561		22,161	$	893,085	Yes – by 213%
2009		600		18,680		19,280	$	654,170
Change		—		2,881		2,881	$	238,915

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $893,085 in 2010, $654,170 in 2009

Victor J. Zaleschuk

66

Calgary, Alberta

Canada

Citizenship — Canadian

Director since 2001

Independent

Main areas of experience

• CEO experience

• Finance

• International

• Mergers and acquisitions

• Board governance

Victor Zaleschuk is a corporate director and chair of Cameco’s board of directors. He is the former president and CEO of Nexen Inc., a publicly traded independent global energy and chemicals company. Mr. Zaleschuk brings to the board his vast experience in the resource industry as a former CEO of a major Canadian oil and gas resource company with international holdings, a financial background as a former chief financial officer and experience in mergers and acquisitions.

Mr. Zaleschuk has been a chartered accountant since 1967 and holds a bachelor of commerce degree from the University of Saskatchewan. Except for the public company boards listed below, Mr. Zaleschuk has not served on any other public company boards over the past five years.

	Overall attendance* – 100%
Cameco board and committee	In person	Telephone	Other public company
membership	meetings	meetings	boards
Board of directors (chair)	6 of 6	5 of 5	Agrium Inc.
Reserves oversight	2 of 2	1 of 1	Nexen Inc.

* As board chair, Mr. Zaleschuk also attended 22 board committee meetings in an ex-officio capacity.

Securities held:

							Total value of
	Cameco				Total Cameco		Cameco shares		Meets share ownership
Fiscal year	shares		DSUs		shares and DSUs		and DSUs		target
2010		28,615		50,087		78,702	$	3,171,691	Yes – by 311%
2009		10,615		43,605		54,220	$	1,839,685
Change		18,000		6,482		24,482	$	1,332,006

Options held: nil

Total amount of equity at risk (Cameco shares, DSUs and options): $3,171,692 in 2010, $2,344,585 in 2009

16     cameco corporation

Notes to the director profiles:

• Each director has provided the information about the Cameco shares they own or exercise control or direction over.

• DSUs refer to deferred share units under our DSU plan for directors. Directors who are Cameco executives do not receive DSUs.

• We calculated the total value of Cameco shares and DSUs using $40.30 for 2010 and $33.93 for 2009, the year-end closing prices of Cameco shares on the Toronto Stock Exchange (TSX).

• Options held refer to options under our stock option plan that have not been exercised. The board stopped granting options to directors on October 28, 2003. In 2004, Mr. Curtiss exercised reload options to receive additional options with a 10-year term. We stopped awarding reload options in 1999.

• The exercise prices and number of options have been adjusted to reflect stock splits of Cameco shares.

• The value of in-the-money options is calculated as the difference between $40.30 (the 2010 year-end closing price of Cameco shares on the TSX) and the exercise price of the options, multiplied by the number of options held at December 31, 2010.

• Qualifying PSUs refer to performance share units (PSUs) that qualify under the executive share ownership guidelines. Their value assumes the PSUs payout at 80% of target, less tax at 50%, and a share price of $40.30, the closing price of our common shares on the TSX on December 31, 2010, and that the PSUs make up no more than 50% of the executive’s holdings.

Meeting attendance

We believe that an active board governs more effectively, so we expect directors to attend all board meetings, all of their respective committee meetings, and the annual meeting of shareholders. Directors can participate by teleconference if they cannot attend in person. The table below shows the number of board and committee meetings each director attended in 2010. All directors attended the 2010 annual meeting of shareholders.

The board needs a quorum of at least a majority of directors in attendance for the board to hold a meeting and transact business. The board and board committees have an opportunity to meet in camera without management present at all meetings, including those held by teleconference.

See Our expectations for directors on page 29 for more information.

										Human				Nominating,								Safety,
										resources and				corporate				Reserves				health and
						Audit				compensation				governance and				oversight				environment
Name	Independent		Board			committee				committee				risk committee				committee				committee
J. Clappison		yes	11 of 11	100	%	5 of 5		100	%	5 of 5		100	%									2 of 2		100	%
J. Colvin1		yes	9 of 11	82	%									5 of 5		100	%					4 of 5		80	%
J. Curtiss		yes	11 of 11	100	%					8 of 8		100	%	5 of 5		100	%
G. Dembroski2		yes	6 of 6	100	%	2 of 2		100	%	5 of 5		100	%	2 of 2		100	%
D. Deranger		no	11 of 11	100	%													3 of 3		100	%	5 of 5		100	%
J. Gowans		yes	11 of 11	100	%									5 of 5		100	%	3 of 3		100	%	5 of 5		100	%
G. Grandey3		no	11 of 11	100	%
N. Hopkins		yes	10 of 11	91	%	4 of 5		80	%					5 of 5		100	%
O. Hushovd		yes	11 of 11	100	%	5 of 5		100	%	8 of 8		100	%					3 of 3		100	%
G. Ivany		yes	11 of 11	100	%	5 of 5		100	%	8 of 8		100	%									5 of 5		100	%
A. McLellan		yes	11 of 11	100	%					7 of 8		88	%	5 of 5		100	%					5 of 5		100	%
N. McMillan4		yes	8 of 11	73	%	3 of 5		60	%									2 of 3		67	%
R. Peterson2		yes	6 of 6	100	%	2 of 2		100	%	5 of 5		100	%									2 of 2		100	%
V. Zaleschuk5		yes	11 of 11	100	%	4 of 5		80	%	8 of 8		100	%	5 of 5		100	%	3 of 3		100	%	5 of 5		100	%
83% of the current board are independent			Total # of meetings	11			5				8				5				3				5

Notes:
1.	Mr. Colvin was unable to attend a board meeting and a committee meeting due to illness.
2.	Mr. Dembroski and Mr. Peterson resigned from the board on May 26, 2010, and did not stand for re-election because they were over 72, our retirement age for directors.
3.	Mr. Grandey, as CEO of Cameco, is not a member of any board committees so they can operate independently of management.
4.	Mr. McMillan’s attendance was 100% in 2009, 97% in 2008 and 94% in 2007. He was unable to attend one set of meetings (consisting of three meetings) because of an important family commitment. He is committed to improving his attendance going forward.
5.	Mr. Zaleschuk attended 22 committee meetings in an ex-officio capacity, as chair of the board.

2011 management proxy circular     17

Skills and experience

A board that has a broad mix of skills and expertise can more effectively oversee the wide range of issues that arise with a company of our size and complexity, and make more informed decisions.

In 2009, the nominating, corporate governance and risk committee implemented a number of initiatives to help with the board’s ongoing development, assist in recruiting new directors, and enhance the quality of the board overall as we advance our growth strategy. This involved completing a comprehensive review of the board skills matrix, having the directors complete a self-assessment against the new matrix and conducting a survey of board diversity. The committee used this information to recruit new candidates to the board in 2009 and 2010. You can find information about board diversity on page 8, and assessing the board and director tenure on page 34.

Skills matrix

Our skills matrix has 14 categories of skills and attributes, and all of the directors complete a self-assessment of their skills annually. The matrix includes three core skills and attributes — being financially literate, independent minded and a team
player — that we expect of all directors who serve on our board.

The table below lists the 11 categories of skills and experience that are essential to the board overall, to effectively oversee and act as a strategic resource for Cameco. The table also shows the number of directors who served in 2010 and the level of expertise they indicated in their self-assessments.

			Strong working		Basic level of
Self-assessment of skills and experience	Expert		knowledge		knowledge
Board experience
Prior or current experience as a board member for a major organization with a current governance mindset, including a focus on Corporate Social Responsibility		6		6		0
Business judgment
Track record of leveraging own experience and wisdom in making sound strategic and operational business decisions; demonstrates business acumen and a mindset for risk oversight		6		6		0
Financial expertise
Experience as a professional accountant, CFO or CEO in financial accounting and reporting and corporate finance		2		6		4
Government relations
Experience in, or a thorough understanding of, the workings of government and public policy both domestically and internationally		5		5		2
Human capital
Experience in executive compensation and the oversight of significant, sustained succession planning and talent development and retention programs.		7		3		2
Industry knowledge
Knowledge of the uranium/nuclear industries, market and business imperatives, international regulatory environment and stakeholder management		3		5		4
International
Experience working in a major organization that carries on business in one or more international jurisdictions, preferably in countries or regions where we have or are developing operations		5		4		3
Investment banking/mergers and acquisitions
Experience in the field of investment banking or in mergers and acquisitions		1		5		5
Managing/leading growth
Experience driving strategic direction and leading growth of an organization, preferably including the management of multiple significant projects		6		5		1
Mining, exploration and operations
Experience with a leading mining or resource company with reserves, exploration and operations expertise		4		3		5
Operational excellence
Experience in a complex chemical or nuclear operating environment creating and maintaining a culture focused on safety, the environment and operational excellence		4		2		5

18     cameco corporation

Board diversity

We are subject to terms of the Investment Canada Act, the Uranium Non-Resident Ownership Policy and the Canada Business Corporations Act. These require at least two-thirds of our directors to be Canadian citizens and half to be Canadian residents.

As part of the matrix review process in 2009, the nominating, corporate governance and risk committee also surveyed its members, the board chair and our senior executives about board diversity.

The survey focused on ethnicity, non-Canadian residents, gender, political affiliation and age, and confirmed the importance of having:

• at least one aboriginal director from Saskatchewan because many of our operations are based in the province

• two directors who are US residents

• one or two directors from Europe and/or Asia

• at least two or three female directors

• directors of various ages.

None of the respondents felt there was a need to seek directors who have specific political affiliations.

The survey results have given the committee and the board important insights for enhancing board composition in the future.

Continuing education and development

We expect our directors to be informed about issues affecting our business, the nuclear industry and governance and other related issues. Continuing education helps our directors keep abreast of industry developments and changing governance issues and requirements, and understand issues we face within the context of our business.

The table below lists the internal and external conferences, seminars, courses and site tours that our directors attended during the year.

2010	Topic	Presented/hosted by	Attended by
February 5	Mergers & Acquisitions	Institute of Corporate Directors (ICD)	Anne McLellan
February 22	Cameco’s Competitors	David Doerksen Vice-President, Corporate Development & Power Generation Ken Seitz Vice-President, Marketing Strategy & Administration	John Clappison Joe Colvin James Curtiss Donald Deranger James Gowans Gerald Grandey	Oyvind Hushovd George Ivany Anne McLellan Neil McMillan
March 8	Pension Policy Conference	University of Saskatchewan and the Johnson Shoyama Graduate School of Public Policy	Nancy Hopkins
April 20	Beyond Compliance — Governance in Times of Transition	Deloitte & Touche	Nancy Hopkins
April 23	Directors and Fraud	Deloitte & Touche	John Clappison
June 1	Directors College Oversight and Finance Module for Crown Investments Corporation	Presenter on Measurement, Reporting and Continuous Disclosure	Nancy Hopkins
June 6-8	World Nuclear Fuel Market 37th Annual Meeting & Conference	World Nuclear Fuel Market	John Clappison James Curtiss George Ivany
June 7-8	Annual Conference	International Corporate Governance Network (ICGN)	Nancy Hopkins
June 10	Audit Committee Network Meeting — Relationship of the Audit Committee Chair with the CEO, CFO and the Finance Group	Ernst & Young	John Clappison
June 11	Overseeing Tax Risk and Reporting Under IFRS	KPMG Audit Committee Institute	John Clappison

2011 management proxy circular     19

2010	Topic	Presented/hosted by	Attended by
June 16	Implementation of ISO 31000 Risk Management Standards: What Directors Need to Know	Webcast by Grant Thornton, the Institute of Corporate Directors and the Canadian Standards Association	Nancy Hopkins
August 10-11	The Impact of Governance on the Nuclear Power Industry	Emory Goizueta Directors Institute and Institute of Nuclear Power Operations	James Curtiss
August 11	Uranium Exploration at Cameco	Colin Macdonald Vice-President, Exploration	John Clappison Joe Colvin James Curtiss Donald Deranger James Gowans Gerald Grandey	Nancy Hopkins Oyvind Hushovd George Ivany Anne McLellan Neil McMillan Victor Zaleschuk
August 28	Presentation and Tour of Cigar Lake Site in Northern Saskatchewan	Grant Goddard Vice-President, Mining North	John Clappison James Curtiss Donald Deranger James Gowans Gerald Grandey	Nancy Hopkins Oyvind Hushovd Neil McMillan Victor Zaleschuk
September 14-15	World Energy Congress	The World Energy Council	Gerald Grandey
September 27	Presentation and Tour of Cameco’s Conversion and Fuel Manufacturing Facilities in Port Hope, Ontario	Vice-President, Fuel Services and General Managers of Cameco’s Facilities in Ontario	Donald Deranger James Gowans Gerald Grandey	George Ivany Anne McLellan Victor Zaleschuk
October 6	Audit Committee Peer Exchange	NYSE and Corporate Board Member	John Clappison
October 6	Compensation Committee Peer Exchange	NYSE and Corporate Board Member	James Curtiss
October 7-8	Annual Boardroom Summit	NYSE and Corporate Board Member	John Clappison Joe Colvin James Curtiss Donald Deranger James Gowans	Nancy Hopkins George Ivany Anne McLellan Victor Zaleschuk
October 12	Canadian Audit Committee Network Meeting — Audit Committee Oversight of Fraud and Other Malfeasance and IFRS Update	Tapestry Networks	John Clappison
November 4	New Build in the Developing World	Ux Consulting	John Clappison Joe Colvin James Curtiss Donald Deranger James Gowans Gerald Grandey	Nancy Hopkins Oyvind Hushovd George Ivany Anne McLellan Neil McMillan Victor Zaleschuk
November 7-9	Directors Financial Literacy Program	Rotman School of Management	Donald Deranger
November 9-10	2010 CEO Conference: Nuclear Safety — Demanding Excellence	Institute of Nuclear Power Operations (INPO)	Gerald Grandey Timothy Gitzel
November 10	The Role of the Board — Adding Value, Distinct from Management	The Saskatchewan Chapter of the Institute of Corporate Directors	Nancy Hopkins
November 30	Executive Compensation for 2011, New Challenges and Opportunities	Hugessen Consulting	Anne McLellan
December 1	Corporate Social Responsibility at Cameco	Gary Merasty Vice-President, Corporate Social Responsibility	John Clappison Joe Colvin James Curtiss Donald Deranger James Gowans Gerald Grandey	Nancy Hopkins Oyvind Hushovd George Ivany Anne McLellan Victor Zaleschuk
December 6	US Energy Policy	J. Robinson West President and CEO PFC Energy	Anne McLellan Victor Zaleschuk

20     cameco corporation

About the auditors

The auditors fulfill a critical role, reinforcing the importance of a diligent and transparent financial reporting process that strengthens investor confidence.

KPMG LLP (KPMG), or its predecessor firms, have been our auditors since incorporation. You can vote for reappointing KPMG as our auditors until the end of the next annual meeting, or you can withhold your vote. Unless otherwise instructed, the named proxyholders will vote for reappointing KPMG. We need a simple majority of votes cast for KPMG, by person or by proxy, to approve their reappointment.

KPMG provides us with four types of services:

• audit services — generally relate to reviewing annual and interim financial statements and notes, conducting the annual audit and providing other services that may be required by regulators. These may also include services for registration statements, prospectuses, reports and other documents that are filed with securities regulators, or other documents issued for securities offerings.

• audit-related services — include consulting on accounting matters, attest services not directly linked to the financial statements that are required by regulators, conducting audits of employee benefit plans and audits of affiliates, as well as reviewing and testing our internal controls over financial reporting.

• tax services — relate to tax compliance, tax advice and tax planning that are beyond the scope of the annual audit. These may include transfer-pricing surveys for the tax authorities, preparing corporate and personal tax returns, and advice and consulting on international tax matters, tax implications of capital market transactions and capital tax.

• other services — include other professional services that KPMG and/or its affiliates provide us and our subsidiaries or joint ventures from time to time.

The table below shows the fees we paid to KPMG and its affiliates for services in 2010 and 2009:

			% of total					% of total
	2010		fees		2009			fees
	($)		(%)		($)			(%)
Audit fees
Cameco		1,697,700		62.6		1,739,900			48.7
Centerra and other subsidiaries		256,200		9.5		978,600	1		27.4
Total audit fees		1,953,900		72.1		2,718,500			76.1
Audit-related fees
Cameco		273,400		10.1		219,800			6.1
Centerra and other subsidiaries1		—		—		32,300			0.9
Translation services		44,500		1.6		424,000			11.9
Pensions		20,000		0.7		17,000			0.5
Total audit-related fees		337,900		12.5		693,100			19.4
Tax fees
Compliance		199,200		7.3		40,000			1.1
Planning and advice		219,500		8.1		122,400			3.4
Total tax fees		418,700		15.4		162,400			4.5
All other fees		—		—		—			—
Total fees		2,710,500		100.0		3,574,000			100.0

Note:

1. The 2009 fees include amounts related to Centerra Gold Inc. (Centerra). We disposed of our entire interest in Centerra in December 2009.

The audit committee is responsible for reviewing and approving KPMG’s audit plan, fees, performance, qualifications and independence. You can find more information about the audit committee starting on page 36.

2011 management proxy circular     21

Amendments to our bylaws

We believe that increasing the quorum for meetings of our shareholders and clarifying the minimum quorum for meetings of our board of directors reflects good governance.

At its meetings on November 4, 2010 and February 11, 2011, the board amended our general bylaws to increase the quorum for meetings of our shareholders and clarify the minimum quorum for meetings of our board of directors. We are now seeking confirmation of these changes to our bylaws from our shareholders.

Previously, according to section 5.2 of Bylaw No. 6, the people attending our meetings of shareholders needed to hold, or represent by proxy, at least 5% of our common shares issued and outstanding. On the recommendation of our nominating, corporate governance and risk committee, our board decided that it would be better for meetings of our shareholders to have representation of at least 25% of our shares issued and outstanding to ensure there is always adequate shareholder representation for decision-making. This is a good governance practice.

Section 7.7 of Bylaw No. 6 previously stated that at least a majority of our directors needed to be in attendance at board meetings, but it also allowed our directors to unilaterally amend this quorum requirement. Although permitted, the directors have never unilaterally amended the quorum for any board meeting. On the recommendation of our nominating, corporate governance and risk committee, the board decided to eliminate this unilateral ability of our directors, so a majority of our directors must now be in attendance at all board meetings. This is also a good governance practice.

You are being asked to confirm these amendments to the quorum requirements for meetings of our shareholders and our board of directors by passing the following resolution. We require a majority of shareholders to confirm the amendments in order to pass this resolution. If the resolution is not passed, the amendments will no longer be in force or have any effect.

Resolved that the amendment of Bylaw No. 6 (a bylaw relating generally to the conduct of the business and affairs of Cameco Corporation) approved at meetings of Cameco’s board of directors on November 4, 2010 and February 11, 2011 is hereby confirmed by:

1. deleting the first sentence of Section 5.2 and replacing it with the following:

A quorum for any meeting of shareholders shall be at least two persons present and holding or representing by proxy not less than twenty-five (25) percent of the total number of issued and outstanding shares of the Corporation entitled to vote at such meeting; and

2. deleting the first sentence of Section 7.7 and replacing it with the following:

A quorum for any meeting of the Board of Directors of the Corporation shall consist of a majority of the directors of the Corporation.

You can access a complete copy of Bylaw No. 6 on our website (cameco.com/responsibility/governance/policies_initiatives/articles_bylaws) or on SEDAR (sedar.com) and EDGAR (sec.gov/edgar.shtml).

22     cameco corporation

Having a say on our approach to executive compensation

You will have an opportunity to vote on our approach to executive compensation at the upcoming meeting. Your vote is advisory and non-binding, and will provide the board and human resources and compensation committee with important feedback.

Please take some time to read the Executive compensation section starting on page 52. We describe our compensation philosophy, the objectives and elements of the program and the way we measure and assess performance and make compensation decisions. We explain how and why a large portion of our executives’ compensation is linked to performance and earned over the longer term, and how we manage compensation risk.

As a shareholder you have the opportunity to vote for or against our approach to executive compensation through the following resolution:

Resolved, on an advisory basis and not to diminish the role and responsibilities of the board of directors,that the shareholders accept the approach to executive compensation disclosed in Cameco’s management proxy circular delivered in advance of the 2011 annual meeting of shareholders.

We recommend that shareholders vote for the advisory resolution on our approach to executive compensation. Unless otherwise instructed, the named proxyholders will vote for the advisory resolution.

We will disclose the results of the advisory vote in our report on the 2011 annual meeting voting results.

The board believes it is important to give shareholders an effective way to provide input on our approach to executive compensation. This is the second year that shareholders will have an opportunity to participate in an advisory vote, and it is one means of achieving this objective. Because we are committed to ensuring shareholders have an effective and timely opportunity to provide input on this matter, we continue to evaluate the most effective means of achieving this objective. As a result, following this year’s vote, we will examine the level of interest and nature of the comments received from shareholders, as well as evolving best practices by other companies, and consider what might be the optimum frequency and approach for shareholders to provide their input on our approach to executive compensation.

Use the tool on our website (cameco.com/investorsurvey) to provide feedback on our executive compensation practices and the frequency of this advisory vote, or see Communicating with the board on page 26. Shareholders can also write directly to the chair of the board or the chair of the human resources and compensation committee with their views on executive compensation.

2011 management proxy circular     23

Governance at Cameco

Cameco recognizes the importance of sound governance, and we firmly believe it is the foundation for strong corporate performance.

This section tells you about three key elements of governance at Cameco: our governance principles and guidelines, our board and how it operates, and our compensation practices.

Our governance principles and guidelines	25
Code of conduct and ethics	25
Disclosure policy	25
Shareholder engagement	26
Communicating with the board	26
Standards and practices	27
Maintaining separate chair and CEO positions	27
About our board	28
Independence	28
Our expectations for directors	29
The role of the board	30
Assessing the board and director performance	33
Board committees	35
Compensating our directors and executives	45
Director compensation	46
Executive compensation	52

24     cameco corporation

Our governance principles and guidelines

Code of conduct and ethics

Everyone at Cameco — directors, officers and employees — are held to the same standard of conduct.

Our board of directors expects everyone to act with honesty, integrity and impartiality, to earn and maintain the trust of our shareholders, other stakeholders, customers and the communities where we operate. This means complying with the code of conduct and ethics in all of our activities. We revised the code in 2010 to reinforce our standards of integrity and ethical conduct and to make it more user-friendly.

The code contains principles and guidelines for ethical behavior, and describes the governance and corporate culture we expect at Cameco. It covers the following key areas:

• financial reporting and accountability

• confidentiality

• conflicts of interest

• complying with the laws, rules and regulations that apply to us (including safety, health, environmental, import, export, securities disclosure and insider trading laws)

• corporate opportunities

• identifying and preventing fraud

• reporting illegal or unethical behaviour

• reporting violations or breaches of the code

Complying with the code means that:

• employees and directors must report any actual, potential or perceived conflicts of interest to the corporate secretary. The secretary brings all reports involving an employee to the attention of management’s conflicts review committee, and to the nominating, corporate governance and risk committee if it involves a director.

• directors must excuse themselves from any discussions or decisions where their business or personal interests would create a conflict of interest.

We have had an ethics (whistleblower) hotline since 2006 that allows employees to report any concerns about inappropriate business conduct confidentially and anonymously. Employees can report these concerns online or by phone.

All new employees must read the code when they are hired, and sign an acknowledgement that they will follow the code and have no conflicts of interest, or disclose any conflicts they do have. Directors and employees who have supervisory responsibilities or work in the supply chain management, exploration and human resources departments must review the code every year and sign a certificate of compliance. Any issues arising from these reports are brought to the attention of management’s conflict review committee for employees, the audit committee for employees who are insiders, and the nominating, corporate governance and risk committee for directors.

You can find a copy of the code on our website (cameco.com/responsibility/governance/ethics/), or by writing to our corporate secretary.

Disclosure policy

We are committed to communicating openly and in a timely way with shareholders, employees and the public, and providing complete, accurate and balanced disclosure in our documents. We describe this commitment and our policy for disseminating material information in our disclosure policy, which is available on our website (cameco.com/responsibility/governance/policies_initiatives/corporate_disclosure/).

Our disclosure committee is made up of members of senior management and is responsible for:

• reviewing all news releases and public filings containing material information prior to their release

• evaluating the design and effectiveness of our disclosure controls and procedures to make sure they continue to provide reasonable assurance that information is gathered promptly and accurately, so we can make decisions about appropriate public disclosure that complies with legal requirements

• recommending any appropriate changes to our disclosure controls and procedures to the audit committee for approval.

Each board committee reviews the material public disclosure relevant to its mandate before the board considers them for approval. The audit committee is responsible for reviewing the annual and interim financial statements and management’s discussion and analysis (MD&A), and then recommending them to the board for approval. The safety, health and environment committee reviews the sustainable development report before it is published.

2011 management proxy circular     25

The board also reviews and approves the following documents, which are filed publicly:

• prospectuses

• annual information forms

• management proxy circulars

• US Form 40-F filings

• other disclosure documents that must be approved by the directors according to securities laws, securities regulations or stock exchange rules.

The audit committee receives regular updates from the disclosure committee, and is responsible for reviewing our disclosure controls and procedures once a year and recommending any changes to the board for approval.

Our website (cameco.com) has information for shareholders, investment analysts, the media and the public. The CEO and other officers meet regularly with investment analysts and institutional investors. Our investor, corporate and government relations (IR) department provides information to current and prospective shareholders and responds to any questions or concerns they may have.

You can reach the IR department by:

phone:	306.956.6309
fax:	306.956.6318
e-mail:	complete the e-mail form under the Contact section of our website.

Shareholder engagement

Our commitment to communicating openly with shareholders and other key stakeholders also involves having open and constructive dialogue on governance and disclosure matters that are in the public domain.

While contact with shareholders is mainly through our corporate office and the IR department, in particular, board members are willing to meet from time to time with significant shareholders and industry organizations upon request. The board believes these discussions lead to a better understanding of governance and other issues and the board’s decisions.

As a result, the board adopted a shareholder engagement statement in 2010 to establish engagement practices based on shareholders’ needs and evolving governance practices.

Shareholders, employees and others can contact the chair of the board, the committee chairs or the independent directors as a group directly. See Communicating with the board, below for more information. You can access a copy of our shareholder engagement statement on our website (cameco.com/responsibility/governance/practices).

Advisory vote

In 2010, shareholders had an opportunity to vote on our approach to executive compensation. This was an advisory and non-binding vote, and a large majority (92%) of our shareholders voted for our approach to executive compensation.

Shareholders will also have another ‘say on pay’ advisory vote at our 2011 annual meeting of shareholders (see page 23). Shareholders can also use the tool on our website (cameco.com/investorsurvey) to provide feedback on our executive compensation practices.

Communicating with the board

Shareholders, employees or other interested parties can contact the chair of the board, or the independent directors as a group by writing to them at our corporate office.

Send the sealed envelope to:
Cameco Corporation	Please mark it:
2121-11th Street West	Private and strictly confidential
Saskatoon, SK S7M 1J3	Attention — Chair of the board of directors
If you want to contact the chair of either the audit committee or the human resources and compensation committee, send your sealed envelope to the same address.	Please mark it: Private and strictly confidential
	Attention — Chair of the audit committee, or
	Chair of the human resources and
	compensation committee

These envelopes will be delivered unopened.

The board can also be contacted through our website (cameco.com).

26     cameco corporation

Standards and practices

We are a public company and our shares trade on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). We must therefore meet various corporate governance guidelines and requirements in Canada and the United States.

Standards

We comply with the corporate governance standards that apply to Canadian companies listed on the TSX, and with the requirements of the Sarbanes-Oxley Act of 2002 (SOx) and the NYSE corporate governance standards that apply to us as a foreign private issuer registered with the Securities and Exchange Commission (SEC) in the US.

We also comply with most of the NYSE corporate governance standards that apply to US issuers:

• the majority of our board is independent under the NYSE standards

• non-management directors meet separately from management at regularly scheduled meetings

• the audit committee has a written mandate and its committee members are independent under the SEC and NYSE requirements

• the audit committee conducts an annual self-assessment survey

• our internal audit department provides management and the audit committee with ongoing assessments of our internal controls

• the human resources and compensation committee has a written mandate and its members are independent under the NYSE standards

• the nominating, corporate governance and risk committee has a written mandate and its members are independent under the NYSE standards

• our enterprise risk management group provides the nominating, corporate governance and risk committee with ongoing reports of our corporate risk management system and other relevant committees with reports on our enterprise risks

• our code of conduct and ethics applies to directors, officers and employees.

Practices

There is only one major difference between our corporate governance practices and what is required of US issuers under the NYSE standards. The NYSE standards require shareholders to approve all equity compensation plans and any material revisions to the plans, whether or not the securities issued under the plans are newly issued or purchased on the open market, subject to a few limited exceptions.

We adhere to the TSX rules. These rules require shareholders to approve equity compensation plans that involve newly issued securities. In addition, the TSX rules require:

• if the plan does not provide for the issue of a fixed maximum number of securities, shareholders must approve the plan every three years

• if the plan has an amendment procedure, shareholders must approve an amendment only when it involves:

• reducing the exercise price or extending the term of options held by insiders

• removing an insider participation limit or when it results in an insider participation limit being exceeded

• increasing the fixed maximum number of securities to be issued under the plan

• changing the amendment procedure or when the plan requires the amendment to receive shareholder approval.

Maintaining separate chair and CEO positions

We have had an independent, non-executive board chair since 2003.

Maintaining separate chair and CEO positions allows the board to be more effective in its oversight duties and hold management accountable for the company’s activities. Appointing a non-executive chair provides the board with stronger leadership, fosters more effective discussion and decision-making and avoids conflicts of interest. It also reflects good governance.

2011 management proxy circular     27

About our board

Our board of directors is responsible for overseeing management and Cameco’s business affairs. Its goal is to ensure we continue to operate as a successful business, optimizing financial returns to increase our value over time while effectively managing the risks we face in our business.

Our board works within a climate of respect, trust and candor, fostering a culture of open dialogue. It fulfills its duties by:

• maintaining a governance framework that sets broad areas of responsibility and includes appropriate checks and balances for effective decision-making and approvals

• making decisions that set the tone, character and strategic direction for Cameco and approving the vision, mission and value statements developed by management

• regularly monitoring management’s effectiveness, including its leadership, recommendations, decisions and execution of strategies to ensure that the CEO and senior management carry out their responsibilities.

The board has delegated the day-to-day responsibility for corporate governance to the nominating, corporate governance and risk committee. It is responsible for defining our approach to corporate governance issues (including reviewing our corporate governance guidelines once a year and recommending any appropriate changes to the board).

The board reviews our corporate governance framework and practices and revises them as regulations change, and as industry and shareholder expectations and corporate best practices continue to evolve.

You can find more information about our corporate governance practices on our website (cameco.com/responsibility/governance/practices/), or by writing to our corporate secretary.

Independence

We define any director who does not have a direct or indirect material relationship with us as independent. A relationship is material when it could reasonably interfere with a director’s ability to make independent decisions, regardless of any other association he or she may have.

The board believes that at least a substantial majority of our directors must be independent, and that the audit committee, human resources and compensation committee and the nominating, corporate governance and risk committee must be made up entirely of independent directors.

Directors must give the nominating, corporate governance and risk committee information about their business and other relationships with us (including our affiliates) and with senior management (and their affiliates). They must also advise the committee if there are any material changes to their circumstances or relationships that could affect the board’s assessment of independence.

The board is responsible for determining whether or not each director is independent. It uses criteria that meet the standards of the Canadian Securities Administrators as set out in Multilateral Instrument 52-110 — Audit Committees, National Policy
58-201 — Corporate Governance Guidelines and the NYSE corporate governance standards.

We last reviewed and updated our criteria for director independence in February 2008. See Appendix B for more information.

Assessing independence

The board has reviewed each nominated director and decided that Gerald Grandey, Timothy Gitzel and Donald Deranger are not independent. Mr. Grandey is our CEO, Mr. Gitzel is our president, and Mr. Deranger is president of Points Athabasca Contracting Ltd. (PACL). In 2010, we paid PACL $38.0 million for construction and contracting services. Mr. Deranger is a Vice-Chief of the Prince Albert Grand Council representing the Athabasca Basin where our significant Saskatchewan operations are located. He is president of PACL by virtue of his aboriginal leadership.

Independent chair

The board appoints a non-executive, independent director as its chair to help it function independently of management. Victor Zaleschuk has served as the chair of our board since 2003.

The chair is responsible for the following duties and responsibilities, among other things:

• leading, managing and organizing the board consistent with our approach to corporate governance

• presiding as the chair at all board meetings and meetings of our shareholders

• implementing procedures so the board can carry out its work effectively, efficiently and independently of management. This includes scheduling, calling and chairing board meetings.

• acting as the liaison between the board and senior management, and as an advisor and sounding board to the CEO

28     cameco corporation

• ensuring that the board has timely and relevant information and access to other resources to adequately support its work.

The board has adopted a position description for the chair, which it reviews from time to time. You can access a copy on our website (cameco.com/responsibility/governance/chairs_role/) or by writing to our corporate secretary.

Our expectations for directors

We expect each member of the board to act honestly and in good faith, and to exercise business judgment that is in the best interests of Cameco overall.

Each director is expected to:

• comply with our code of conduct and ethics, including conflict of interest disclosure requirements. See Our governance principles and guidelines on page 25 for more information about the code.

• develop an understanding of our strategy, business environment and operations, the markets we operate in and our financial position and performance. See Measuring performance starting on page 63 for a discussion of our corporate performance.

• diligently prepare for each board and committee meeting by reviewing all of the meeting materials

• actively and constructively participate in each meeting, and seek clarification from management and outside advisors when necessary to fully understand the issues

• participate in continuing education programs, as appropriate

• participate in the board, committee and director self-assessment process.

Meeting attendance

We expect each director to attend all board meetings, all meetings of committees he or she is a member of, and the annual meeting of shareholders. Directors can participate by teleconference if they are unable to attend a board or committee meeting in person.

See Meeting attendance on page 17 for the attendance record of each director and the total number of board and committee meetings held in 2010.

In camera sessions

The board and board committees meet in camera without management present at all meetings, including those held by teleconference.

Although the board has regular in camera sessions, no sessions are held for only the independent directors. Mr. Deranger is the only non-management, non-independent director. He is not independent because he is the president of a company that Cameco has a material contract with. Mr. Deranger understands that if any matters related to that contract are raised, he is to leave the meeting until the discussion is completed and not participate in any related votes. The board has determined that the independent directors can have open and candid discussions with Mr. Deranger in attendance.

Only independent directors attend the in camera sessions of the audit committee, human resources and compensation committee and nominating, corporate governance and risk committee as all the members of these committees are independent.

Director experience

Our board represents a cross-section of business and industry experience we believe is critical for effective oversight and to support our future growth. We developed a new skills matrix in 2009 to assess board composition and recruit new directors in the future. See page 18 for more information about the skills and experience we believe are critical for serving on our board.

When a director’s principal occupation or business association changes substantially from when he or she was first elected or appointed to our board, the director must approach the chair of the board immediately and offer to resign. The nominating, corporate governance and risk committee will consider the change in circumstance and recommend to the board whether to accept or reject the resignation.

Serving on other boards

Our directors do not serve on the boards of competitor firms, nor can they join organizations or groups that may have adverse interests, unless they have our board’s permission.

In 2006, we started limiting the number of boards our directors can serve on because of the increasing demands on directors of public companies. A director who is an active CEO can serve on the boards of up to three other public companies, including the company he or she is a CEO of. Other directors can serve on the boards of up to four other public companies.

2011 management proxy circular     29

A director can temporarily exceed the limit by one public company if he or she has declared an intention to resign from, or not stand for re-election to, at least one other board as of that company’s next annual general meeting. We expect directors to advise the chair of the board and chair of the nominating, corporate governance and risk committee if they are considering accepting a directorship with another public company.

The Director profiles starting on page 9 list other public company directorships of each nominated director.

Director education

We believe that director education is important for helping directors maintain skills, gain insights and increase their understanding of our operations, and issues affecting our business and governance practices. We offer an orientation program for new directors, and a continuing education program for all directors.

Orientation for new directors

Our orientation session helps familiarize new directors with the uranium and nuclear industries, Cameco and what we expect of our board and committee members. Directors meet senior management through their presentations and at informal social gatherings.

We also provide an educational manual that covers a wide range of topics including:

• information on our corporate and organizational structure

• background information on the company and the uranium and nuclear industries

• recent regulatory filings

• financial information

• governance documents

• important policies.

Continuing education

Our continuing education program has three components:

• receiving management presentations at board and committee meetings

• visiting facilities we operate, or other nuclear facilities

• attending external conferences and seminars.

Management makes presentations to the board and committees:

• when they are making key business decisions

• during strategic planning meetings

• on topical issues from time to time

• in response to requests from directors.

Directors can also enhance their understanding of our operations and the nuclear industry through site visits to facilities we operate, or to other nuclear facilities.

We encourage directors to attend external conferences, seminars or courses at our expense. They can be on any subject that is related to their role on our board or board committees, or that is important for enhancing their knowledge of an industry relevant to us. Our corporate secretary notifies the directors of pertinent conferences, seminars and other educational opportunities to see if they are interested in attending them.

See Continuing education and development on page 19 for the list of sessions and site tours our directors attended in 2010.

The role of the board

The company articles require our board to have at least three directors and no more than 15. This year the board has decided that 13 directors are to be elected at our upcoming annual meeting.

Mandate and scope

The board has a formal mandate (see Appendix B) that lists its specific duties and responsibilities including, among others:

• selecting, evaluating and, if necessary, terminating the CEO

• assessing the integrity of the executive officers and ensuring there is a culture of integrity throughout Cameco

• succession planning and monitoring the performance and compensation of senior management

• adopting an annual strategic planning process that includes approving the strategic plans and monitoring our performance against those plans

• approving policies and procedures for identifying our principal risks and overseeing the risk management systems to mitigate those risks

• overseeing the integrity of our internal control and management information systems

30     cameco corporation

• making decisions about material corporate matters, including those that require director approval by law or regulations.

The board also has five standing committees, and each committee has a mandate that lists the responsibilities and duties of both the committee and the chair. See Board committees on page 35 for more information.

Overseeing the CEO

The CEO is appointed by the board and is responsible for managing Cameco’s affairs. His key responsibilities involve articulating the vision for the company, focusing on creating value for shareholders, and developing and implementing a strategic plan that is consistent with the corporate vision.

Our annual objectives become the CEO’s mandate from year to year, and they include specific, quantifiable goals. The human resources and compensation committee reviews the CEO’s annual objectives and recommends them to the board for approval.

The CEO is accountable to the board and board committees, and the board conducts a formal review of his performance once a year. The board has established clear limits of authority for the CEO. These are described in our delegation of financial authority policy, which was updated by the board in 2009.

The policy states, among other things, that the board must approve a number of decisions, including any that involve:

• operating expenditures that exceed the total operating budget by more than 10%

• unbudgeted project expenditures over $10 million per transaction, or over $50 million in total per year

• cost overruns on budgeted project expenditures that are more than $15 million per transaction, or over $50 million in total per year

• any acquisition or disposition of assets over $10 million per transaction, or over $50 million in total per year.

The board adopted a position description for the CEO, which is reviewed from time to time. You can find a copy on our website (cameco.com/responsibility/governance/ceos_role/) or by writing to our corporate secretary.

Decision-making

The board strives to make all decisions in the best interests of Cameco.

It engages in lively debate on items of business and considers the interests of our shareholders, debt holders, customers, employees, communities where we operate, the environment, governments, regulators and the general public when making decisions.

Strategic planning

The board works with management to develop our strategic direction.

Our strategic planning process has four main elements:

• developing a 10-year strategic plan

• setting annual corporate objectives

• establishing annual budgets and two-year financial plans

• reviewing the strategic plan annually and revising it based on our progress.

Management is responsible for preparing information on these four areas and presenting it to the board for discussion and approval.

The board holds at least one special meeting a year devoted to strategic planning. Management and the board discuss the main risks facing our business, strategic issues, competitive developments and corporate opportunities.

While these special meetings focus on strategic planning, management also presents strategic isues to the board throughout the year based on the business climate and other developments. From time to time, the board also raises various issues and topics for discussion as part of the overall process.

Overseeing and managing risk

Management, the board and board committees have been devoting more time over the last several years to the way we identify, manage, report and mitigate risk.

Risk can take different forms, and a new formal risk management policy, to be implemented in 2011, will improve the way we identify and manage risks across the organization.

We identify risk using six different categories:

• financial

• human capital

• infrastructure and security

• operational

• social, governance and compliance

• strategic.

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The board works with management to ensure our enterprise risk management system is robust in managing and assessing risk, and generating comprehensive updates.

We use a broad based, systematic approach to identifying, assessing, reporting and managing the significant risks we face in our corporate office and operations. We follow defined principles to help us identify and mitigate uncertainties that can have a negative effect on our business activities and ability to achieve our corporate objectives or strategic plan. Employees “own” the risks as part of our risk management process, and they are responsible for developing and implementing the controls that are planned or already in place, and for any risk assessments and work that are under way to mitigate risk.

Our management committee meets quarterly to review our progress in managing the most significant risks and identifying any emerging risks. Management reports on our enterprise risk management system to the nominating, corporate governance and risk committee quarterly, and reports risks to the relevant committees quarterly and to the board once a year.

The table below shows how the board and its standing committees monitor risk across the organization:

Board of directors	Committee areas of responsibility
Overall responsibility for risk oversight at Cameco	Audit committee Monitors financial risks, like hedging
	Human resources and compensation committee Oversees compensation risk, talent management risk and succession risk
	Nominating, corporate governance and risk committee Oversees governance and ensures we have a robust risk management process in place
	Reserves oversight committee Oversees the estimating of our mineral reserves
	Safety, health and environment committee Reviews the policies and systems related to safety, health, environment and related operational risks

You can find more information about the board committees starting on page 35, and how we manage compensation risk starting on page 58.

In addition, we revised our securities trading and reporting policy to reinforce that directors, executives and other employees should only purchase our securities for investment purposes, and to prohibit them from hedging any equity-based compensation.

Internal controls

The board and board committees are responsible for monitoring the integrity of our internal controls and management information systems.

The audit committee is responsible for overseeing the internal controls, including controls over accounting and financial reporting systems. The chief internal auditor reports directly to the chair of the audit committee and provides quarterly reports to the committee, while the CFO makes quarterly presentations on our financial results and forecasts to the audit committee and board. You can find more information about the committee’s activities starting on page 35.

Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting to provide reasonable assurance that public reporting of our financial information is reliable and accurate, our transactions are appropriately accounted for and the company’s assets are adequately safeguarded. Management evaluated the effectiveness of our system of internal control over financial reporting and concluded that the system was effective in providing reasonable assurance as at December 31, 2010.

Succession planning

The board is actively involved in succession planning to ensure we have an orderly succession of senior management and a plan for developing strong leadership, nurturing talent and retaining key people for our long-term success.

We also have a leadership development program to build leadership competencies throughout Cameco and to prepare certain senior level employees to take on executive positions in the future.

The human resources and compensation committee reviews the succession plan for our entire executive team twice a year, while the audit committee is responsible for reviewing the succession plan for the CFO and controller and making recommendations to the human resources and compensation committee.

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The board reviews the succession plan annually, and approves any changes to senior management. See Human resources and compensation committee on page 38 for more information.

Assessing the board and director performance

The nominating, corporate governance and risk committee uses a formal process to assess the performance and effectiveness of the board, the committees and the individual directors every year.

The committee alternates between a shorter survey one year, and a comprehensive set of surveys the following year. It uses the survey results to assess the board overall and the composition of the committees and effectiveness of their meetings, and to make the most of a director’s expertise and identify gaps in skills and experience.

Year 1		Year 2
Comprehensive set of surveys		Shorter survey
Board survey •    completed by all directors	•    nominating, corporate governance and risk committee analyses results and prepares a summary report for the board •    corporate secretary tracks the resulting action items	Board and committee survey •    completed by all directors	•    about the board, committees, board chair, committee chairs and CEO •    chair of nominating, corporate governance and risk committee reviews the results and presents them to the committee •    also prepares a summary report for the board •    corporate secretary tracks the resulting action items
Director self-evaluation •    completed by all directors	•    chair of the nominating, corporate governance and risk committee analyses results and discusses them with individual directors during their personal interviews	Director self-evaluation •    completed by all directors	•    chair of the nominating, corporate governance and risk committee analyses results and discusses them with individual directors during their personal interviews
Board chair evaluation •    completed by all directors	•    chair of the nominating, corporate governance and risk committee reviews the results and presents the results to the board chair •    also prepares a summary report for the committee and the board	Board chair evaluation •    completed by all directors	•    chair of the nominating, corporate governance and risk committee reviews the results and presents the results to the board chair •    also prepares a summary report for the committee and the board
Committee surveys •    completed by members of each committee	•    each committee chair analyses the results and prepares a summary report for the committee and reports to the board •    corporate secretary tracks the resulting action items	Audit committee survey •    completed by members of the audit committee	•    chair of the audit committee analyses the results and prepares a summary report for the committee and reports to the board •    corporate secretary tracks the resulting action items
Surveys of committee chairs •    completed by members of each committee	•    board chair reviews the results and discusses the issues raised with each committee chair	Survey of the audit committee chair •    completed by members of the audit committee	•    board chair reviews the results and discusses the issues raised with the audit committee chair

Each director completes a survey of his or her own skills, performance and relevant experience. The committee chair also conducts annual one-on-one interviews so directors can have a candid discussion about their own performance, any matters relating to the performance of their peers, or other aspects of the functioning of the board.

The nominating, corporate governance and risk committee reviews the interview and survey results, and decides whether to recommend any changes to the composition of the board or committees, structure or processes or other changes to enhance board performance, and submits them to the board for approval.

The board completed the shorter survey in 2010. The results showed that the board and committees are performing very well overall. The nominating, corporate governance and risk committee will review the board chair succession plan in 2011.

The audit committee also completed a separate self-assessment survey in 2010, and the results confirmed that the committee and the committee chair are performing very well.

2011 management proxy circular     33

Director tenure

The board does not believe in limiting the time a director can serve. While term limits can help ensure the board gains a fresh perspective, imposing this restriction means the board would lose the increasing contributions of longer serving directors who have developed a deeper knowledge and understanding of the company over time.

The board has adopted a policy requiring directors to retire when they reach 72 years of age to encourage board renewal. It can, however, extend the retirement age for an individual director, and reviews any exceptions once a year. As George Ivany turned 72 in 2010, he is retiring as of the 2011 annual meeting of shareholders.

When Mr. Grandey, our CEO, retires at the end of June 2011, he will also resign from the board.

Recruiting new directors

The nominating, corporate governance and risk committee identifies potential director candidates based on their skills, experience, character, integrity, judgment, record of achievement, diversity and any other qualities or qualifications that would enhance the board’s decision-making process and overall oversight of Cameco’s business and affairs.

This is an ongoing process based on the development of the board and its overall mix of skills and experience, and Cameco’s business needs. The committee examines the list of candidates when it is filling a vacancy on the board, and can also engage an external search firm to supplement the process as it did in 2010 (see About the nominated directors starting on page 8 for more information).

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Board committees

The board carries out its responsibilities directly and through its committees, which make recommendations to the board for approval.

The board has five standing committees:

• audit

• human resources and compensation

• nominating, corporate governance and risk

• reserves oversight

• safety, health and environment.

The audit, human resources and compensation, and nominating, corporate governance and risk committees are independent. This means each committee member is independent according to the board’s independence criteria and the terms of the Canadian Securities Administrators’ Multilateral Instrument 52-110 — Audit committees and National Policy 58-201 — Corporate Governance Guidelines and the NYSE corporate governance standards.

The nominating, corporate governance and risk committee recommends the composition of each committee and chair, while the board makes the final decisions.

Each committee has a mandate that lists the responsibilities and duties of both the committee and the chair. Each committee chair is responsible for determining the meeting agenda, how often the committee will meet, the conduct of each meeting, and chairing the meetings of their respective committees. The committees set aside time at each meeting to meet without management present.

The committee mandates are available on our website (cameco.com/responsibility/governance/board_committees/), or you can request copies from our corporate secretary.

The committee reports, which start on the next page, include the names of the chair and committee members and the committees’ activities in 2010. The membership of each committee may change once the new board is elected at the annual meeting. The board chair is a regular member of the reserves oversight committee and an ex-officio member of the other four committees.

Access to management and outside advisors

The board and board committees can invite any member of management, outside advisor or other person to attend any of their meetings.

Committees can engage outside advisors to assist in carrying out their duties, as authorized by their mandates. Individual directors can also engage outside advisors, as long as it is approved beforehand by the nominating, corporate governance and risk committee.

2011 management proxy circular     35

Audit committee

The audit committee has five members:

• John Clappison (chair, financial expert)

• Nancy Hopkins

• Oyvind Hushovd

• George Ivany

• Neil McMillan

Members of our audit committee must be independent and financially literate to meet regulatory requirements in Canada and the US, and the NYSE corporate governance standards. Mr. Clappison is the audit committee’s financial expert because he has accounting or related financial expertise, and meets the necessary requirements.

According to the committee mandate and the NYSE corporate governance standards, members of the audit committee must receive the board’s approval if they sit on the audit committees of more than three public companies. In 2010, the board approved Mr. Clappison serving on the audit committees of five public companies, including Cameco as Mr. Clappison advised he would no longer be a member of one of the boards prior to our annual meeting, in accordance with our governance guidelines. The board believes it benefits from the experience and knowledge Mr. Clappison gains by being on the audit committees of other public companies, especially during our transition to International Financial Reporting Standards (IFRS). Mr. Clappison has since resigned from one of the boards and currently serves on four audit committees.

The committee is responsible for assisting the board in overseeing:

• the quality and integrity of our financial reporting

• the quality and integrity and performance of our internal control systems for finance and accounting, our internal audit function and our disclosure controls

• the annual audit plan, fees, quality, performance and independence of our external auditors

• our compliance with certain laws and regulations, our code of conduct and ethics and our international business conduct policy.

Financial reporting

The committee is responsible for reviewing the following items and recommending them to the board for approval:

• annual audited financial statements and MD&A

• quarterly financial statements and MD&A

• accounting and financial reporting process.

It also reviews quarterly press releases.

Internal control systems

The committee receives reports every year on:

• our disclosure controls and procedures

• our internal controls over financial reporting

• the process for the CEO and CFO to certify that our quarterly and annual securities filings are accurate.

It oversees the internal audit function and the chief internal auditor reports directly to the chair of the audit committee.

External auditors

KPMG are our current auditors. From time to time, KPMG and or its affiliates also provide us and our subsidiaries or joint ventures with other professional services. See About the auditors starting on page 21 for more information.

The committee is responsible for reviewing and approving KPMG’s performance, fees, qualifications, independence and audit of our financial statements.

Approving services

The committee must pre-approve all services the external auditors will provide to make sure they remain independent. Any service that is not generally pre-approved must be approved by the audit committee before the work is carried out, or by the committee chair or board chair as long as the approved service is reported to the full audit committee at its next meeting.

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Compliance

The audit committee is responsible for:

• overseeing compliance with the laws and regulations that apply to us (other than environment and safety compliance, which are the responsibility of the safety, health and environment committee, and human resources and compensation compliance, which are the responsibility of the human resources and compensation committee)

• monitoring employees’ compliance with the code of conduct and ethics and the international business conduct policy

• overseeing certain financial risks as delegated by the board.

It also makes recommendations to the board on the above matters, and is responsible for reviewing the succession plan for the CFO and controller and making any related recommendations to the human resources and compensation committee.

2010 highlights

The committee carried out the following activities as part of its 2010 work plan:

• reviewed and approved interim financial statements and MD&A, and annual audited financial statements and the annual MD&A

• carried out an assessment of the internal auditor, and reviewed and confirmed the internal audit department’s mandate, approved the 2010 audit plan and received an update on the five-year audit plan

• carried out an assessment of the external auditors and their independence, and reviewed and approved their audit plan and audit fees

• reviewed year-end audit issues

• received reports on compliance with SOx and ongoing compliance activities

• reviewed disclosure controls and procedures and management’s assessment of internal controls

• reviewed related party transactions and political and charitable donations

• reviewed the CEO’s expenses

• received updates on the implementation of IFRS and made certain accounting policy decisions regarding the adoption of the new reporting standards

• reviewed the committee’s mandate and the committee’s self-assessment

• recommended the appointment of the external auditor

• received and considered an external report on the strategic review of the function of our internal audit group.

The audit committee met five times in 2010. It met in camera without management present at every meeting, and also separately with the internal auditor and external auditors at every meeting.

2011 management proxy circular     37

Human resources and compensation committee

The human resources and compensation committee has five members:

• James Curtiss (chair)

• John Clappison

• Oyvind Hushovd

• George Ivany

• Anne McLellan

None of the members is currently a CEO of a publicly-listed company.

The committee is responsible for assisting the board in overseeing:

• human resource policies

• executive compensation

• succession planning

• our pension plans

• director compensation.

Executive compensation

The committee is responsible for:

• consulting with management to develop our general philosophy on compensation

• reviewing and recommending to the board for approval all compensation policies and programs for our executives (vice-presidents and above) including:

• the corporate goals and objectives relating to the compensation for the CEO, president and senior vice-presidents

• evaluating the CEO’s performance against those goals and objectives

• the CEO’s compensation based on the committee’s evaluation

• the compensation for our president and senior vice-presidents based on the CEO’s evaluations

• employment contracts with executive officers

• overseeing the development and implementation of compensation programs, including establishing any incentive and equity-based compensation plans.

The committee believes in the fundamental importance of aligning the interests of executives and shareholders and paying for performance. It is also responsible for reviewing all executive and director compensation disclosure before we publicly disclose it. Our Compensation discussion and analysis explains our philosophy and objectives, policies and guidelines, the different components that make up our executive compensation program, what we base executive compensation on and how we evaluate performance and approve compensation. This report was prepared by management and reviewed and approved by the human resources and compensation committee.

The committee retained Hugessen Consulting Inc. (Hugessen) as its primary independent compensation consultant throughout 2010. Hugessen did not perform any services for management in 2010.

See Executive compensation — Compensation discussion and analysis starting on page 52 for a detailed discussion of our compensation programs and information about our compensation risk assessment.

Share ownership

The committee is also responsible for reviewing our share ownership guidelines for directors and executives to ensure they continue to meet our needs and evolving governance practices. This includes reviewing the levels of ownership, valuing our shares, considering PSUs for meeting the ownership requirements and reviewing the period to meet the guidelines. The committee recommended a number of changes to the guidelines — they were approved by the board and are explained in more detail on pages 46 and 61.

Succession planning

Succession planning is critical to any organization. The committee is actively involved in succession planning to ensure we have an orderly succession of senior management, and a plan for developing strong leadership, nurturing talent and retaining key people for our long-term success.

The committee is responsible for:

• reviewing our executive talent pool and the succession plan twice a year. The audit committee is also responsible for reviewing the succession plan for the CFO and controller and making related recommendations to the human resources and compensation committee.

• ensuring the succession plan is presented to the board each year.

The committee ensures there are opportunities for directors to get to know employees who have been identified as potential executives. They make presentations to the board and committees and are invited to company functions where they can interact with directors more informally.

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In 2010, the committee recommended to the board some important changes to position our leadership team for the long term. These recommendations were subsequently approved by the board:

• Gerald W. Grandey’s title was changed from president and CEO, to CEO

• Timothy S. Gitzel was appointed president, after joining Cameco in 2007 as senior vice-president and chief operating officer

• Robert A. Steane, who has been with Cameco or a predecessor company since 1983, was appointed senior vice-president and chief operating officer

• Kenneth A. Seitz, who has been with Cameco since 2004, was promoted to senior vice-president, marketing and business development, replacing George Assie, who retired on December 31.

Confident in the strength and ability of the new leadership team to continue Cameco’s growth, Mr. Grandey announced on February 22, 2011 his plans to retire as CEO and as a member of our board of directors at the end of June 2011. On February 22, on the committee’s recommendation, the board appointed Mr. Gitzel to be our next CEO, as of July 1, 2011.

Pension plan governance

While the board has overall responsibility and accountability for our pension plans (defined contribution plans, a defined benefit plan, and a supplemental executive pension plan), it has delegated certain responsibilities to the human resources and compensation committee and management’s pension investment committee.

The human resources and compensation committee is responsible for overseeing management’s supervision of our pension plans as well as:

• making recommendations to the board on plan design and policy after receiving advice from management

• providing a high level review of the performance of the investment options

• making recommendations on the investment managers when necessary, after receiving advice from management

• receiving reports from management’s pension investment committee and the finance, human resources and legal departments from time to time on these matters.

It receives reports from management’s pension investment committee at least twice a year and ensures a pension plan report is submitted to the board at least once a year for review.

The pension investment committee is mainly responsible for selecting and monitoring the performance of the investment managers, monitoring the performance of the investment options under the plan and providing guidance to management on administrative matters. The committee consists of the CFO, senior vice-president, corporate services, senior vice-president, governance, law and corporate secretary, vice-president, human resources, the vice-president and treasurer, the vice-president, controller and the assistant treasurer.

Director compensation

The human resources and compensation committee is also responsible for reviewing the compensation of our directors and recommending it to the board for approval. It conducts a thorough review of director compensation every two to three years to make sure our program continues to meet our objectives and remains competitive. The committee conducted a review in 2009 with assistance from Hugessen and, based on the findings, agreed not to recommend any changes to the level or mix of compensation, but to conduct a further review in 2010. It carried out that review in 2010 and recommended changes to the board for approval. See Assessing the program on page 48 for information about the changes approved in 2010.

The committee also recommended the board approve a change to the directors’ share ownership guidelines to allow our shares and deferred share units to be valued at the purchase/issue price or market value, whichever is greater, to determine whether the directors meet the share ownership guidelines.

See Compensation discussion and analysis starting on page 46 for more information about our director compensation practices.

2010 highlights

The committee carried out the following activities as part of its 2010 work plan:

• reviewed the executive compensation market data and the comparator group to ensure that our compensation levels remain competitive

• retained an independent compensation consultant and approved its fees

• reviewed the corporate results

• reviewed the corporate and individual objectives of the CEO, president and senior vice-presidents

• reviewed the CEO’s performance

• reviewed the CEO’s annual performance assessments of the president and senior vice-presidents

• reviewed and recommended changes to base salary and the short and long-term incentive plan awards for the CEO, president and senior vice-presidents

• assessed compensation risk

• reviewed and recommended payouts of the PSUs granted in 2007

2011 management proxy circular     39

• reviewed the compensation discussion and analysis in the management proxy circular

• reviewed the succession plan for the executive team, including the vice-presidents, and consulted with the audit committee about the succession plan for the CFO and senior finance employees

• recommended the appointments of the president, the senior vice-president and chief operating officer and the senior vice-president, marketing and business development

• received semi-annual reporting on the pension plan

• recommended the board approve a change to the stock option plan

• reviewed governance issues relating to executive compensation

• reviewed the committee’s mandate and report on its self-assessment

• reviewed director compensation

• reviewed the director and executive share ownership guidelines and recommended changes to the board

• reviewed the 2011 corporate goals and objectives and the CEO’s objectives

• had preliminary discussions on 2011 compensation.

The committee met eight times in 2010. It met in camera without management present at every meeting.

40     cameco corporation

Nominating, corporate governance and risk committee

The nominating, corporate governance and risk committee has five members:

• Nancy Hopkins (chair)

• Joe Colvin

• James Curtiss

• James Gowans

• Anne McLellan

It is responsible for assisting the board in overseeing:

• our approach to corporate governance, including establishing corporate governance principles and a code of conduct and ethics

• identifying and recommending qualified individuals as potential members of our board and board committees

• risk management.

Corporate governance principles

The committee is responsible for:

• assessing the size and composition of the board

• assessing the number of board committees and their composition and mandates

• evaluating our approach to corporate governance

• recommending the board adopt a code of conduct and ethics for the organization

• overseeing directors’ compliance with our code of conduct and ethics.

The committee is responsible for defining our approach to corporate governance issues (including reviewing our corporate governance guidelines once a year and recommending any appropriate changes to the board), and managing the board’s relationship with management.

As a publicly listed company on the TSX and NYSE, we must meet various corporate governance guidelines and requirements in Canada and the US. The board has adopted guidelines for meeting these responsibilities and ensuring that our corporate governance practices comply with the governance rules and legislation in Canada and those that apply to foreign private issuers in the US.

Board evaluation

The committee assesses the overall effectiveness of the board and its committees by:

• developing and implementing an evaluation process

• maintaining a skills matrix for the board and identifying additional skills we should recruit when we are making changes to the board

• maintaining a succession plan for the board that meets our corporate needs and the interests of shareholders.

Evaluating performance

See page 33 for a description of the committee’s evaluation process for assessing the effectiveness of the board, its chair, board committees, committee chairs and individual directors.

Evaluating the composition of the board

The committee is responsible for establishing the competencies and skills necessary for the board overall, and for any new candidates being considered for nomination to the board.

As part of this process, we have developed a skills matrix for the board, identifying 11 areas that are important to our business and the directors who have expert knowledge, strong working knowledge or basic knowledge in these key areas. The committee uses the information to identify any possible gaps in the skills of the board. We updated the skills matrix in 2009 to reflect our growing needs as we embark on our growth plans and at that time canvassed the board and senior management on different elements of diversity desired for the board.

The committee assesses the size of the board and its composition once a year to determine whether we have all of the necessary elements in place for effective decision-making.

The committee identifies potential candidates based on their skills, experience, character, integrity, judgment, record of achievement, diversity and any other qualities or qualifications that would enhance the board’s decision-making process and overall management of Cameco’s business and affairs. A candidate must disclose any potential conflicts of interest before he or she can be nominated to the board.

See About our board starting on page 28 for more information.

2011 management proxy circular     41

Risk management

The committee is also responsible for overseeing Cameco’s risk management process, which includes:

• overseeing our program and procedures to identify significant risks and the systems to mitigate risk

• receiving regular reports from management on our significant risks or exposures, and the steps taken to monitor and manage these risks

• recommending risk management policies to the board as appropriate

• reviewing management’s reports on our insurance program and the directors’ and officers’ liability insurance and indemnity agreements.

The other committees also have risk management responsibilities:

• the audit committee monitors certain financial risks

• the safety, health and environment committee reviews the policies and systems related to safety, health and environmental risk

• the reserves oversight committee oversees the estimating of our mineral reserves

• the human resources and compensation committee assesses compensation risk.

2010 highlights

The committee carried out the following activities as part of its 2010 work plan:

• received quarterly enterprise risk management reports

• reviewed procedures for identifying board candidates and conducted a search for a new director

• reviewed the board composition and directors’ independence and conflicts

• reviewed the composition of the board committees and proposed new members

• reviewed and updated our corporate governance practices, reviewed third-party governance rankings and comments, and monitored corporate governance developments

• reviewed the results of the board and this committee’s assessments

• reviewed the governance disclosure in our management proxy circular

• received management’s report on our insurance coverage

• received reports on proxy voting recommendations and voting results

• received reports on governance trends

• reviewed the board’s mandate and the mandate for this committee

The committee met five times in 2010. It met in camera without management present at every meeting.

42     cameco corporation

Reserves oversight committee

The reserves oversight committee is made up of five members:

• Neil McMillan (chair)

• Donald Deranger

• James Gowans

• Oyvind Hushovd

• Victor Zaleschuk

It is responsible for assisting the board in overseeing:

• management’s estimating of our mineral reserves and resources

• the review of our mineral reserves and resources before they are disclosed to the public

Estimating our mineral reserves and resources

The committee is responsible for:

• confirming the appointment of our designated qualified persons for estimating our mineral reserves and resources

• reviewing management’s annual reserve and resource report and annual reconciliation of reserves to mine production

• receiving management reports on our internal controls and procedures for estimating our mineral reserves and resources

• keeping abreast of industry standards and regulations on estimating and publishing mineral reserve and resource information and any related issues and developments through reports from management.

Disclosing our mineral reserves and resources

Before we disclose our mineral reserves and resources, the committee:

• receives a report on the reserve and resource estimates by the qualified persons from the leading qualified person

• ensures the qualified persons have not been restricted or unduly influenced in any way

• has the leading qualified person and the chief operating officer (COO) confirm that:

• the information is reliable

• mineral reserves and resources have been estimated and will be published according to the securities laws and regulations that apply

• disclosure controls and procedures for disclosing mineral reserve and resource estimates comply with industry standards.

2010 highlights

The committee carried out the following activities as part of its 2010 work plan:

• reviewed and recommended to the board the year-end annual estimation of reserves and resources

• received a report on our internal controls and procedures related to reserves reporting and report on disclosure controls and procedures

• confirmed the appointments of the qualified persons

• reported annual reserves to the audit committee

• reviewed the results of the committee’s self-assessment

• received education sessions on the geology of uranium deposits and National Instrument 43-101 — Standards of Disclosure for Mineral Projects

The committee met three times in 2010. It met in camera without management present and separately with the leading qualified person at two of their meetings.

2011 management proxy circular     43

Safety, health and environment committee

The safety, health and environment committee is made up of five members:

• Joe Colvin (chair)

• Donald Deranger

• James Gowans

• George Ivany

• Anne McLellan

It is responsible for assisting the board in overseeing safety, health and environmental matters by:

• assessing our policies and management systems for these areas and making any appropriate recommendations to the board

• monitoring our safety, health and environmental performance.

Assessing policies and management systems

The committee is responsible for overseeing management in the following areas:

• reviewing our safety, health and environmental policies

• overseeing the implementation of related systems to make sure we comply with the policies and all safety, health and environmental legislation

• bringing any material issues of non-compliance to the attention of the board in a timely fashion

• monitoring the effectiveness of our policies, systems and monitoring processes to protect the safety and health of our employees, contractors, visitors and the general public and manage any environmental impacts

• reviewing the benchmarking results of our policies, systems and monitoring processes against best practices in the industry

• reporting any related recommendations to the board.

Monitoring our performance

The committee is responsible for overseeing management in the following areas:

• keeping abreast of significant safety, health and environmental issues (and monitoring any trends and significant events) through reports from management

• monitoring our corporate performance in safety, health and the environment and receiving regular updates from management

• reviewing the findings of our health, safety and environmental audits, action plans and results of investigations into significant events

• reviewing our sustainable development report

• receiving regular compliance updates from management

• reviewing the annual budget for our safety, health and environmental operations to ensure there is sufficient funding for compliance.

2010 highlights

The committee carried out the following activities as part of its 2010 work plan:

• received reports on injuries and environmental incidents

• received quarterly reports on our environmental leadership initiative (including waste, air emissions, greenhouse gas emissions and water usage)

• received reports on the safety, health and environmental audits

• reviewed the annual safety, health, environment and quality (SHEQ) report

• determined the impact of SHEQ objectives on executive compensation

• received reports on regulatory and legislative reform initiatives

• reviewed the management system report and management compliance report

• held one of its regular meetings in Port Hope, toured Cameco Fuel Manufacturing’s Port Hope facilities and the Port Hope Conversion Facility and had lunch with the employees

• received a presentation on Cigar Lake matters and toured the Cigar Lake site

• met with the general managers in our fuel services division and received reports on the implementation of the SHEQ management system and environmental performance improvement initiatives

• reviewed the sustainable development report

• reviewed the SHEQ, sustainable development and legal regulatory 2011 objectives and budgets

• reviewed the committee’s self-assessment

The committee met five times in 2010. It met in camera without management present at every meeting.

44     cameco corporation

Compensating our directors and executives

We compensate our directors and executives in a way that is fair, competitive and linked to performance.

This section is a report by the board of directors on the recommendation of the human resources and compensation committee. It gives you insight into our compensation process and discusses the different components of our program. We have provided additional information than what is required by regulators, to give you a more complete understanding of our decisions.

Director compensation	46
• Compensation discussion and analysis	46
- Philosophy and objectives	46
- Share ownership requirements	46
- Fees and retainers	47
- Assessing the program	48
• 2010 results	49
- Summary compensation table	49
- Incentive plan awards	51
- Loans to directors	51
Executive compensation	52
• Compensation discussion and analysis	52
- Executive summary	52
- Our compensation framework	58
- Annual decision-making process	62
- Measuring performance	63
- Compensation components	65
- How our executive compensation aligns with share performance	80
• 2010 results	81
- Summary compensation table	81
- Incentive plan awards	84
- Securities authorized for issue under equity compensation plans	85
- Retirement plan benefits	86
- Loans to executives	88
• Developments in 2011	89

2011 management proxy circular     45

Director compensation

Compensation discussion and analysis

Four elements make up our director compensation framework:

• Philosophy and objectives

• Share ownership requirements

• Fees and retainers

• Assessing the program.

1 Philosophy and objectives

Our philosophy and objectives for director compensation revolve around three key areas:

• recruiting and retaining qualified individuals to serve as members of our board of directors and contribute to our overall success

• aligning the interests of the board members with those of our shareholders by requiring directors to hold a multiple of their annual retainer in shares or share equivalents, and receive at least 60% of their annual retainer in deferred share units (DSUs) until they meet the share ownership guidelines

• offering competitive compensation by positioning director compensation at the median of director compensation paid by companies that are comparable in size and in a similar business.

2 Share ownership requirements

We introduced share ownership guidelines for our directors in 2003 to more closely align their interests with those of our shareholders.

Directors must hold three times their annual retainer in Cameco shares or DSUs. If a director joined the board before July 1, 2010, he or she has seven years from the date they joined to meet the minimum requirement, while any director joining the board after this date has five years to meet the guidelines.

As of December 31, 2010, all of the nominated directors are in compliance with the guidelines. They either hold the minimum requirement, or have additional time to acquire the necessary holdings. Only Mr. Camus and Mr. Gitzel (who have been nominated for the first time this year) and Mr. Deranger and Mr. Gowans (who joined the board in 2009) must continue to acquire DSUs or Cameco shares, and they have until 2016 to meet the target.

If a director does not meet the target by the required date, or does not maintain the minimum required, the human resources and compensation committee will review the situation and recommend a course of action to the board. The board has the discretion to decide what action, if any, should be taken.

As of December 31, 2010, directors held $14,277,322 worth of DSUs based on the year-end closing price on the TSX of $40.30 per common share.

About DSUs

A deferred share unit (DSU) is a notional share that has the same value as one Cameco common share. DSUs earn dividend equivalents, at the same rate as dividends paid on our common shares.

DSUs are paid out to directors in cash when they retire from the board. A retiring director can defer the payment and decide to receive all or a portion of the cash payout the following year.

46     cameco corporation

3 Fees and retainers

Our director compensation includes:

• an annual retainer (higher retainer for the non-executive chair of the board)

• an annual fee for serving as a committee chair or committee member

• an attendance fee for each set of board and committee meetings they attend

• a travel fee to cover the necessary travel time to attend board and committee meetings.

Directors who are employees of Cameco or any of our affiliates (such as Mr. Grandey, our CEO) do not receive any compensation for serving as a director.

The retainer for the non-executive chair became a flat fee as of July 1, 2010, so Mr. Zaleschuk no longer receives any committee retainers, or attendance fees for the board or committee meetings he attends.

We pay for any reasonable travel and other out-of-pocket expenses relating to their duties as directors.

The table below shows our director fee schedule, which went into effect on July 1, 2010. All amounts are shown in Canadian dollars, unless otherwise indicated.

Annual retainer	($)
Non-executive chair of the board		340,000
Other directors		140,000
Committee members (per committee)		5,000
Committee chairs
Audit committee and Human resources and compensation committee		20,000
Other committees		11,000
Attendance fees (per meeting)
Board meetings		1,500
Audit committee meetings		2,000
Other committee meetings		1,500
Travel fees (per trip)
Greater than 1,000 km within Canada		1,700
From the US	1,700		(US)
From outside North America	2,700		(US)

We pay the annual retainers to directors 60% in DSUs and the balance in cash. Directors have the option of receiving the balance and any additional fees in DSUs, as along as it is in increments of 25%. They must make this decision before the beginning of the fiscal year.

As of 2010, any director who has met the share ownership target can decide before the beginning of each fiscal year whether to receive all of their retainer and fees in cash, or a portion (0%, 25%, 50% or 75%) in cash and the balance in DSUs. They must make this decision before the beginning of the fiscal year. Previously, directors had to receive at least 60% of their annual retainer in DSUs.

We revised this policy because we have several long-standing directors with holdings of DSUs or Cameco shares that exceed the minimum requirement. Those directors who elect to receive all of their compensation in cash continue to increase their share ownership through dividend equivalents that are paid in DSUs.

2011 management proxy circular     47

4 Assessing the program

The human resources and compensation committee reviews director compensation every few years and makes recommendations to the board.

The committee conducted a review in 2009. Working with its independent consultant, Hugessen Consulting Inc. (Hugessen), the committee assessed director compensation against:

• the compensation peer group of 21 companies we use to assess executive compensation

• broader market trends using five different third party sources

• research with various Canadian institutional shareholders.

The review indicated that our director compensation was at approximately the median, while the compensation for the non-executive board chair was below the median.

Both the committee and Hugessen recommended that the board not make any changes to the compensation program in 2009 and that a further review be carried out in 2010.

Hugessen conducted a further review in 2010, examining our compensation peer group and the broader market using the most current market data available. The committee reviewed this report and then made the following recommendations to the board for approval, to maintain the directors’ compensation approximately at the median of our compensation peer group:

Fees and retainers

• changing the annual retainer for the non-executive chair of the board to a flat fee of $340,000, which now covers his retainer and all meeting fees

• increasing the annual retainer for directors from $120,000 to $140,000

• increasing the retainer for the chairs of the audit committee and human resources and compensation committee from $15,000 to $20,000, and from $10,000 to $11,000 for the other committee chairs

• increasing the retainer for committee members $3,500 to $5,000

• increasing the travel fees per trip by from $1,500/$1,500(US)/$2,500(US) to $1,700/$1,700(US)/$2,700(US)

Share ownership guidelines

• increasing the period for meeting the guidelines from five to seven years if a director joined the board before July 1, 2010, while any director joining after this date has five years to meet the guidelines

These changes were approved by the board and went into effect on July 1, 2010.

In December 2010, the board approved a further change to the directors’ share ownership guidelines on the recommendation of the human resources and compensation committee. While directors must maintain their level of share ownership once they meet the guidelines, we value their shareholdings and DSUs on an ongoing basis using the closing price of our shares on the TSX or the book value, whichever is higher.

See pages 46 and 47 for more information about the share ownership guidelines and the new director fee schedule.

48     cameco corporation

2010 results

Mr. Dembroski and Mr. Peterson resigned from our board at the 2010 annual meeting and did not stand for re-election because they were over 72, our retirement age for directors.

Mr. Colvin, Mr. Curtiss and Mr. Hushovd received their compensation in US dollars because they are non-residents of Canada. The amounts relating to their compensation were converted from US dollars to Canadian dollars at the following exchange rates:

	March 31, 2010			June 30, 2010			September 30, 2010			December 23, 2010
$1 (US)	$	1.0195	(Cdn)	$	1.0553	(Cdn)	$	1.0340	(Cdn)	$	1.0089	(Cdn)

Summary compensation table

The table below shows what we paid to each non-executive director in 2010.

	Retainer						Attendance fees
															% of total
															retainer and
			Committee		Committee				Committee						fees paid in
	Board		member		chair		Board		meetings		Travel fee		Total paid		DSUs
Name	($)		($)		($)		($)		($)		($)		($)		(%)
John Clappison		130,000		4,250		17,500		18,000		17,500		11,100		198,350		70
Joe Colvin		133,746		4,369		10,805		15,444		13,867		8,300		186,530		0
James Curtiss		133,746		4,369		17,995		18,578		16,909		11,641		203,237		0
George Dembroski		48,462		4,240		0		9,000		11,500		4,500		77,702		100
Donald Deranger		130,000		8,500		0		16,500		12,000		3,400		170,400		59
James Gowans		130,000		12,750		0		16,500		19,500		8,100		186,850		42
Nancy Hopkins		130,000		4,250		10,500		16,500		15,500		3,200		179,950		25
Oyvind Hushovd		133,746		13,107		0		16,995		24,066		16,219		204,132		50
George Ivany		130,000		12,750		0		16,500		26,500		11,300		197,050		0
Anne McLellan		130,000		12,750		0		16,500		22,500		3,400		185,150		42
Neil McMillan		130,000		4,250		10,500		13,500		9,000		1,500		168,750		46
Robert Peterson		48,462		4,240		0		9,000		11,500		0		73,202		0
Victor Zaleschuk		295,000		4,250		0		12,000		18,500		6,400		336,150		53
Total		1,703,162		94,075		67,300		195,017		218,842		89,060		2,367,453		37.5

Notes:

Mr. Grandey does not receive any compensation as a director, as he is our CEO. See the Summary compensation table on page 81 for his compensation.

Mr. Zaleschuk is the non-executive chair of the board, and his board retainer reflects the fees paid to him in this capacity.

2011 management proxy circular     49

Director compensation table

The next table shows what each non-executive director earned in 2010, in cash and DSUs. It includes the information for two mandatory tables: Director compensation and Incentive plan awards — Value vested or earned during the year.

Directors received a portion of their retainer and fees in cash, and a portion in DSUs:

•	Fees earned is the amount directors received in cash
•	Share-based awards is the amount that directors received in DSUs in 2010, valued as of the grant date.
	It includes all of the DSUs that vested as of the grant date, including DSUs granted as dividend equivalents in 2010. Since these totals include the dividend equivalents, they are higher than the total fees paid disclosed on the previous page.

	Fees earned		Share-based awards		Total
Name	($)		($)		($)
John Clappison		60,175		141,820		201,995
Joe Colvin		186,530		31,411		217,941
James Curtiss		203,237		35,503		238,740
George Dembroski		0		84,038		84,038
Donald Deranger		69,300		102,319		171,619
James Gowans		108,850		79,648		188,498
Nancy Hopkins		134,962		50,411		185,373
Oyvind Hushovd		102,066		111,415		213,481
George Ivany		197,050		9,907		206,957
Anne McLellan		107,150		83,561		190,711
Neil McMillan		90,750		85,622		176,372
Robert Peterson		73,202		2,899		76,101
Victor Zaleschuk		159,150		194,709		353,859
Total		1,492,422		1,013,263		2,505,685

50     cameco corporation

Incentive plan awards

We stopped granting options to directors on October 28, 2003.

The table below lists the non-executive directors who had unexercised option awards as at December 31, 2010. All of the directors’ options have vested except Mr. Dembroski’s reload options (3,300 vested in March 2011). We stopped awarding reload options in 1999. Mr. Curtiss and Mr. Dembroski exercised their reload options to acquire additional options with a 10-year term. They are exercisable at the closing market price of Cameco shares on the day before they are exercised.

See Director profiles starting on page 9 for the amount of equity at risk of each director.

	Option-based awards
			Number of securities
	Grant		underlying		Option		Option expiry		Value of unexercised
	date		unexercised options		exercise price		date		in-the-money options
Name	(mm/dd/yyyy)		(#)		($)		(mm/dd/yyyy)		($)
James Curtiss		03/10/2003		12,000		5.88		03/09/2011		413,040
		09/21/2004		3,300		15.79		09/20/2014		80,876
Total				15,300						493,916
George Dembroski		03/10/2003		18,000		5.88		03/09/2011		619,560
		03/01/2007		3,300		43.25		02/28/2017		(9,735	)
		03/03/2008		3,300		38.55		03/02/2018		5,775
Total				24,600						615,600
Nancy Hopkins		03/10/2003		27,000		5.88		03/09/2011		929,340
Total				27,000						929,340

Loans to directors

As of March 7, 2011, we and our subsidiaries had no loans outstanding to any current or former directors, except routine indebtedness as defined under Canadian securities laws.

2011 management proxy circular     51

Executive compensation

Compensation discussion and analysis

Executive summary

Cameco’s vision is to be a dominant nuclear energy company producing uranium fuel and generating clean electricity.

As the demand for energy increases worldwide, we are well positioned to benefit from the growing interest in nuclear as a source of clean, reliable and affordable energy. We are one of the world’s largest uranium producers and a pure play nuclear energy investment, and are building on our base of high-grade uranium reserves to increase our value.

We are focusing our growth strategy on our uranium segment, and our goal is to double production to 40 million pounds by 2018 — a strategy that will advance our growth, strongly position us for the future and enhance our value over time.

We have long-term objectives for each of our three business segments:

• uranium — double annual production to 40 million pounds by 2018 from existing assets

• fuel services — invest in our fuel services business to support overall growth in the nuclear business

• electricity — maintain steady cash flow while gaining exposure to new opportunities.

The board believes that strong leadership, a clear strategic direction and a pay for performance philosophy are key to driving solid, long-term results.

Excellent results in 2010

We made excellent progress at our operations and projects in 2010, building on the successes we achieved in 2009 and delivering strong results in virtually all aspects of our business. We increased production, lowered uranium unit costs, achieved the best safety record in our history and earned awards in a number of different areas, and our subsidiary signed two long-term contracts with Chinese utilities. We also announced an increase in our annual dividend starting in 2011 — our seventh dividend increase in nine years.

Key highlights include:

Financial

• Net earnings in 2010 were $515 million. Last year, net earnings were higher by $584 million, due mainly to the one time gain on the sale of our interest in Centerra Gold Inc. and higher unrealized gains on financial instruments.

• We ended the year with $1.3 billion cash on hand. We intend to use these funds to advance our growth strategy.

Operating

• In our uranium segment this year, production was 10% higher than 2009 and 6% higher than our plan at the beginning of 2010. We had a number of successes at our mining operations:

• received approval for production flexibility at McArthur River, which allowed us to exceed our production target by 6%

• extended Rabbit Lake’s expected mine life by two years to 2017

• continued to ramp up production at Inkai and exceeded 2009 production by 136%

• finished dewatering the underground development at Cigar Lake, substantially completed securing the underground development areas and began implementing a surface freeze strategy we expect will provide a number of benefits.

• In our fuel services segment, production was 25% higher than 2009 due to the routine operation of the Port Hope UF₆ plant. In 2009, the plant was shut down for the first five months of the year.

• In our electricity segment, Bruce Power Limited Partnership (BPLP) generated 25.9 terawatt hours (TWh) of electricity, at a capacity factor of 91%. Our share of earnings before taxes was $166 million.

• Our investment in GE-Hitachi Global Laser Enrichment LLC (GLE) continues to progress. GLE successfully completed initial testing of its enrichment technology, which met key performance criteria. GLE is continuing testing, and has begun engineering design work for a commercial facility. In addition, we have continued to work with GLE on potential customer contracts for the facility. The US Nuclear Regulatory Commission is assessing GLE’s application for a commercial facility construction and operating licence.

• We continued to advance exploration activities, spending $11 million at five brownfield exploration projects, and $48 million for resource delineation at Kintyre and Inkai block 3. We spent $37 million on regional exploration programs. Saskatchewan saw the most expenditures, followed by Australia, northern Canada, Asia, the US and South America.

Linking pay to performance

Corporate performance remains the single biggest factor affecting the board’s decisions on executive pay and the compensation of our most senior people.

Our excellent corporate performance in 2010 was the driving factor behind the board’s assessment and ultimate decisions on executive compensation for 2010.

52     cameco corporation

• We reached new labour agreements at Port Hope and McArthur River/Key Lake operations.

• We completed delineation drilling at Kintyre.

• We completed our mine design of Millennium and continued work on the environmental assessment.

Health and safety

• We achieved the best safety performance in our history, exceeding 2009’s award winning performance.

• We received the John T. Ryan National Safety Trophy award from the Canadian Institute of Mining, Metallurgy and Petroleum for the best safety performance in a metal mine in 2009, at our McArthur River site.

• There were 22 reportable environmental incidents, an improvement over 2009 (28 incidents), and below our long-term average of 30. There were no significant environmental incidents.

Awards and recognition

• We increased our corporate trust rating in Saskatchewan and the US, and maintained high ratings in Port Hope.

• We were included in the Financial Post’s Top 10 Best Companies to Work For in Canada for 2010 for our employee policies, programs and role in the community, and Mediacorp named us one of Canada’s Top 100 Employers for both 2010 and 2011.

• We received the Governance Gavel Award by the Canadian Coalition for Good Governance for best disclosure of board governance practices and director qualifications.

• We were ranked as one of the top five IR websites in North America by Investor Relations Global Rankings.

Shareholder return

• The board approved a 43% increase in the annual dividend policy from $0.28 to $0.40 per share starting in 2011.

You can find more information about our 2010 performance in our 2010 annual financial review on our website (cameco.com/investors).

2010 compensation decisions

Corporate performance remains the single biggest factor affecting the board’s decisions on executive pay and the compensation of our most senior people.

This next section discusses our executive compensation program and the pay decisions affecting our five highest compensated officers (our named executives) as of December 31, 2010:

• Gerald W. Grandey, Chief Executive Officer (CEO)

• O. Kim Goheen, Senior Vice-President and Chief Financial Officer (CFO)

• Timothy S. Gitzel, President

• George B. Assie, Senior Vice-President, Marketing and Business Development

• Gary M.S. Chad, Senior Vice-President, Governance, Law and Corporate Secretary.

The board of directors reviewed our 2010 performance and the analysis and recommendations of the human resources and compensation committee. It approved the following decisions on executive pay for 2010:

Modest increases in base salary (see page 66)

The named executives received a modest increase in base salary in March 2010, positioning them at the median of our compensation peer group. The increase is consistent with the lower end of salary increases nationally, and recognizes internal equity. The only exception is Mr. Gitzel, who received a large increase in May when he was appointed as president. His increase reflected the expanded duties and responsibilities of his new role, and is competitive with similar positions of companies in our compensation peer group.

Payouts under our short-term incentive plan (see page 66)

Solid performance across all four performance measures in 2010 resulted in a corporate performance payout factor of 128% in accordance with the plan. The board acknowledged the CEO’s outstanding performance in leadership effectiveness and his impact on strategic initiatives, and strong performance by the other named executives.

2010 compensation highlights

•  Base salaries increase 2% for four of five named executives

•  The board exercises discretion under the short-term incentive plan to increase the corporate performance factor of 128% calculated under the plan to recognize the excellent results

•  2008 performance share units pay out at 77% of the grant value, based on an overall performance factor of 80.45% and management’s request to cap the payout for the absolute measure at the plan design maximum of 150%

•  Conservative grant of new long-term incentive awards to drive corporate performance over the next three to eight years

See the following sections for key information about our executive compensation:

Compensation timeline	55
Compensation lookback	56
Our compensation framework	58
Annual decision-making process	62
Measuring performance	63
Compensation components	65
Compensation and share performance	80
2010 results	81

2011 management proxy circular     53

The board has regularly exercised its discretion to reduce incentive awards calculated under the plan, based on management’s recommendation. The board made significant cuts to bonuses in previous years when our financial performance was strong, but management and the board felt other aspects of corporate performance could have been improved.

The short-term incentive payouts for 2010 performance exceeded the targets as a result of a second consecutive year of excellent corporate performance, supported by the best safety record in our company history. The board exercised its discretion and awarded an additional 20% to each of the named executives, and an additional 85% to the CEO. The bonus paid to the CEO for 2010 performance exceeds the cap in the plan’s design. This was the first time the board decided to exercise its discretion to award an amount that exceeds the calculated amount under the plan and the first time they exceeded the cap in the plan’s design, however, the board felt it was warranted because of the sustained level of corporate performance. By comparison, approximately 20% of the CEOs in our compensation peer group received annual bonuses for 2009 that exceeded the dollar value of the annual bonus awarded to Mr. Grandey for 2010.

Moderate payouts of PSU awards granted in 2008 and vesting at the end of 2010 (see page 72)

Payouts of the 2008 PSUs were based on an overall performance factor of 80.45%, reflecting stronger cash from operations before working capital changes (our absolute measure) and weaker total shareholder return (our relative measure) over the three-year period.

Management recommended capping the payout for the absolute measure at the plan design maximum of 150%, resulting in a performance factor of 75% for the combined measures. This had the effect of the named executives receiving 77% of the grant value of the award reported in 2008.

A conservative grant of new long-term incentive awards (see page 89)

The board approved a conservative grant of long-term incentive awards at the median of our compensation peer group. The LTI awards, which include performance share units and stock options, are based on targets by position, to motivate executives to achieve superior corporate performance. The LTI awards are at risk and not guaranteed (see page 68 for details).

As part of the senior management succession plan, the board also granted an additional PSU award to Mr. Assie on May 26, 2010 as a retention bonus so he would postpone his retirement until December 31, 2010. The PSUs vested on December 31, 2010 at 100% and were paid out in 2011 in shares purchased on the market, net of income taxes (see page 72 for details).

About the named executives

In 2010, on the recommendation of the committee, the board approved some important changes to position our leadership team for the long term:

• Gerald W. Grandey’s title was changed to CEO

• Timothy S. Gitzel was appointed president, after joining Cameco in 2007 as senior vice-president and chief operating officer

• Robert A. Steane, a 30-year veteran of Cameco, was appointed senior vice-president and chief operating officer

• Kenneth A. Seitz, who has been with Cameco since 2004, was promoted to senior vice-president, marketing and business development, replacing George Assie, who retired on December 31.

Confident in the strength and ability of the new leadership team to continue Cameco’s growth, Mr. Grandey announced on February 22, 2011 his plans to retire as CEO and as a member of our board of directors at the end of June 2011. On February 22, on the committee’s recommendation, the board appointed Mr. Gitzel to be our next CEO as of July 1, 2011.

See page 32 and the report by the human resources and compensation committee starting on page 38 for more information about succession planning.

54     cameco corporation

Compensation timeline

The image below shows the different components that make up total compensation for our executives and the timeline for each component.

Our short-term incentive plan (STI) offers the potential for our executives to earn a cash bonus based on their success in achieving pre-established corporate and individual performance objectives for the year. Our long-term incentives (LTI) include a stock option plan and performance share unit (PSU) plan, which have different terms for vesting and payouts. We offer these incentive plans to drive longer-term corporate performance.

2011 management proxy circular     55

Compensation lookback

The table below is voluntary and shows the total compensation our named executives received in the last three years and the 2011 compensation known to date, such as long-term incentives that were granted in March 2011 to drive performance over the next three to eight years. The ultimate value of a long-term incentive award depends on future events, so its value can change significantly after it has been granted.

Turn to the Summary compensation table on page 81 for more information about the compensation of the named executives. See Compensation components starting on page 65 for a description of each element of compensation and Developments in 2011 on page 89 for more information about the 2011 compensation known to date.

	2008		2009			2010			2011
Total compensation	($)		($)			($)			($)
Gerald Grandey CEO1
Base salary		986,000		999,500			1,019,500			1,040,000
Short-term incentive (cash bonus)		553,000		963,000			2,000,000
Long-term incentive (performance share units)		970,750		774,800			1,387,200			988,250
Long-term incentive (options)		1,347,000		1,215,600			2,104,900			1,699,790
Pension benefits (annual pension service cost)		290,500		251,700			314,900
Other compensation2		412,611		n/a			n/a
Total CEO compensation		4,559,861		4,204,600			6,826,500
Kim Goheen Senior Vice-President and CFO
Base salary		460,000		473,800			483,300			493,000
Short-term incentive (cash bonus)		173,000		420,000	3		351,000
Long-term incentive (performance share units)		388,300		213,070			346,800			395,300
Long-term incentive (options)		539,000		455,850			516,040			594,927
Pension benefits (annual pension service cost)		153,300		123,800			150,950
Other compensation2		82,923		n/a			n/a
Total compensation		1,796,523		1,686,520			1,848,090
Timothy Gitzel President
Base salary		470,000		550,000			643,750	4		807,000	5
Short-term incentive (cash bonus)		194,000		360,000			715,000
Long-term incentive (performance share units)		388,300		271,180			578,000			988,250
Long-term incentive (options)		539,000		506,500			814,800			1,274,843
Pension benefits (annual pension service cost)		139,700		98,400			160,550
Other compensation2		7,598		n/a			n/a
Total compensation		1,738,598		1,786,080			2,912,100
George Assie Senior Vice-President, Marketing and Business Development
Base salary		550,000		566,500			577,800			n/a
Short-term incentive (cash bonus)		227,000		360,000			492,000
Long-term incentive (performance share units)		388,300		271,180			778,200	6		n/a
Long-term incentive (options)		606,000		506,500			746,900			n/a
Pension benefits (annual pension service cost)		146,400		124,700			142,050
Other compensation2		226,269		n/a			n/a
Total compensation		2,143,969		1,828,880			2,736,950
Gary Chad Senior Vice-President, Governance, Law and Corporate Secretary
Base salary		432,000		445,000			453,900			463,000
Short-term incentive (cash bonus)		146,000		220,000			298,000
Long-term incentive (performance share units)		232,980		116,220			173,400			316,240
Long-term incentive (options)		337,000		303,900			271,600			424,948
Pension benefits (annual pension service cost)		134,500		110,100			132,500
Other compensation2		153,869		n/a			n/a
Total compensation		1,436,349		1,195,220			1,329,400

56     cameco corporation

Notes:

1.	Mr. Grandey’s title changed to CEO when Mr. Gitzel was appointed President on May 14, 2010.
2.	Total employer contributions to the perquisites of each of the named executives were less than $50,000 and 10% of the executive’s base salary in each year, so they are not disclosed in this table. Perquisites include life insurance premiums, long-term disability premiums, a financial and tax planning allowance, an executive medical plan and a vehicle allowance.
	Other compensation includes vacation time paid to the named executives in February 2008 for the time they had accrued over many years. Accrued vacation pay had grown to a significant amount, so we chose to make a one-time payout to all employees who had banked vacation time in excess of our policy. We have revised our vacation policy so employees no longer bank excess vacation time (subject to exceptions that might be granted from time to time) so we do not incur such a liability in the future.
3.	Mr. Goheen’s short-term incentive (cash bonus) for 2009 includes a one-time discretionary bonus of $150,000 for his role in the divestiture of Cameco’s interest in Centerra Gold Inc.
4.	Mr. Gitzel’s base salary increased from $561,000 to $700,000 when he was appointed President on May 14, 2010. The amount in the table reflects his actual pay for 2010.
5.	Mr. Gitzel’s base salary in 2011 will increase from $714,000 to $900,000 when he becomes President and CEO on July 1, 2011. The amount in the table reflects what he will actually be paid in base salary for all of 2011.
6.	Mr. Assie’s long-term incentive for 2010 includes PSUs granted on March 1, 2010, and a grant of 10,000 PSUs on May 26, 2010 at a grant date value of $25.80, the closing price of Cameco shares on the TSX on May 25, 2010. These PSUs were granted as a retention bonus so Mr. Assie would postpone his retirement until December 31, 2010. The PSUs vested on December 31, 2010.

Managing risk

We have a very conservative approach to risk management, and are focusing more on compensation risk to ensure our compensation program is appropriately structured, encourages the right management behaviours, uses a balanced scorecard to assess performance, and avoids excessive risk-taking or extreme payouts to our executives and employees.

We manage compensation risk by:

• maintaining a multi-year strategic plan

• considering risk when we set our annual corporate objectives

• working within an enterprise risk management framework

• establishing absolute and relative measures of performance

• establishing individual and joint accountabilities for achieving objectives

• setting threshold performance levels in all categories under our incentive plans

• using appropriate payout curves to cap performance incentives

• having a clawback policy for our CEO and CFO, consistent with US statutory requirements

• committing to full and open disclosure

• acknowledging the board’s role in overseeing our compensation policies and practices, and its use of discretion to adjust payouts up or down, as it deems appropriate.

The human resources and compensation committee conducted compensation risk assessments in 2010 and early 2011 to ensure we are not exposed to any undue risk. It confirmed that our compensation philosophy, program design, and policies are solid and appropriate for our needs.

The following sections in this CD&A discuss our framework for executive compensation, our decision-making process, the components that make up our executive compensation program, and how our share performance over the past five years compares with the total compensation paid to our named executives over the same period.

2011 management proxy circular     57

1 Our compensation framework

Philosophy and objectives

Our compensation policies and programs are designed to accomplish four specific goals:

• attract, retain and motivate executives operating in a highly demanding, complex and competitive business environment

• link executive compensation to corporate performance

• motivate executives to create shareholder value by:

• using total shareholder return as one of our performance measures

• rewarding them when they successfully achieve corporate and individual performance objectives over the short and long term

• ensuring that total compensation of all of our executives includes a significant component that is at risk. This reinforces the importance of strong leadership and the executives’ ability to influence business outcomes and financial performance.

• position our total direct executive compensation at the median of our compensation peer group. This means that half of the companies in our peer group pay more than we do and half pay less.

Our executive compensation program includes base salary, short and long-term incentives, pension and other benefits.

The short and long-term incentives are variable or at-risk compensation, which is awarded based on how well we perform as a company (corporate performance), and how well the executive performs in his or her role (individual performance). Our long-term incentives are equity-based compensation, so there is an added element of risk, a focus on share value, and alignment of the executives’ interests with those of our shareholders.

Our most senior people have the highest amount and proportion of at-risk compensation.

Managing compensation risk

We take a very conservative approach to risk management because of the complex nature of our business.

Comprehensive and disciplined compensation framework

• We have a formal disciplined process for risk oversight that involves the board and all five board committees.

• We have a multi-year strategic plan to balance risk and reward. The plan contemplates the risks we face, and the risks inherent in the industry overall, so we are proactive in our planning, risk management and decision-making.

• We embed our corporate objectives into how we assess the performance of our executives and make decisions. The human resources and compensation committee assesses each objective before they are submitted to the board for their review and approval. This includes assessing whether the objectives can be manipulated, and objectives are assigned to executives with individual or joint accountability.

• We award compensation based on performance and not length of service.

• A significant portion of executive compensation is variable or at risk, and is therefore not guaranteed.

• Our compensation program is designed in a way that does not encourage excessive risk-taking by employees.

• We use our enterprise risk management system as a management tool that identifies risks, assigns accountability, monitors controls, and enables us to develop performance expectations that are appropriate and risk-adjusted.

Balanced decision-making

• We use absolute and relative measures to assess performance.

• We introduced a balanced scorecard for our short-term incentive (STI) plan and performance share unit (PSU) plan in 2009 to broaden the way we assess performance, and provide a more direct and representative link between pay and performance. This plan continues in 2010.

Threshold performance

• We must deliver threshold performance to receive a payout under our STI plan and PSU plan, otherwise the payout is zero.

• Payouts under our PSU plan are based on our performance against three-year objectives and the value of our shares when the units vest at the end of the three-year performance period.

Limits on incentive pay

• Payouts under our STI and PSU plans are limited to a maximum of two times target. These limits can only be exceeded if the board decides to exercise its discretion to pay higher than the program design, for extraordinary performance.

• We use typical and modified payout curves to clearly indicate caps on performance, so there is no incentive for any executive to take on extreme risk for the potential of an extremely high payout.

58     cameco corporation

Clawback policy

• We have instituted a clawback policy requiring the CEO and CFO to reimburse part of their incentive compensation if there is misconduct that results in Cameco restating its financial statements.

We have also developed a culture that encourages management to be objective in recognizing its level of performance and make recommendations to the board to lower its compensation when appropriate. The board has used its discretion in the past to reduce executive compensation. For example, the board awarded short-term incentive bonuses to executives for 2005, 2006 and 2008 that were lower than target.

Who participates

Our executive compensation program covers the entire executive team:

• our CEO

• our president

• five senior vice-presidents (including three who are named executives)

• 16 vice-presidents and two presidents of our US subsidiaries.

Target compensation and mix

We target overall executive compensation at the median of our compensation peer group, and benchmark base salaries at the median.

The human resources and compensation committee consults with the safety, health and environment committee on our performance in meeting our safety, health and environmental goals and related corporate results as a component in determining the STI awards.

The charts below show the 2010 target direct compensation mix for our CEO and other senior executives, and the amount of variable or at-risk compensation. The board has discretion to grant higher compensation for exceptional performance.

Compensation mix for the CEO	Average compensation mix for
	the other senior executive

The table below compares the targets for 2010 short and long-term incentives with the actual awards, expressed as a percentage of base salary. The targets are comparable to those of our compensation peer group.

The committee increased the LTI target ranges for the CEO, the president and the senior vice-president, marketing and business development in early 2010 because their levels had fallen substantially below the market median. Their target range is from approximately the 50^th percentile of the market to a maximum of 1.5 x P50 (equivalent to approximately the 60^th percentile). The other LTI target ranges and STI targets are comparable to those of other companies in our compensation peer group.

The board has the discretion to modify or reduce incentive awards calculated under the plans, and has done so in the past, based on management’s recommendation. In previous years, the board decided, on management’s recommendation, to make significant cuts to incentive awards when our financial performance was strong, but other aspects of corporate performance could have been improved.

2011 management proxy circular     59

	Target at-risk compensation
	Short-term incentive target			Long-term incentive target
Position	(% of base salary)			(% of base salary)
CEO		80	%		300 to 450	%
President		65	%		250 to 400	%
Senior vice-presidents		45 to 55	%		80 to 265	%
	Actual 2010 at-risk compensation
	Actual 2010 short-term incentive			Actual 2010 long-term incentives granted in 2010
	(% of 2010 base salary)			(% of 2010 base salary)
CEO		196	%		343	%
President		102	%	248% of COO base salary awarded when Mr. Gitzel was COO
Senior vice-presidents		66 to 85	%		162 to 321	%

Research and benchmarking

We review the results of national compensation forecast surveys and benchmark our executive compensation program to our compensation peer group as part of our analysis and assessment to make sure our compensation is fair and competitive. We also benchmark our compensation internally to make sure we are balanced in our decision-making.

In 2008, the human resources and compensation committee, with the support of its external consultant, reviewed the list of peers we use to assess our corporate performance and executive pay. As a publicly traded, global nuclear energy company based in Canada, we have few peers, so the committee established a performance peer group of companies with a subset of Canadian companies to assess compensation levels. Thirteen companies in the performance peer group were not included in the compensation peer group because they are of a larger size, income trusts or US companies, and the committee felt their compensation was not comparable.

Peer groups

The performance peer group of 34 companies includes the 21 companies in the compensation peer group, and 13 global companies with a larger revenue base and representing the energy, gold and coal mining industries. The committee uses the performance peer group to calculate the relative total shareholder return (TSR), which is a performance measure under our PSU plan.

The compensation peer group consists of 21 Canadian companies, representing a cross-section of capital-intensive companies from different sectors that are similar to us in terms of size of assets and revenue. We typically target the median of this peer group for total direct compensation although the human resources and compensation committee has the discretion to adjust the target up or down, depending on our corporate performance and other factors like market conditions. We compare the compensation of our executives against comparable executive positions from the compensation peer group when we determine the compensation for our executive officers. Total direct compensation for our named executive positions was generally at the median of our compensation peer group for 2010, following the adjustments to the long-term incentive targets.

The table below lists the companies in the two peer groups (there was no change to either peer group in 2010):

Company name	Performance peer group		Compensation peer group
Agnico-Eagle Mines Ltd.		•
Agrium Inc.		•		•
Alpha Natural Resources Inc.		•
Arch Coal Inc.		•
Barrick Gold Corporation		•		•
Canadian Natural Resources Ltd.		•
Canadian Oil Sands Trust		•		•
CONSOL Energy Inc.		•
Emera Inc.		•		•
Enbridge Inc.		•
EnCana Corp.		•
Enerplus Resources Fund		•		•
First Quantum Minerals Ltd.		•		•
Fortis Inc.		•		•
Goldcorp Inc.		•		•

60     cameco corporation

Company name (continued)	Performance peer group		Compensation peer group
Husky Energy Inc.		•
Imperial Oil Ltd.		•
Inmet Mining Corporation		•		•
Kinross Gold Corp.		•		•
Lundin Mining Corp.		•		•
Massey Energy Co.		•
Methanex Corp.		•		•
Nexen Inc.		•		•
Peabody Energy Corp.		•
Penn West Energy Trust		•		•
Potash Corp. of Saskatchewan		•		•
Sherritt International Corporation		•		•
SNC Lavalin Group Inc.		•		•
Suncor Energy Inc.		•
Talisman Energy Inc.		•		•
Teck Cominco Ltd.		•		•
TransAlta Corp.		•		•
TransCanada Corp.		•		•
Yamana Gold, Inc.		•

Share ownership guidelines

One of the key ways we align the interests of management and shareholders is by requiring our executives to own Cameco shares. We introduced share ownership guidelines for our executives on January 1, 2005, based on compensation and position as follows:

• CEO — 4.0 x base salary

• president — 3.0 x base salary

• senior vice-presidents — 2.0 x base salary

• vice-presidents — 1.0 x base salary

Executives were required to meet the share ownership targets by January 1, 2010 or within five years of being appointed to an executive position, whichever is later.

The table below shows the number of shares held by our named executives at December 31, 2010. Four of them hold more than the minimum number of shares required. We calculate the target value of share ownership by using the 2010 base salary and the multiplier for the position of the named executive.

The share value is based on $40.30, the closing price of Cameco common shares on the TSX on December 31, 2010, or the executive’s purchase price, whichever is higher. In 2010 the board approved this change of using the higher of the market price or purchase price.

The board also approved the recommendation by the human resources and compensation committee in 2010 to allow executives to use unvested PSUs towards meeting their share ownership guidelines, as long as:

• at least 50% of their holdings are in Cameco common shares

• they use a PSU estimate of 80% of target, net of taxes of approximately 50%.

The table below shows the ownership requirements for each named executive and their qualifying holdings as of December 31, 2010.

	2010				Target value		Value of		Value of		Total value of
	base				of		shares		qualifying		shares and
	salary				ownership		held1		PSUs2		qualifying PSUs		Meets share
Name	($)		Multiple		($)		($)		($)		($)		ownership target
Gerald Grandey		1,019,500		4 x		4,078,000		27,189,040		1,821,560		29,010,600	Yes — by 711	%
Kim Goheen		483,300		2 x		966,600		1,271,223		531,960		1,803,183	Yes — by 187	%
Timothy Gitzel		700,000		3 x		2,100,000		124,930		124,930		249,860	No — has met 12% of executive target for president. Has until December 31, 2015 to reach the target for president.
George Assie		577,800		2 x		1,155,600		1,664,914		677,040		2,341,981	Yes — by 203	%
Gary Chad		453,900		2 x		907,800		1,906,512		290,160		2,196,672	Yes — by 242	%

2011 management proxy circular     61

Notes:

1.	Value of shares held is based on $40.30, the closing price of our common shares on the TSX on December 31, 2010.
2.	Value of qualifying PSUs assumes the PSUs pay out at 80% of target, less tax at 50%, and a share price of $40.30, the closing price of our common shares on the TSX on December 31, 2010, and that the PSUs make up no more than 50% of the executive’s holdings.

2 Annual decision-making process

We make compensation decisions using a comprehensive process that includes decision-making by the board, the human resources and compensation committee and management. The board is actively involved as part of its oversight responsibilities, and the committee is directly involved in, and responsible for, making compensation recommendations as part of their duties. The board makes the final decisions on executive compensation.

The illustration below shows the annual process, the different inputs we use to determine compensation and the flow of information, recommendations and approval by our board.

Assessing the program

The human resources and compensation committee reviews all of our policies and programs relating to executive compensation and makes recommendations to the board. This process involves:

• establishing the annual corporate objectives to measure performance

• evaluating performance

• determining the proposed base salaries, short-term incentive awards, grants of stock options and performance share unit awards

• committee review and recommendation to the board

• board approval.

The committee is satisfied that our current executive compensation policies and programs and our compensation levels are aligned with our corporate performance, reflect competitive market practices and allow us to attract, retain and motivate talented executives.

We revised our STI and PSU programs in 2009 based on a comprehensive review by the committee in 2008. In 2010 we made changes to the share ownership guidelines as discussed above. The committee continues to assess the competitiveness and effectiveness of our executive compensation program, and STI and LTI targets may be adjusted by position.

Independent advice

The human resources and compensation committee has retained Hugessen as its independent compensation consultant since November 2008.

Hugessen’s services in 2010 mainly included:

• research and advisory services on director and executive compensation levels and practices

• advisory services on performance, compensation peer groups, and payout and plan objectives

• attending three committee meetings and one board meeting

• consultation and advisory services on compensation-related governance matters.

We paid Hugessen $247,500 for services in 2009 and $104,417 in 2010. Hugessen did not provide any other services to Cameco or to management in either year.

The committee reviews all fees and the terms of consulting services provided by its compensation consultant. The committee is ultimately responsible for its own decisions, which may take into consideration more than the information and recommendations provided by its compensation consultant or management.

62     cameco corporation

3 Measuring performance

Compensation decisions are based on corporate and individual performance.

Corporate performance

Our corporate performance is measured by how well we achieve both operational and financial goals. The board approves our corporate objectives every year, as recommended by the human resources and compensation committee. These objectives become the individual performance objectives for the CEO, and are allocated among the president and senior vice-presidents, becoming part of their individual performance objectives.

Our corporate objectives for 2010 were grouped into four broad measures of success:

1 — Safe, healthy and rewarding workplace

2 — Clean environment

3 — Supportive communities where we operate

4 — Outstanding financial performance

We had 28 corporate objectives in 2010, including 13 that were selected to determine the payouts under our annual short-term incentive plan. The table below lists the 13 corporate objectives and their results for 2010.

2010 objectives	2010 results
1 — Outstanding financial performance
Production	Exceeded
•    Produce 21.5 million lbs of U3O8 and between 14 million and 16 million kgU from fuel services.	•    Our share of U3O8 production was 22.8 million pounds, or 106% of plan. •    We produced 15.4 million kgU at fuel services.
Financial measures	Exceeded
	•    Net earnings were higher than budget.
Corporate performance •    Achieve budgeted net earnings and cash from operations before working capital changes.1	•    Cash from operations before working capital changes was higher than budget. •    Unit costs for uranium production and fuel services were below budget.
Cash costs
•    Strive for unit costs below budget.
Growth
Cigar Lake	Exceeded
•    Access and secure underground workings and continue with remediation work on schedule. •    Reinitiate shaft 2 development. •    Update the technical report.	•    Successfully dewatered and re-entered the mine using innovative technology. •    Resumed shaft 2 development. •    Issued technical report.
Inkai	Partially achieved
•    Advance Inkai block 3 delineation and begin a feasibility study. •    Initiate a feasibility study to increase production at Inkai blocks 1 and 2, and secure necessary regulatory approvals.	•    Block 3 delineation was advanced and supported initiation of a 5-year resource appraisal work plan and test leach facility required by the Kazakh authorities. •    Approval in principle to operate blocks 1 and 2 at 3.9 million pounds per year (100% basis) was received, but not for design capacity of 5.2 million pounds per year.
Kintyre	Achieved
•    Advance project evaluation to allow a production decision as soon as possible	•    Completed delineation drilling and core logging. •    Made progress on environmental baseline studies, supporting submission of an environmental scoping document to the Australian regulator.
Exploration and innovation	Exceeded
•    Replace mineral reserves and resources at the rate of annual U3O8 production based on a three-year rolling average. •    Continue to advance extension of McArthur River and the Millennium project to provide future sources of production. •    Support production growth and improved operating efficiencies through targeted research, development and technological innovation.	•    Additions to reserves and resources exceeded production by an average of 8 million pounds per year in each of the last three years (2008 to 2010). •    The McArthur River extension project and the Millennium project were advanced through the stage gate process. •    Cameco’s Research Centre advanced a number of projects aimed at improving our environmental performance and process efficiencies at our operations.

2011 management proxy circular     63

2010 objectives	2010 results
Management	Achieved
•    Continue integrating portfolio management into our management, planning and budgeting processes. •    Deliver planned capital projects within 10% of budget.	•    Portfolio management is now fully integrated into the planning and budgeting process. •    Capital projects were delivered within 10% of budget.
2 — Safe, healthy and rewarding workplace
•    Strive for no lost-time injuries at all Cameco-operated sites and, at a minimum, maintain a long-term downward trend in combined employee and contractor injury frequency and severity, and radiation doses.	Exceeded •    Overall, exceptionally strong safety performance in 2010. •    Lost-time incident frequency for employees and contractors was 0.24 per 200,000 hours worked compared to a target of 0.5 — the best performance in Cameco’s history. Medical aid frequency and severity were also significantly better than target.
•    Develop a formal implementation plan for the risk standard and begin implementation.	Achieved •    All operations met or exceeded their 2010 implementation milestones.
3 — Clean environment
•    Strive for zero reportable environmental incidents, reduce the frequency of incidents and have no significant incidents at all Cameco-operated sites.	Achieved •    There were 22 reportable environmental incidents, an improvement over 2009 (28 incidents), and below our long-term average of 30. There were no significant environmental incidents.
•    Improve year-over-year performance in corporate environmental leadership indicators.	Achieved •    Five out of eight key performance indicators showed an improvement relative to 2009.
4 — Supportive communities
•    Build awareness and support for Cameco through community investment, business development programs and public relations.	Achieved •    We received positive feedback from our annual polls in Port Hope and Saskatchewan. •    We were named one of Canada’s Top 100 employers, and one of the top 10 companies to work for in Canada.
•    Advance our projects by securing support from indigenous communities affected by our operations.	Achieved •    Established and maintained positive relationships with groups impacted by our various operating activities.

Note:

1.	We use cash from operations before working capital changes (a non-GAAP measure) as a more meaningful way to compare our financial performance from period to period. Cash from operations before working capital changes is our GAAP-based cash provided by operations, adjusted for changes in non-cash working capital and other operating items.
	Cash from operations before working capital changes is non-standard supplemental information, and is not a substitute for financial information prepared in accordance with GAAP. Other companies may calculate this measure differently. See note 19 to our audited 2010 financial statements (in our 2010 annual financial review) for more information.

Individual performance

The board measures the CEO’s individual performance using the annual corporate performance objectives (80% weighting) and their view of his executive leadership (20% weighting). Turn to page 74 for more information about the process for determining the CEO’s compensation.

At the beginning of the year the CEO establishes individual performance objectives for the president and each of the senior vice-presidents, allocating and weighting the annual corporate performance objectives by individual, according to the executive’s influence in a given area. At the end of each year, the CEO compares performance to the targets, analyses the compensation levels of similar positions in the compensation peer group, and prepares a comprehensive report on the president and each senior vice-president, summarizing their individual performance and leadership effectiveness and recommending any changes to compensation. The human resources and compensation committee reviews the reports and consults with its compensation consultant before making recommendations to the board.

64     cameco corporation

4 Compensation components

Total compensation for our executives includes five components:

1.	Base salary
2.	Short-term incentive plan (STI)	ý at-risk compensation
3.	Long-term incentive plan (LTI)
4.	Pension
5.	Benefits and perquisites

The table below is a summary of the different compensation elements and how they are determined.

Type of compensation	Form	Performance period	How it is determined
Base salary (page 66)	cash	one year	Based on market competitiveness among the compensation peer group, individual performance and internal equity
Short-term incentive (page 66)	cash	one year	Focuses on specific annual objectives Target award based on market competitiveness among the compensation peer group and internal equity
			Actual award based on corporate and individual performance
Long-term incentive (page 68)	performance share units	three-year term, with vesting at the end of three years	Focuses on longer-term objectives (three years) Target award based on market competitiveness of the LTI package among the compensation peer group
			Actual payout based on our overall performance, combining a balanced scorecard of:
			•    financial and operating performance over the three-year performance period •    three-year total shareholder return compared to the performance peer group
			At the board’s discretion, payment is made in Cameco shares purchased on the open market, or in cash
Long-term incentive (page 73)	stock options	eight-year term, with one-third vesting each year starting on the first anniversary of the grant date	Target award based on market competitiveness of the LTI package among the compensation peer group The final realized value is based on the appreciation of Cameco’s share price
Pension (page 74)	defined benefit plan (CEO and one senior vice-president) defined contribution plan (for president and all other senior vice-presidents) supplemental executive pension plan	ongoing	Based on market competitiveness
Benefits	group life, health and dental select perquisites	ongoing	Based on market competitiveness

Our named executives also have employment contracts with us. These are described in more detail starting on page 74.

2011 management proxy circular     65

Base salary

We set our benchmark for base salaries at the median of the compensation peer group.

We review the base salaries of our CEO, president and other senior executives every year, and compare them with our compensation peer group to make sure the salary levels are competitive. We compare base salaries with similar positions at companies in the compensation peer group. Then we consider our corporate performance for the year, the individual’s performance, and the salaries of others at Cameco to make sure any salary increases are fair and balanced.

The named executives received a modest increase in base salary for 2010, consistent with market practices. The only exception was Mr. Gitzel, who was promoted to the role of president on May 14, 2010. He received an increase in base salary to reflect his increased duties and responsibilities.

	2010 base salary				2009 base salary
			% increase				% increase
Name and position	$		from 2009		$		from 2008
Gerald Grandey	$	1,019,500		2.0		999,500		1.4
CEO
Kim Goheen	$	483,300		2.0		473,800		3.0
Senior Vice-President and CFO
Timothy Gitzel	$	700,000		27.3		550,000		17.0
President
George Assie	$	577,800		2.0		566,500		3.0
Senior Vice-President, Marketing and Business Development
Gary Chad	$	453,900		2.0		445,000		3.0
Senior Vice-President, Governance, Law and Corporate Secretary

Short-term incentive plan (STI)

The STI gives executives the opportunity to earn a cash bonus each year based on their success in achieving pre-established corporate and individual performance objectives.

Awards range anywhere from 0 to 150% of the STI target established for the year based on the level of performance. Payouts can be:

• 50% of the STI target if our performance meets the threshold (80% of the performance target)

• 150% of the STI target if we deliver outstanding performance (120% of the performance target)

The board has the discretion to pay up to a maximum of 200% of the STI target for exceptional performance. There is no payout if our performance is below the threshold.

The board can adjust the amount of the bonus when there are significant external challenges or opportunities that were not contemplated or reasonably expected when the objectives were set.

The human resources and compensation committee sets the STI target bonus for each executive based on the level of the position, internal equity and overall market competitiveness. Actual awards are based on corporate and individual performance for the year using the following target levels and performance weightings:

	STI target for 2010			Corporate performance			Individual performance
Position	(% of base salary)			weighting			weighting
CEO		80	%		80	%		20	%
President		65	%		70	%		30	%
Senior vice-presidents	45% to 55		%		60	%		40	%
Vice-presidents		35	%		40	%		60	%

Program enhancements

We introduced a scorecard approach in 2009 to measure performance more broadly and give participants a clearer picture of their potential award. The balanced scorecard has a number of weighted objectives aimed at driving our one-year performance in key areas, including safety, health and the environment. These objectives are mostly absolute measures because they are within our control and are tied to our four corporate measures of success and individual performance measures.

66     cameco corporation

We calculated the STI awards for 2010 as follows:

Measuring corporate performance

The board establishes the measures and weightings every year based on the recommendation of the committee. It identified 13 of the corporate objectives as compensable STI performance measures for 2010, and assigned them weightings. These objectives represent our four measures of success, and are grouped into two sets of measures that each add up to 100%. The product of these two sets of measures results in the corporate performance multiplier.

Measure	Weighting			Objective
Outstanding financial performance		85	%	•    Produce 21.5 million pounds of U3O8 and between 14 million and 16 million kgU from fuel services •    Achieve budgeted net earnings and cash from operations before working capital changes1 •    Advance the Cigar Lake project by accessing and securing underground workings and continuing with remediation work on schedule. Reinitiate shaft 2 development. Update the technical report. •    Strive for unit costs below budget •    Deliver planned capital projects within 10% of budget •    Advance Inkai block 3 delineation and begin a feasibility study •    Advance the Kintyre project evaluation to allow a production decision as soon as possible •    Continue integrating portfolio management into our management, planning, and budgeting processes
Supportive communities		15	%	•    Build awareness and support for Cameco through community investment, business development programs and public relations
Safe, healthy and rewarding workplace		50	%	•    Strive for no lost-time injuries at all Cameco-operated sites and, at a minimum, maintain a long-term downward trend in combined employee and contractor injury frequency and severity, and radiation doses •    Develop a formal implementation plan for the risk standard and begin implementation
Clean environment		50	%	•    Strive for zero reportable environmental incidents, reduce the frequency of incidents and have no significant incidents at Cameco-operated sites •    Improve year-over-year performance in corporate environmental leadership indicators

Note:

1. See page 64 for an explanation of cash from operations before working capital changes, a non-GAAP measure.

2011 management proxy circular     67

Measuring individual performance

The committee establishes individual performance measures every year, and set three core measures for 2010:

Key operating results
Strategic change initiatives
Leadership effectiveness ý The committee can also add any other performance measures it deems appropriate.

The committee used these measures to assess the CEO’s individual performance for 2010. The committee assessed the CEO’s leadership effectiveness and his impact on strategic change initiatives as outstanding.

The CEO decides which measures will be used for the other participants in the plan, and sets the weightings for each. He assesses the performance of the president and senior vice-presidents. Senior vice-presidents assess the performance of vice-presidents.

2010 award

The table below shows the STI awards made to our CEO, president and senior vice-presidents for 2010 and paid in 2011. The STI plan design is as follows:

• for the CEO — 80% on corporate performance, 20% on individual performance

• for the president — 70% on corporate performance, 30% on individual performance

• for the senior vice-presidents — 60% on corporate performance, 40% on individual performance.

As described on page 53, the board exercised its discretion to increase the bonuses for the president and senior vice-presidents by 20%, and by 85% for the CEO.

2010

Corporate

Individual

2010 STI

base

Factor

performance

performance

bonus

salary

x STI

multiplier &

multiplier &

Discretionary

paid

Name and position

($)

target

weighting

weighting

factor

($)

Gerald Grandey

1,019,500

x

80%

x

[(128% x 80%)

+

(150% x 20%)]

x

185%

=

2,000,000

CEO

Kim Goheen

483,300

x

50%

x

[(128% x 60%)

+

(110% x 40%)]

x

120%

=

351,000

Senior Vice-President and CFO

Timothy Gitzel

700,000

x

65%

x

[(128% x 70%)

+

(137.5% x 30%)]

x

120%

=

715,000

President

George Assie

577,800

x

55%

x

[(128% x 60%)

+

(130% x 40%)]

x

120%

=

492,000

Senior Vice-President, Marketing and Business Development

Gary Chad

453,900

x

45%

x

[(128% x 60%)

+

(111.25% x 40%)]

x

120%

=

298,000

Senior Vice-President, Governance, Law and Corporate Secretary

The Compensation lookback on page 56 shows the impact that discretionary changes, market compensation and formula calculations had on STI awards for our named executives over the past three years.

Long-term incentive plans (LTI)

Our LTI gives executives and other employees the opportunity to receive options and performance share units (PSUs) every year. Options are awarded to employees ranging from first-line supervisors to the CEO, while PSUs are awarded to vice-presidents and above. In addition, all employees below the level of vice-president, including unionized employees, are eligible to participate in our employee share ownership plan (ESOP). We make annual base contributions to the plan, and also match 50% of employee contributions up to a maximum of 1.5% of an employee’s base salary.

Both the committee and the board confirmed the importance of equity-based compensation as part of our overall compensation program in order to stay competitive, motivate executives to deliver strong longer term performance and link executives’ interests with those of shareholders. By offering a performance share unit plan and stock option plan, we can use different vesting criteria, eligibility and performance measures for at-risk compensation.

The committee evaluates our weightings of options and PSUs every year, and discusses the national trends with its compensation consultant. The committee can adjust this weighting based on, among other things, the emphasis Canadian public companies are putting on stock options or some form of whole share plan. The committee set the

68     cameco corporation

targeted mix of the expected value of the long-term incentives at 40% PSUs and 60% options in 2010, similar to our mix for the past three years and consistent with our compensation peer group.

Each LTI grant is based on individual performance, the level of the position, internal equity and overall market competitiveness. The CEO reviews the expected value of each officer’s LTI grant, based on the above criteria, and creates a pool of options and PSUs. The pool is allocated based on the CEO’s recommendation and internal equity. The CEO has always reduced his own potential LTI allocation to distribute among management and ensure that the senior executives are treated as a team. The LTI grant to executives in 2010 was targeted at the median of the compensation peer group. We grant options to other employees based on their position and performance for the year, within established ranges for the different position levels.

Awards are granted every year on March 1 (or the next business day if March 1 falls on a weekend), after we publicly disclose our results for the previous fiscal year. If we impose a trading blackout period that includes March 1, we will make the grants seven trading days after the blackout period has ended. The board can make special grants of options and PSUs at other times during the year. The board decided to grant a special award of PSUs to Mr. Assie in 2010, as a retention bonus so he would postpone his retirement until December 31, 2010.

Shareholder feedback

Two shareholders expressed concern over our use of stock options as a long-term incentive. The committee discussed the use of options as part of our executive compensation program and concluded that they remain an important element of a competitive compensation program in our industry and are a tax-efficient mechanism that provides a longer term horizon.

As discussed above, the committee discusses national compensation trends with its independent compensation consultant. The committee also continues to monitor the appropriate allocation of long-term incentives.

Performance share unit plan

We introduced a PSU plan for executives in 2004 to replace some of the incentive opportunities granted previously through stock options. The PSU plan allows us to reduce the number of options we grant, lessening the dilutive impact to shareholders, and adds another element of compensation with performance criteria.

The longer-term nature of the PSU award is aimed at increasing retention and is designed to motivate executives to:

• consistently meet corporate performance targets that are aligned with our strategy

• create shareholder value that can be sustained on an absolute and relative basis over a three-year period.

Under the plan, each PSU represents one notional common share that can be exchanged for Cameco common shares purchased on the open market (or for cash, at the board’s discretion) at the end of a three-year period, as long as certain performance and vesting criteria have been met. PSUs do not earn dividends. Withholding taxes apply, so the amount of cash or shares each executive receives is reduced by that amount.

In 2009, the human resources and compensation committee introduced a scorecard approach to better align senior management’s compensation with their ability to improve corporate performance over a three-year period. PSUs issued up to and including March 4, 2008 vest at the end of the three-year period based on the previous criteria, while those awarded starting in 2009 vest based on the new scorecard. The target measures under the new PSU plan are based on capital costs, increased production, average realized uranium price and TSR, all of which are also measured on an annual basis under the STI plan. Measuring performance against these objectives under the PSU plan over a three-year period ensures management maintains a balanced, longer-term focus on these measures, in addition to the short-term focus created under the annual bonus program. We explain the performance measures and vesting criteria in more detail below.

The human resources and compensation committee sets the performance targets every year. The committee and the board consider them reasonably challenging stretch targets.

Previous terms for vesting

PSUs issued up to and including March 4, 2008 vest at the end of the three-year period based on two criteria:

• annual cash provided by operations before working capital changes averaged over the three-year period (absolute measure)

• annualized total shareholder return (relative measure).

2011 management proxy circular     69

We calculate the amount as follows:

	Absolute measure		Annual cash provided by operations before working capital changes
			If our performance is:
	% of PSUs available to vest 0 to 150%	ý	•    between 95 and 105% of the target, 100% of the PSUs will vest •    below 95%, the board can lower the number of PSUs that will vest •    higher than 105% of the target, the board can increase the number of PSUs that will vest. No PSUs will vest if our performance is below 80% of the target. The board can pay up to 200% of the target for exceptional corporate performance.
	Relative measure		Annualized total shareholder return (TSR)
X	% of PSUs available to vest 100% or 50%	ý	We compare our annualized total shareholder return (appreciation in share price + dividends paid) to the Metals and Mining and Utilities and Gold indices over three years. While the relative weighting of this blended index may vary, it represents the mix of industries that make up our operations. If our performance is similar to the index, there will be no change to the initial grant of PSUs (for example, if the return of the blended market index is 10%, our total shareholder return must be at least 8%). If our performance is less than comparable (outside a defined range), then we reduce the initial grant of PSUs by 50%.
=	% of initial grant of PSUs 0 to 150%	ý	Performance multiplier

If an executive is no longer an employee at the end of the three-year vesting period, a pro-rated portion of the PSUs will vest based on the period of employment, as long as the executive:

• was not terminated for cause

• did not resign from Cameco before being entitled to receive a pension under our registered pension plan.

If an executive is terminated within 12 months after a change of control, all of the PSUs will vest and be paid out at their target value.

New terms for vesting

The new scorecard, first used for the awards granted in 2009, uses four measures to calculate our overall performance, combining relative total shareholder return with three other corporate measures. Each of these is given a weighting, and calculated over a three-year period.

The performance targets are reasonably achievable stretch targets and are largely within the control of our executive team.

The table below explains the specific terms of the targets for PSUs awarded in 2010:

Total actual costs for capital projects (30%) 0 to 150%	ý	Total actual costs for planned capital projects (approved financial expenditures) that started and closed during the three-year period 2010 to 2012, not to exceed the budgeted cost by a defined margin
Average realized uranium price (20%) 0 to 150%	ý	Achieve an average realized price for uranium sales for a three-year period that exceeds the weighted average price for sales in two industry benchmarks for the same period The 2010 goal will be based on 2009, 2010 and 2011 sales due to timing of when pricing information is available
Increased production (20%) 0 to 150%	ý	Increase production of U30 8 by 22% during the three-year period 2010 to 2012

70     cameco corporation

Our three-year average total shareholder return (TSR) (30%) 0 to 200%	ý	Achieve three-year average TSR that is the median of the three-year average TSR achieved by companies in our performance peer group We define TSR as the change in price of a Cameco common share, including reinvestment of dividends, on the Toronto Stock Exchange (TSX) during the three-year period.
Corporate performance multiplier	ý	The overall performance factor represents the sum of the four targets above
Initial grant of PSUs	ý	Notional units awarded at the beginning of the three-year performance period
PSU payout	ý	Payout amount is the initial number of PSUs granted, multiplied by the PSU corporate performance multiplier, exchanged for the equivalent number of Cameco common shares

Payout curves have been established for each performance measure, taking into account different levels of threshold performance to determine the performance multiplier and cap the payouts to eliminate any excessive risk taking.

Calculating the corporate performance multiplier

The final performance multiplier for each measure will depend on our performance against each target. The table below shows how we assess performance against each measure:

Corporate	Threshold
performance measures	performance	If we achieve:	Then the performance multiplier is:
Total actual costs for capital projects (25%)	25% above our budget (target) of 100%	More than 25% higher than target	0%
		Within 20 to 25% above target	50 to 100% (in a straight-line interpolation)
		Target to 20% above target	100%
		Target to 83% of target	100 to 150% (in a straight-line interpolation)
Average realized uranium price (20%)	80% of our target of 100%	Less than 80% of the corresponding target	0%
Increased production (20%)		80 to 120% of the corresponding target	50 to 150% (in a straight-line interpolation)
		More than 120% of the corresponding target	150%
Our three-year average total shareholder return (30%)	35th percentile (target is the 50th percentile)	Below the 35th percentile among our performance peer group	0%
		From the 35th to the 75th percentile	40 to 200% (in a straight-line interpolation)
		Higher than the 75th percentile	200%

Applying discretion

The committee can make adjustments at its discretion. For example, it can:

• adjust a performance measure, target measure and/or two or more weightings when things change (such as when a financial indicator no longer exists or has materially changed or is no longer relevant to our business, or when there are significant external challenges and opportunities that were not contemplated or reasonably expected when the objectives were set)

• increase any of the corporate performance multipliers up to a maximum of 200% for extraordinary corporate performance, subject to the approval of the board. It can also increase the final number of PSUs to account for exceptional corporate performance, or decrease it due to corporate performance that does not meet expectations.

2011 management proxy circular     71

Using discretion helps reduce the possibility that anyone unduly benefits from or suffers because of events that are unforeseen or out of their control.

2010 payouts of 2008 PSU awards

The table below shows the payouts we made to our named executives in early 2011 for PSUs awarded in 2008, compared to the payouts made in 2009 for PSUs awarded in 2007. The payout for the 2008 awards was made March 1, 2011 in common shares purchased in the market that day. Payouts for previous years were made in late December of each year, in common shares purchased in the market. As Mr. Assie was no longer an active employee after the end of 2010, his PSU payout was made in cash in early March, based on $39.13, the average price of our common shares on the TSX for the first 20 trading days of the year, in accordance with the plan design.

Three-year performance

Our performance from 2008 to 2010 was better than from 2007 to 2009. The table shows the difference in the absolute measure (defined as cash from operations before working capital changes) between the two periods. The average annual cash provided by operations before working capital changes from 2008 to 2010 was $766 million, more than 118% of target and resulting in a payout factor of 160.9%. This compares to $812 million for the period from 2007 to 2009, which was more than 112% of target and resulted in a payout factor of 127.7%. The cash from operations reported for 2009 used information available to the end of November 2009, however, as a result of the divestiture of Centerra in December 2009, the target cash flow for 2009 was reduced by $216 million, and the year-end number was reduced accordingly. Total shareholder return, our relative measure, was low over both three-year periods, resulting in a payout factor of 50% for that measure in both periods.

Grant value vs. payout value

The grant date valuation of the PSUs in 2008 was based on $38.83, our closing share price on the TSX on the day prior to the grant. We also used this share price to calculate each executive’s total compensation for 2008.

The PSUs were exchanged for Cameco common shares on March 1, 2011 at an average purchase price of $39.89.

The performance factor was calculated at 80.45% (160.9% x 50%), however, on management’s recommendation, the board capped the payout for the absolute measure at the plan design maximum of 150%. This resulted in a calculated payout of 75%, which, combined with the change in share price, resulted in the named executives receiving 77% of the grant value reported in 2008.

							Value of total									Value of total
							2008 PSU									2007 PSU
							payout									payout
							March 1, 2011									Dec. 11, 2009
							at a share									at a share
	2008		Absolute		Relative		price of			2007		Absolute		Relative		price of
	PSU award		measure		measure		$39.89			PSU award		measure		measure		$32.36
Name	(# of units)		(%)		(%)		($)			(# of units)		(%)		(%)		($)
Gerald Grandey		25,000		150		50		747,938			15,000		127.7		50		309,966
Kim Goheen		10,000		150		50		299,175			8,000		127.7		50		165,307
Timothy Gitzel		10,000		150		50		299,175			3,000		127.7		50		62,006
George Assie*		10,000		150		50		293,475	*		8,000		127.7		50		165,307
Gary Chad		6,000		150		50		179,505			6,000		127.7		50		123,980

* Due to his retirement on December 31, 2010, Mr. Assie was paid in cash at $39.13 per share, the average price of our common shares on the TSX for the first 20 trading days in 2011.

The absolute measure is cash from operations before working capital changes. See page 64 for an explanation of this non-GAAP measure.

See the Compensation lookback on page 56 for the PSUs granted to our named executives over the past three years, and Performance share unit plan on page 69 for more information about the plan.

Additional 2010 PSU award

Mr. Assie received a grant of 10,000 PSUs on May 26, 2010 as a retention bonus so he would postpone his retirement until December 31, 2010. This grant was valued at $25.80 per unit based on our closing share price on the TSX on May 25, 2010. The PSUs vested on December 31, 2010 at 100%, and were paid out in January 2011 in shares purchased on the market at a weighted average cost of $37.10 per share.

72     cameco corporation

Stock option plan

Our stock option plan is designed for management, and certain professional employees and employees with supervisory responsibilities, and ties a portion of their future compensation to the long-term performance of our shares. It gives executives and other employees a form of compensation tied to the market value of our common shares. We had 918 employees participate in the plan in 2010.

The human resources and compensation committee believes that granting options is an effective way to:

• make sure that executives and other employees are committed to the longer term interests of the company and our shareholders

• attract, retain and motivate talented employees to achieve corporate success.

Options have a term of eight years and one-third vest each year, starting on the first anniversary of the date of the grant. The committee takes into account previous grants when it considers new grants of options.

The board fixes the exercise price of an option at the time of the grant at the TSX closing price of Cameco common shares on the trading day immediately before the date of the grant. Withholding taxes apply when the options are exercised, so the amount of cash each executive or employee receives is reduced by that amount.

We amended our stock option plan in 2010 to apply withholding taxes when employees or directors exercise their options. This change did not require shareholder approval under the terms of our plan.

If an employee leaves the company, any unvested options will vest during a specific period of time depending on the reason for leaving. All vested options can be exercised for the same specified period of time. See Compensation on termination starting on page 76 for more information.

No more than 10% of our total shares issued and outstanding can be issued to insiders in a one-year period under the stock option plan and any other security based compensation arrangement. An employee participating in the plan can only hold up to 5% of our total common shares issued and outstanding. Options cannot be transferred to another person (other than by will or intestate succession).

Making changes

The board can change, suspend or terminate the option plan subject to the laws that apply, including but not limited to the rules, regulations and policies of any stock exchange Cameco is listed on. Some changes may require approval from shareholders or other governmental or regulatory body.

Neither the board, nor the human resources and compensation committee or shareholders can alter or affect the rights of an option holder in a negative way without his or her consent, except as described in the plan.

The following kinds of changes also require shareholder approval under the terms of the plan:

Administrative

• any change to the number of common shares that can be issued under the plan, including increasing the fixed maximum number of common shares, or changing from a fixed maximum number to a fixed maximum percentage of common shares

• any change to extend the period after a trading blackout when options can be exercised

• any change to extend the expiry date of an option unless it would otherwise expire during a trading blackout period

• any change that requires shareholder approval such as those described in the rules, regulations and policies of any stock exchange that we are listed on

Exercise price

• any change that would cause the exercise price of an option to be lower than the fair market value of the common shares at the time the option is granted. This does not include standard adjustment provisions relating to dividends or stock splits, recapitalizations, consolidations or other fundamental corporate changes, or provisions for the treatment of options if there is a change of control or other similar transaction that affects the powers of the board to make certain changes to the option plan.

• any other change that would cause the exercise or purchase price of an option to be lower (other than the standard adjustment provisions or if there is a change of control or other similar transaction as described in the item above). Cancelling an option or reissuing it at a lower price is considered a reduction in the exercise price.

Eligibility

• any change that increases the number of categories of people who are eligible to receive options, if it could increase the participation of insiders

• any change allowing options to be transferred other than by will or intestate succession

Securities

• adding deferred or restricted share units or other share awards that would not involve an actual cash payment

• any change that allows adding a cashless exercise feature, unless it reduces the number of underlying shares in the option plan reserve

2011 management proxy circular     73

See the Compensation lookback on page 56 for information about the notional value of the options granted to our named executives over the past three years.

International employees

On January 1, 2001, we introduced the non-North American stock option plan (phantom plan) to give eligible employees of our international subsidiaries the opportunity to participate in our overall growth and profitability.

The phantom plan has the same objectives and features as our stock option plan except that these option holders have the right to receive cash payments rather than Cameco shares. The cash amount equals the difference between the market price of a Cameco share on the exercise date and the exercise price of a phantom stock option.

Pension

The human resources and compensation committee believes pensions are an integral part of total compensation and a cost-effective and important benefit for attracting and retaining talented employees, including executives.

Our executives participate in a registered base plan and a supplemental plan.

Registered base plan

This is a defined contribution plan for the named executives, except for Mr. Grandey and Mr. Chad who participate in a registered defined benefit plan.

Supplemental plan

The supplemental executive pension plan is a non-contributory supplemental defined benefit plan that is designed to attract and retain talented executives over the longer term. It is also designed to provide a retirement income that is commensurate with the executive’s salary and offset the strict limits under the Income Tax Act (Canada) relating to registered pension plans.

All of our executives and certain officers of wholly owned subsidiaries participate in the supplemental executive pension plan. See Retirement plan benefits on page 86 for more information.

Perquisites

Our named executives receive a number of perquisites as part of their total compensation, including:

• life insurance

• long-term disability

• financial and tax planning

• an executive medical plan

• a vehicle allowance

• additional salary protection in the event of a disability (at no current incremental cost to Cameco).

These perquisites are similar to those offered by the companies in our compensation peer group.

Employment contracts

CEO

Mr. Grandey signed a new employment agreement with us on December 31, 2007 that does not include a fixed term of employment. The new contract provides for:

• a base salary

• participation in the short-term incentive plan

• participation in the long-term incentive plan (including options and PSUs)

• participation in the defined benefit pension plan

• participation in the supplemental executive pension plan

It also includes post-termination obligations requiring that he:

• not use or disclose specialized knowledge, contacts and connections he obtained while at Cameco

• not compete against us in any way for 12 months after he leaves the organization

• not solicit any of our customers, suppliers or employees or harm our relationships with any of them for 18 months after he leaves the organization.

Mr. Grandey is also entitled to US currency protection for any benefits that will be paid to him under our executive defined benefit pension plan and the supplemental executive pension plan if the exchange rate from the Canadian to US dollar is less than 0.725 at the time of payment.

Compensation

The human resources and compensation committee considers the following when it reviews the salary and performance of the CEO:

• overall corporate performance

• implementation of the CEO’s strategies to increase shareholder value

• the CEO’s individual performance measures

74     cameco corporation

• comparative compensation — how the salary and short and long-term incentives compare to similar positions in the peer groups

The CEO submits a performance self-assessment to the committee. The committee reviews the self-assessment, considers compensation recommendations received from the compensation consultant, and then recommends the CEO’s compensation to the board for approval.

On termination

The table on page 78 gives a summary of the incremental compensation that would be paid to Mr. Grandey if his employment had been terminated on December 31, 2010.

If Mr. Grandey resigns, it will be treated as retirement because he is eligible to retire. If there is a change of control and no termination, Mr. Grandey does not receive any incremental benefits.

Mr. Grandey has announced that he will retire on June 30, 2011.

President and other senior executives

Mr. Gitzel signed an employment agreement with us on May 14, 2010 that provides for:

• a base salary

• participation in the short-term incentive plan

• participation in the long-term incentive plan (including options and PSUs)

• participation in the employee defined contribution pension plan and the supplemental executive pension plan.

Mr. Gitzel is required to hold the equivalent of at least three times his base salary in Cameco shares and qualifying PSUs by December 31, 2015.

Mr. Assie, Mr. Goheen and Mr. Chad signed new employment agreements on November 1, 2005. The contracts are for an indefinite period of employment and provide for:

• a base salary

• participation in the short-term incentive plan

• participation in the long-term incentive plan (including options and PSUs)

• participation in the employee defined contribution pension plan (other than Mr. Chad who participates in the executive defined benefit pension plan) and the supplemental executive pension plan.

All three executives met the share ownership target by January 1, 2010. See page 61 for more information.

The contracts with all four executives also include post-termination obligations requiring that each does not:

• use or disclose specialized knowledge, contacts and connections he obtained while at Cameco

• compete against us in any way for 12 or 18 months (depending on the officer) after he leaves the organization

• solicit any of our customers, suppliers or employees or harm our relationships with any of them for 12 or 18 months (depending on the officer) after he leaves the organization

On termination

If Mr. Goheen or Mr. Chad resign, it will be treated as retirement because they are eligible to retire. They do not receive any incremental benefits if there is a change of control but no termination of employment.

Mr. Assie retired from his position of senior vice-president, marketing and business opportunities on December 31, 2010.

Mr. Gitzel will become president and CEO as of July 1, 2011. Under the terms of his new employment agreement:

• Mr. Gitzel will be required to hold four times his base salary in Cameco shares and qualifying PSUs by December 31, 2016

• his notice period increases from 18 months to two years if he is terminated without cause.

See 2011 compensation to date on page 89 for an update on changes to Mr. Gitzel’s compensation when he becomes president and CEO.

Clawback provisions

If our financial statements have to be restated because of misconduct, the CEO and CFO have to reimburse some of their incentive compensation as required by US law. This policy has been in place since 2003.

2011 management proxy circular     75

Compensation on termination

The table below is a summary of the compensation that would be paid to the named executives if any of them is terminated. The only difference for Mr. Grandey and Mr. Gitzel is if they are terminated without cause, Mr. Grandey’s severance and STI awards are based on six months, rather than two years, and Mr. Gitzel’s are based on 18 months until January 30, 2011 and two years thereafter. As Mr. Assie retired in 2010, only the information about retirement applies to him.

We believe the following terms are fair, competitive with the market and based on industry practice.

Type of
termination	Severance	STI bonus	Options	PSUs	Benefits	Pension
Retirement1	•  none	•  bonus for the current year is pro-rated to retirement date	•  three years to vest •  must be exercised within three years or the original term, whichever is earlier	•  performance is measured to the end of the year of retirement •  awards are pro-rated to retirement date	•  post-retirement benefits continue until age 65 •  once the executive turns 65, life insurance is reduced and health and dental benefits are provided until death	•  credited service no longer earned
Resignation2	•  executive must give three months notice •  if we waive the notice, we must pay his base salary for three months	•  none	•  vesting continues for 90 days •  must be exercised within 90 days or the original term, whichever is earlier	•  no entitlement to any PSU payout and all PSUs are cancelled	•  none	•  credited service no longer earned
Termination without cause3	•  lump sum equal to base salary for the notice period	•  lump sum equal to the target bonus for the notice period	•  options continue to vest for the notice period •  must be exercised within the notice period (except for the CEO who is entitled to the notice period plus 90 days) or by the original expiry date, whichever is earlier	•  performance is measured to the end of the year of termination •  awards are pro-rated to termination date	•  employer contributions for health, dental and life insurance benefits continue for the notice period or until executive obtains other employment, whichever is earlier	•  coverage continues and credited service continues to be earned for the notice period
Termination without cause within 12 months of a change of control4	•  same as for termination without cause	•  same as for termination without cause	•  all vested options must be exercised within the notice period (except for the CEO who is entitled to the notice period plus 90 days) or by the original expiry date, whichever is earlier •  all unvested options vest, assuming TSX approval and must be exercised within two years or the original term, whichever is earlier5	•  all PSUs vest and are paid at target	•  same as for termination without cause	•  same as for termination without cause

76     cameco corporation

Type of termination	Severance	STI bonus	Options	PSUs	Benefits	Pension
Termination with cause	•   none	•  all entitlement to the bonus is lost	•  vesting continues for 30 days or the original term, whichever is earlier •  must be exercised within 30 days	•  no entitlement to any PSU payout and all PSUs are cancelled	•  none	•  credited service no longer earned
Death	•   none	•  pro-rated to the date of death	•  three years to vest •  must be exercised within three years or original term, whichever is earlier	•  performance is measured to the end of the year of death •  awards are pro-rated to the date of death	•  life insurance is paid on death	•  credited service no longer earned •  value of vested pension benefit is paid to the beneficiary

Notes:
1.	Retirement
	Post-retirement benefits include health, dental, accidental death and dismemberment, and life insurance. Benefits are provided only if the executive is at least 57 years old with at least 10 years of service when he retires. A supplemental amount of $1,000 per month is paid until age 65, if the executive retires and is at least 57 years old with 10 years of service.
	Mr. Assie retired on December 31, 2010.
2.	Resignation
	Mr. Grandey, Mr. Goheen and Mr. Chad are eligible for early retirement and therefore do not qualify for the compensation that is paid if a senior executive resigns.
3.	Termination without cause
	The notice period for Mr. Grandey, Mr. Goheen and Mr. Chad is two years or the period remaining until age 65, whichever is earlier. As Mr. Grandey will be 65 in June 2011, his notice period was six months at December 31, 2010. The notice period for Mr. Gitzel is 18 months or the period remaining until age 65, whichever is earlier until June 30, 2011. After that, the notice period is two years or the period remaining until age 65, whichever is earlier.
4.	Termination without cause within 12 months of a change of control
	According to the ENL Reorganization Act, no person, alone or together with associates may hold, beneficially own or control, directly or indirectly, more than 25% of Cameco’s voting shares that can be cast to elect the directors. Because of the legislated restrictions on share ownership, there would have to be an act of federal parliament for anyone to hold more than 25% of our voting shares. For Mr. Grandey, change of control is defined as an entity holding 35% or more of our voting shares, transfer or lease of substantially all of the company’s assets, dissolution or liquidation of the company, or the board deciding that a change of control has occurred. For Mr. Goheen, Mr. Gitzel and Mr. Chad, change of control is the same except that an entity must hold 50% or more of our voting shares.
5.	Options
	Upon termination without cause within 12 months of a change of control, any unvested stock options vest immediately and the executive has two years to exercise them. For stock options that had already vested prior to termination, the executive must exercise them within the notice period (6 months for Mr. Grandey, 18 months for Mr. Gitzel and two years for the other named executives ,or the period remaining until age 65, whichever is earlier).

2011 management proxy circular     77

The table below shows the incremental values that would be paid to the named executives if any of them had been terminated on December 31, 2010 and includes a situation of termination without cause with a change of control. Cameco has legislated ownership restrictions under the ENL Reorganization Act. While a change of control is possible, it would require an act of parliament as discussed in note 4 of the pervious table. As Mr. Assie retired in 2010, only the incremental consequences of his retirement are included in the table.

	Severance		STI bonus1			Options2		PSUs3			Benefits4		Pension5			Total payout
Type of termination	($)		($)			($)		($)			($)		($)			($)
Gerald Grandey CEO
Retirement6		nil		nil			nil		nil			61,200		nil			61,200
Termination without cause		509,750		407,800			nil		nil			45,800		61,500			1,024,850
Termination without cause with a change of control		509,750		407,800			3,490,400		3,546,400			45,800		61,500			8,061,650
Termination with cause		nil		(2,000,000	)		nil		(2,640,730	)		nil		nil			(4,640,730	)
Death		nil		nil			nil		nil			2,039,000		(2,926,500	)		(887,500	)
Kim Goheen Senior Vice-President and CFO
Retirement6		nil		nil			nil		nil			nil		nil			nil
Termination without cause		966,600		483,300			nil		nil			29,100		309,100			1,788,100
Termination without cause with a change of control		966,600		483,300			1,080,700		926,900			29,100		309,100			3,795,700
Termination with cause		nil		(351,000	)		nil		(799,820	)		nil		nil			(1,150,820	)
Death		nil		nil			nil		nil			966,600		(645,900	)		320,700
Timothy Gitzel President
Resignation7		nil		(715,000	)		nil		(1,009,190	)		nil		nil			(1,724,190	)
Termination without cause		1,050,000		682,500			nil		nil			18,800		279,100			2,030,400
Termination without cause with a change of control		1,050,000		682,500			1,401,300		1,370,200			18,800		279,100			4,801,900
Termination with cause		nil		(715,000	)		nil		(1,009,190	)		nil		nil			(1,724,190	)
Death		nil		nil			nil		nil			1,122,000		56,700			1,178,700
George Assie Senior Vice-President, Marketing and Business Development
Retirement6		nil		nil			nil		nil			186,700		nil			186,700
Gary Chad Senior Vice-President, Governance, Law and Corporate Secretary
Retirement6		nil		nil			nil		nil			191,800		nil			191,800
Termination without cause		907,800		408,510			nil		nil			30,800		143,500			1,490,610
Termination without cause with a change of control		907,800		408,510			658,850		483,600			30,800		143,500			2,633,060
Termination with cause		nil		(298,000	)		nil		(444,050	)		nil		nil			(742,050	)
Death		nil		nil			nil		nil			907,800		(1,547,500	)		(639,700	)

78     cameco corporation

Notes:
1.	STI bonus
	When the executive resigns or is terminated for cause, he forfeits any outstanding STI bonus payment. We calculated the payment that he is forfeiting based on the STI bonus determined in 2011 for 2010 performance.
2.	Options
	The named executives only receive an incremental benefit on their options when there is a termination without cause with a change of control. Currently under the ENL Reorganization Act, a change of control for Cameco is not permitted. The amount shown is the in-the-money value at December 31, 2010 of all unvested options which would vest upon a termination without cause with a change of control.
3.	PSUs
	When there is a retirement, termination without cause or termination without cause with a change of control, the named executives may receive an incremental benefit for any outstanding PSUs, to account for the fact that our corporate performance may be better at the end of the year of termination, than it turns out to be at the end of the original three-year vesting period. In the table, we have assumed that the performance multiplier at the end of the assumed year of termination and at the end of the original three-year vesting period are the same so there is no incremental benefit at retirement, termination without cause or death.
	When the executive resigns or is terminated for cause, he forfeits any payment. To determine the amount forfeited, we calculated the payout of the outstanding PSUs based on the results to date and the average share price over the first 20 trading days of 2011 of $39.13, as required under the PSU plan for a mid-term payout.
	When the executive is terminated without cause with a change of control, all outstanding PSUs vest immediately at target, and are paid out on the termination date of December 31, 2010. The calculation in this situation is based on a share price of $40.30, the closing price of a Cameco common share on the TSX on December 31, 2010.
4.	Benefits
	Post-retirement benefits include health, dental, accidental death and dismemberment, and life insurance. Benefits are provided only if the executive is at least 57 years old with at least 10 years of service when he retires. Mr. Goheen and Mr. Gitzel are not eligible for post-retirement benefits because they had not reached the age of 57 on December 31, 2010.
5.	Pension
	The incremental pension benefit is the difference between the commuted value on termination and the commuted value on retirement at December 31, 2010. If the commuted value on termination is less than the commuted value when the executive retires (or resigns in Mr. Gitzel’s case), his pension benefit is negative.
	The table below shows the commuted values for retirement (resignation in the case of Mr. Gitzel). We estimated these values using the Canadian Institute of Actuaries’ Standard Practice for Determining Pension Commuted Values, and assumed:

• 100% vesting

• the executive’s age or age 55, whichever is later

• no salary increase after December 31, 2010

• a discount rate of 3.3% each of the next 10 years and 5.0% each year thereafter for Canadian and US liabilities

• benefits are pre-tax.

Commuted value	For retirement	On December 31, 2010
The commuted values are based on assumptions representing entitlements in the employment agreements, and these may change over time. The methods we use may not be exactly the same as those used by other companies, so you may not be able to compare our figures directly with those of other companies.	Gerald Grandey	$	7,282,000
	Kim Goheen	$	2,588,200
	George Assie	$	6,409,100
	Gary Chad	$	3,758,400
	For resignation
	Timothy Gitzel	$	627,300

6.	Retirement
	The termination on resignation estimate does not apply to Mr. Grandey, Mr. Goheen and Mr. Chad because they are all eligible to retire, and a resignation by any one of them would be treated as a retirement.
	Mr. Assie retired on December 31, 2010.
7.	Resignation
	Based on his terms of employment in effect on December 31, 2010, if Mr. Gitzel had voluntarily ended his employment on December 31, 2010, it would have been regarded as a resignation because of his age. Mr. Gitzel would not receive a severance. He would have been required to give three months notice prior to resignation. We can waive this notice if we pay three months’ base salary, or $175,000. The table assumes that we did not waive the notice period.

2011 management proxy circular     79

5 How our executive compensation aligns with share performance

The graph below compares the performance of Cameco shares over the last five years (including reinvestment of dividends) to the performance of the S&P/TSX Composite Total Return Index. It shows what $100 invested in Cameco shares and the index at the end of 2005 would be worth at the end of each of the last five years.

The bar chart shows the trend in total compensation paid to our named executives over the same period. It tracks closely with our share performance in three of the last five years. The exceptions were in 2006 and 2008:

• our share performance was very strong in 2006, but total compensation was less than 2005 because of the water inflow at Cigar Lake

• our share performance declined in 2008, but total compensation was higher than 2007 because of exceptionally strong financial results. We reduced the short-term incentive bonus because we did not meet two key operational objectives. Since we grant long-term incentives early in the year, the 2008 LTI awards were paid before the significant downturn in the market, and had a higher grant date value than in 2007.

The value of total compensation for the named executives increased in 2010 because of our excellent results. See the Executive summary starting on page 52 for more information.

	2005		2006		2007		2008		2009		2010
Cameco	$	100	$	128	$	108	$	58	$	94	$	113
S&P/TSX Composite Total Return Index		100		117		129		86		117		137
Grant date value of total compensation for the named executives (in $ millions)		16.5		11.5		10.3		11.7		10.7		15.7

The grant date value of total compensation for the named executives includes the total compensation we disclosed in our previous management proxy circulars:

• salary

• short-term incentive bonus

• options (valued as of the grant date using the Black-Scholes model)

• performance share units (valued as of the grant date based on the share price on the day before the grant and target awards)

• annual pension service cost and all other compensation.

It does not include any perquisites, as they all fall below the threshold.

The named executives in the table and graph above include Mr. Grandey, Mr. Goheen, Mr. Assie and Mr. Chad for each of the last five years. Terry Rogers, the former chief operating officer who retired at the end of June 2006, was also a named executive in 2005 and 2006. Mr. Gitzel, who became the chief operating officer in January 2007, was also a named executive in 2007, 2008, 2009 and 2010.

80     cameco corporation

2010 results

Summary compensation table

The summary compensation table shows the base salary, incentive-based awards and other compensation awarded to the named executives in 2010.

See the table on page 56 for the 2011 compensation known to date.

									Non-equity
									incentive plan
									compensation
									($)
					Share-		Option		Annual
					based		based		incentive		Pension		All other		Total
Name and			Salary		awards2		awards3		plans4		value5		compensation6		compensation
principal position	Year		($)		($)		($)		($)		($)		($)		($)
Gerald W. Grandey		2010		1,019,500		1,387,200		2,104,900		2,000,000		314,900		n/a		6,826,500
CEO1		2009		999,500		774,800		1,215,600		963,000		251,700		n/a		4,204,600
		2008		986,000		970,750		1,347,000		553,000		290,500		412,611		4,559,861
O. Kim Goheen		2010		483,300		346,800		516,040		351,000		150,950		n/a		1,848,090
Senior Vice-President		2009		473,800		213,070		455,850		420,000		123,800		n/a		1,686,520
and CFO		2008		460,000		388,300		539,000		173,000		153,300		82,923		1,796,523
Timothy S. Gitzel		2010		643,750		578,000		814,800		715,000		160,550		n/a		2,912,100
President		2009		550,000		271,180		506,500		360,000		98,400		n/a		1,786,080
		2008		470,000		388,300		539,000		194,000		139,700		7,598		1,738,598
George B. Assie		2010		577,800		778,200		746,900		492,000		142,050		n/a		2,736,950
Senior Vice-President		2009		566,500		271,180		506,500		360,000		124,700		n/a		1,828,880
Marketing and Business Development		2008		550,000		388,300		606,000		227,000		146,400		226,269		2,143,969
Gary M.S. Chad		2010		453,900		173,400		271,600		298,000		132,500		n/a		1,329,400
Senior Vice-President		2009		445,000		116,220		303,900		220,000		110,100		n/a		1,195,220
Governance, Law and		2008		432,000		232,980		337,000		146,000		134,500		153,869		1,436,349
Corporate Secretary

Notes:
1.	Mr. Grandey’s title changed to CEO when Mr. Gitzel was appointed president on May 14, 2010.
2.	Share-based awards
	These amounts reflect the grant date value of the actual number of PSUs originally awarded, using the closing price of a Cameco share on the TSX on the day before the grant. The number of PSUs that the named executives will actually earn can vary from 0 to 150% of the original number of PSUs granted, depending on performance (the board can pay up to 200% if performance is exceptional).
	We awarded the following PSUs to the named executives in 2010 and 2009:

	May 26, 2010		March 1, 2010		March 16, 2009
Gerald Grandey				48,000		40,000
Kim Goheen				12,000		11,000
Timothy Gitzel				20,000		14,000
George Assie		10,000		18,000		14,000
Gary Chad				6,000		6,000
Grant price	$	25.80	$	28.90	$	19.37

For purposes of financial statement disclosure, the PSUs were valued at $29.06 per unit for 2010 and $19.97 per unit for 2009 using a Monte Carlo pricing model. Currently the Monte Carlo model is considered the most appropriate way to value a plan with a relative market condition like total shareholder return. The total fair value of the PSUs is amortized into income over their three-year vesting period and the weighted average of the expected retirement dates of the named executives, whichever is lower.

2011 management proxy circular     81

The table below shows the difference between the grant date value for compensation purposes and the grant date fair value used for purposes of financial statement disclosure.

			Grant date		Grant date fair
	Total number of		value for		value for financial		Difference between the two values
	PSUs awarded to		compensation		statement		Difference		Total value of
	named executives		purposes		disclosure		per unit		difference
Grant date	(# of units)		($)		($)		($)		($)
May 26, 2010		10,000		25.80		29.06		3.26		32,600
March 1, 2010		104,000		28.90		29.06		0.16		16,640
March 16, 2009		85,000		19.37		19.97		0.60		51,000
March 4, 2008		61,000		38.83		38.83		0		0

PSUs granted:

•	in 2008 vested at 75% of target and paid out in shares, net of income tax, in March 2011
•	in 2007 vested at 63.85% of target and paid out in shares, net of income tax, in December 2009
•	in 2006 vested at 50% of target and paid out in shares, net of income tax, in December 2008.
See the 2010 PSU payout table on page 72 for more information.

3.	Option-based awards
	The table below shows the number of options granted to the named executives over the last three years and the corresponding grant date valuations:

	March 1, 2010		March 16, 2009		March 4, 2008
Gerald Grandey		155,000		120,000		100,000
Kim Goheen		38,000		45,000		40,000
Timothy Gitzel		60,000		50,000		40,000
George Assie		55,000		50,000		45,000
Gary Chad		20,000		30,000		25,000
Grant date valuation	$13.58 per option		$10.13 per option		$13.47 per option

In March of 2010, 2009 and 2008, the human resources and compensation committee reviewed estimates of the value of the options on the grant dates that were prepared by its compensation consultant. It then recommended to the board the number of options to grant, which the board approved. The compensation consultant used the Black-Scholes option-pricing model and the following key assumptions:

	Dividend
	yield		Volatility		Risk-free rate		Expected life		Exercise price
	(%)		(%)		(%)		(years)		($)
2010		0.94		44.0		2.8		8		28.90
2009		1.20		52.5		3.0		8		19.37
2008		0.40		32.1		3.8		5.5		38.83

As this approach may not be identical to that used by other companies and is sensitive to the assumptions used, the figures may not be directly comparable across companies, however, a consistent approach has been used for compensation valuation purposes. In 2008 the expected life assumption was different from previous and subsequent years, and was based on Mercer (Canada) Limited’s analysis of the expected life of Cameco options and options issued by companies in the compensation peer group. They calculated it by adding the actual term (eight years) to the vesting period (three years), and dividing in half.

For purposes of financial statement disclosure, options awarded in 2010 were valued at $8.74, in 2009 at $5.60, and in 2008 at $11.90 each on the date of the grant. We used the Black-Scholes option-pricing model all three years and the following key assumptions:

	Dividend yield		Volatility		Risk-free rate		Expected life		Exercise price
	(%)		(%)		(%)		(years)		($)
2010		0.97		36.0		2.2		4.5		28.90
2009		1.24		36.0		1.76		4.5		19.37
2008		0.60		39.0		2.9		3.5		38.83

These accounting value assumptions are different from the compensation value assumptions in the calculations above. The human resources and compensation committee uses the compensation valuation method because it allows for a better comparison with market peers.

The accounting value assumptions are based on our own internal research and past experience of how employees exercise their options. The difference between the two models is:

• 2010 — $4.84 per option granted, or $1,587,520 for the 328,000 options granted to the named executives

• 2009 — $4.53 per option granted, or $1,336,350 for the 295,000 options granted to the named executives

• 2008 — $1.57 per option granted, or $392,500 for the 250,000 options granted to the named executives.

82     cameco corporation

	For purposes of financial statement disclosure, the options were amortized over their three-year vesting period or the weighted average of the years to expected retirement of the named executives, whichever was lower.
4.	Annual incentive plans
	These amounts were earned in the fiscal year shown and were paid in the following fiscal year. The amount for Mr. Goheen in 2009 includes a one-time discretionary bonus of $150,000 for his role in the divestiture of Cameco’s interest in Centerra Gold Inc.
5.	Pension value
	Pension value for Mr. Goheen, Mr. Assie and Mr. Gitzel includes company contributions under the registered defined contribution pension plan, plus the projected value of the pension earned in 2010 for service credited under the supplemental executive pension plan. Pension value for Mr. Grandey and Mr. Chad includes the projected value of the pension earned in 2010 for service credited under the registered defined benefit plan and the supplemental executive pension plan.
6.	All other compensation
	This amount does not include perquisites and other personal benefits because they total less than $50,000 and less than 10% of the annual salary for any of the named executives. Perquisites are valued at the cost to Cameco.
	For 2008 this represents vacation time that was paid to the named executives in February 2008, for time that had accrued over many years. Since accrued vacation time had grown to a significant amount, we decided to make a one-time payment to all employees who had banked vacation time in excess of our policy. We have revised our vacation policy so employees cannot bank vacation time in excess of what the policy allows (subject to exceptions that might be granted from time to time), to avoid such a liability in the future.

2011 management proxy circular     83

Incentive plan awards

The table below shows the total unexercised option and share awards granted to our named executives as of December 31, 2010.

											Share-based
			Option-based								awards
			awards								Number of		Market or
			Number of								shares or		payout value
			securities						Value of		units of		of share-
			underlying		Option		Option		unexercised		shares that		based awards
	Grant		unexercised		exercise		expiry		in-the-money		have not		that have not
	date		options1		price1		date		options		vested		vested2
Name	(mm/dd/yyyy)		(#)		($)		(mm/dd/yyyy)		($)		(#)		($)
Gerald Grandey		03/04/2004		186,000		10.51		03/03/2012		5,540,382
		03/02/2005		210,000		27.04		03/01/2013		2,784,600
		03/10/2006		86,000		41.00		03/09/2014		0
		03/30/2007		40,000		46.88		03/29/2015		0
		03/04/2008		100,000		38.83		03/03/2016		147,000
		03/16/2009		120,000		19.37		03/15/2017		2,511,600		40,000		0
		03/01/2010		155,000		28.90		02/28/2018		1,767,000		48,000		0
Total				897,000						12,750,582		88,000		0
Kim Goheen		03/02/2005		30,000		27.04		03/01/2013		397,800
		03/10/2006		46,000		41.00		03/09/2014		0
		03/30/2007		25,000		46.88		03/29/2015		0
		03/04/2008		40,000		38.83		03/03/2016		58,800
		03/16/2009		30,000		19.37		03/15/2017		627,900		11,000		0
		03/01/2010		38,000		28.90		02/28/2018		433,200		12,000		0
Total				209,000						1,517,700		23,000		0
Timothy Gitzel		03/30/2007		10,000		46.88		03/29/2015		0
		03/04/2008		40,000		38.83		03/03/2016		58,800
		03/16/2009		50,000		19.37		03/15/2017		1,046,500		14,000		0
		03/01/2010		60,000		28.90		02/28/2018		684,000		20,000		0
Total				160,000						1,789,300		34,000		0
George Assie3		03/10/2006		54,000		41.00		12/31/2013		0
		03/30/2007		30,000		46.88		12/31/2013		0
		03/04/2008		45,000		38.83		12/31/2013		66,150
		03/16/2009		33,333		19.37		12/31/2013		697,660
		03/01/2010		55,000		28.90		12/31/2013		627,000
Total				217,333						1,390,810		0
Gary Chad		03/10/2006		40,000		41.00		03/09/2014		0
		03/30/2007		20,000		46.88		03/29/2015		0
		03/04/2008		25,000		38.83		03/03/2016		36,750
		03/16/2009		20,000		19.37		03/15/2017		418,600		6,000		0
		03/01/2010		20,000		28.90		02/28/2018		228,000		6,000		0
Total				125,000						683,350		12,000		0

Notes:
1.	The number of options and exercise prices have been adjusted to reflect stock splits of Cameco shares.
2.	These awards are subject to performance conditions and valued at the minimum possible payout.
3.	Mr. Assie retired on December 31, 2010. Under the PSU plan, all of his PSUs for 2008, 2009 and 2010 vested and he was paid a prorated amount in 2011 for the portion of the three-year period that he had worked. The payout was made in cash, net of tax, and was based on performance against the targets as of December 31, 2010. Mr. Assie therefore had no unvested PSUs as of December 31, 2010.

84     cameco corporation

The table below shows the:

• total value of the named executive’s options when they vested during 2010

• share-based awards that vested at the end of 2010 and were paid out in 2011

• short-term incentive award earned in 2010 and paid in 2011.

	Option-based awards –			Share-based awards –		Non-equity incentive plan
	value during the			value vested during		compensation – value earned
	year on vesting			the year		during the year
Name	($)			($)		($)
Gerald Grandey		(250,942	)		747,938		2,000,000
Kim Goheen		(166,142	)		299,175		351,000
Timothy Gitzel		(56,539	)		299,175		715,000
George Assie		(200,597	)		1,350,189		492,000
Gary Chad		(125,669	)		179,505		298,000

The amounts for:

• option-based awards reflect the pre-tax value that the executives would have realized if they had exercised their options that vested in 2010, on the date they vested. Options that had a negative value at the time of vesting are included in the calculation of these figures.

•	share-based awards are the values of the PSUs that were granted in 2008, vested at December 31, 2010 and were paid out on March 1, 2011 at $39.53 (the closing price of our common shares on the TSX on the day immediately before the grant). The compensation value we previously disclosed for these PSUs was based on the target number of PSUs multiplied by the share value on their grant date. The named executives realized 77% of the grant date value of the PSUs that were granted as part of their total compensation for 2008.
	In addition, Mr. Assie received prorated payouts for the portion of 2009 and 2010 PSUs he was entitled to upon his retirement in 2010. The payments were made in 2011 at $39.13 (the average price of our common shares on the TSX for the first 20 trading days in 2011). The 10,000 PSUs that were awarded to Mr. Assie in 2010 as a retention bonus vested on December 31, 2010 at a weighted average price of $37.10 per unit.
•	non-equity incentive plan compensation are the STI payments for 2010 that were paid in 2011.

Securities authorized for issue under equity compensation plans

The table below shows the equity securities authorized for issue from treasury under our compensation plans at the end of 2010:

					Number of securities remaining
	Number of securities to				available for future issue under
	be issued upon exercise		Weighted-average exercise		equity compensation plans
	of outstanding options,		price of outstanding		(excluding securities reflected in
	warrants and rights		options, warrants and rights		column (a))
Plan category	(a)		(b)		(c)
Equity compensation plans approved by security holders		7,552,379		$47.46		9,364,580
Equity compensation plans not approved by security holders		—		—		—
Total		7,552,379		$47.46		9,364,580

Of the 7,552,379 options outstanding at December 31, 2010, 4,814,761 were exercisable and 2,737,618 were not.

The total number of Cameco shares that can be issued under the option plan and other compensation arrangements must be less than 43,017,198 (10.9%) of our total and outstanding common shares as of March 7, 2011.

2011 management proxy circular     85

The table below gives details about the number of shares under our stock option plan at the end of 2010 and as of March 7, 2011. The burn rate is the number of options issued in 2010 (1,515,945), expressed as a percentage of the 394,351,043 Cameco shares that were issued and outstanding as at December 31, 2010.

	As of December 31, 2010
Number of options available for issue under the option plan and other compensation arrangements		9,364,580
Number of options issued in 2010 under the option plan and other compensation arrangements		1,515,945
2010 Burn rate		0.38	%

	As of March 7, 2011
Number (%) of our shares issued and outstanding to be issued when outstanding options under the option plan are exercised		7,207,801 (1.8	%)
Number (%) of our issued and outstanding shares still available for issue under the option plan		9,422,583 (2.4	%)
Total dilution rate		4.2	%

The table below shows other activity in the option plan since it was introduced in 1992:

Maximum initial share reserve (August 15, 1995)	31,460,418
Increase in the reserve (June 12, 2006)	11,556,780
Total shares issued under the plan (as at the close of business on March 7, 2011)	27,907,940
Total shares issued under the plan / total shares issued and outstanding (as at the close of business on March 7, 2011)	7.1	%
Total shares issued and outstanding (as at the close of business on March 7, 2011)	394,645,418

Retirement plan benefits

Defined benefit plan

Mr. Grandey and Mr. Chad are the only named executives who participate in our registered defined benefit plan. The plan is being phased out and will only exist for as long as the current members, retirees and their spouses are entitled to receive benefits. No new members have been added to the plan since 1997 and none will be added in the future.

The Income Tax Act (Canada) limits the annual benefits that can be accrued under a defined benefit plan. The limit for 2010 was $2,494 for each year of credited pensionable service, and pension benefits cannot be earned on the portion of salaries above approximately $124,722 per year.

Defined contribution plan

All of our regular, full-time employees participate in our registered defined contribution plan as of December 31, 2010, except for Mr. Grandey and Mr. Chad who participate in our registered defined benefit plan.

Under the Income Tax Act (Canada), the plan had a contribution limit of $22,450 in 2010, based on a salary of approximately $187,083.

Supplemental executive pension plan

The supplemental defined benefit plan is aimed at attracting and retaining talented executives over the longer term. The plan is designed to provide a retirement income that is consistent with the executive’s salary and to offset the strict limits of registered pension plans under the Income Tax Act (Canada).

All of our executives and certain officers of wholly owned subsidiaries participate in this plan, but they must also participate in either our defined benefit plan or defined contribution plan. The plan had 20 active members as at December 31, 2010, with 20 retirees and spouses of deceased retirees who were receiving a pension, two former members with deferred entitlements and three former members with pending entitlements.

86     cameco corporation

Under the plan, executives and officers of certain subsidiaries receive overall benefits calculated as follows:

	1.8% of average of three highest years of base salary (excluding bonuses and taxable benefits)	For the CEO, president and senior vice-presidents for years of service after January 1, 1998, the overall benefits that would be paid under the program are calculated using 3% of the average of the three highest years of base salary (excluding bonuses and taxable benefits).
x	number of years of credited service
–	benefits payable under the base plan
=	overall benefits under the supplemental plan

The supplemental plan only provides benefits based on actual years of service with us up to the date of termination, or until the end of the notice period for termination without cause. It is only calculated on base salary, and does not include bonuses as part of the pensionable earnings, as other companies often do. The plan does not allow past service credits or any kind of accelerated service. Full benefits are paid at the normal retirement age of 65, but they can start at 60 years of age if the person has 20 years of service. There are no social security or other deductions.

We fund the supplemental plan each year, except for benefits for participants who are US taxpayers, including two named executives. These benefits are unfunded, and this liability was approximately $7,669,500 ($7,436,900 for the two named executives) as of December 31, 2010.

Early retirement

Mr. Grandey has reached the normal retirement age under our registered defined benefit plan, and is eligible to retire with full pension under this plan. Mr. Chad is within 10 years of the normal retirement age, so is eligible to retire early under the plan. If he retires early, he can either defer receiving the full pension until he reaches the normal retirement age under the plan, or receive his pension, less 0.25% times the total number of months until he reaches the normal retirement age.

Under our registered defined contribution plan, members can transfer their account balance or begin receiving a benefit any time after termination, so early retirement does not apply. Mr. Goheen and Mr. Gitzel are members of this plan. Mr. Assie was a member of this plan prior to his retirement.

Under our supplemental executive pension plan, although none of the named executives are eligible yet to retire with full pension under this plan, they can take early retirement starting at age 55. This gives them the option to either:

• defer receiving their full pension until they reach the defined age under the plan which is i) at least 60 with at least 20 years of continuous employment or ii) 65, whichever is earlier; or

• receive the pension, less 0.25% times the total number of months until they reach the defined age.

Executive pension value disclosure

The table below shows the estimated annual pension service costs for the defined benefit plans and Cameco’s contribution to the defined contribution plans as the compensatory change. It also shows the accrued pension obligations and annual pension payable under our pension plans for each of the named executives.

			Number
			of years		Annual benefits				Accrued						Accrued
	Age		of		payable1				obligation				Non-		obligation
	at		credited		($)				at start of		Compensatory		compensatory		at year
	year		service		At year				year		change2		change3		end4
Name	end		(#)		end		At age 65		($)		($)		($)		($)
Gerald Grandey		64.5		18.00		480,800		504,700		5,356,700		314,900		473,300		6,144,900
Kim Goheen		56.9		13.87		191,600		313,100		1,897,900		150,950		296,650		2,345,500
Timothy Gitzel		48.7		3.98		62,900		341,800		466,300		160,550		116,550		743,400
George Assie		59.7		31.25		405,800		507,500		4,532,200		142,050		1,734,850		6,409,100
Gary Chad		59.1		20.13		230,000		315,900		2,534,900		132,500		356,000		3,023,400

2011 management proxy circular     87

Notes:
1.	Annual benefits payable
	Mr. Grandey and Mr. Chad participate in our registered defined benefit pension plan, and do not have any defined contribution costs.
	Mr. Goheen and Mr. Gitzel participate in our registered defined contribution plan. Mr. Assie participated in this plan prior to his retirement. All of the named executives participate in our supplemental executive pension plan.
	The annual benefits payable for Mr. Grandey and Mr. Chad include benefits under the registered defined benefit pension plan and the supplemental executive pension plan. The annual benefits payable for Mr. Goheen, Mr. Assie and Mr. Gitzel include benefits under the registered defined contribution pension plan and the supplemental executive pension plan. The defined contribution costs for Mr. Goheen, Mr. Assie and Mr. Gitzel are also included in the service cost as described under Compensatory change. The annual benefits payable do not take into account any early retirement reductions or vesting requirements.
	The amounts under at age 65 are based on current compensation levels and assume accrued years of service to age 65 for each of the named executives. Under our supplemental executive pension plan, the named executives are eligible to retire at age 55, which would reduce the pension benefits they are entitled to receive.
	The accrued obligation at start of year and the compensatory change are estimated totals that include our registered defined benefit pension plan, registered defined contribution pension plan and supplemental executive pension plan. They are based on assumptions representing entitlements in employment agreements that may change over time. The methods we used to determine these estimates may not be exactly the same as methods other companies use, so the figures may not be directly comparable.
	We used the following key assumptions to estimate these benefit obligations:

• 100% vesting

• a retirement age of 63 or one year after the valuation date if 63 years of age or older. The assumed retirement age of 63 is management’s best estimate for determining the accrued benefit obligation as at December 31, 2010, as reported in our financial statements.

• salary increases of 4.5% each year

• a discount rate of 5.5% each year for Canadian and US liabilities to determine the benefit obligation

• a long-term rate of return on assets of 5.25% for the registered defined benefit pension plan and 6.0% for the invested assets of the supplemental executive pension plan

• benefits are pre-tax.

	See note 23 to our audited 2010 financial statements (in our 2010 annual financial review and also on our website) for more information about our pension plans.
2.	Compensatory change is the value of the projected pension earned from January 1, 2010 to December 31, 2010 for our registered defined benefit pension plan, registered defined contribution pension plan and supplemental executive pension plan.
3.	Non-compensatory change includes changes such as changes in assumptions (other than those used to estimate the compensatory change), employee contributions and interest on the accrued obligation at the start of the year.
4.	Accrued obligation at year end is the value of the named executive’s projected pension earned for service up to December 31, 2010 under our registered defined benefit pension plan, registered defined contribution pension plan and supplemental executive pension plan. The pension amounts for Mr. Goheen, Mr. Assie and Mr. Gitzel equal the value of their accumulated contributions under the registered defined contribution pension plan, supplemented by amounts based on final average earnings and service under the supplemental executive pension plan (a defined benefit plan).

Loans to executives

As of March 7, 2011, we and our subsidiaries had no loans outstanding to our current or former named executives, except routine indebtedness as defined under Canadian securities laws.

88     cameco corporation

Developments in 2011

2011 compensation to date

Based on continued strong performance in 2010 and an analysis of market data, the human resources and compensation committee positioned total direct compensation at the median of the compensation comparator group.

Base salary

The named executives received an average increase of 2.0%, which is below the average increase for executive salaries nationally and estimates for Saskatchewan and other provinces. The committee also reviewed additional data on companes in our compensation peer group when it reviewed the base salaries of all the named executives and, on the committee’s recommendation, the board decided to place more emphasis on variable compensation in 2011.

George Assie did not receive an increase in base salary for 2011 because he retired on December 31, 2010. Timothy Gitzel will become president and CEO on July 1, 2011, and his base salary will increase to $900,000 as of that date.

	2011 base salary				2010 base salary
			% increase
Name and position	$		from 2010		$
Gerald Grandey		1,040,000		2.0		1,019,500
CEO
Kim Goheen		493,000		2.0		483,300
Senior Vice-President and CFO
Timothy Gitzel		714,000 / 900,000		2.0 / 28.6		700,000
President
George Assie		n/a		n/a		577,800
Senior Vice-President, Marketing and Business Development
Gary Chad		463,000		2.0		453,900
Senior Vice-President, Governance, Law and Corporate Secretary

Short-term incentive

To align our direct compensation packages for executives with our compensation peer group and market compensation levels, in 2011, the board, on the recommendation of the human resources and compensation committee, approved increasing the STI targets for each executive position. The table below shows the STI targets for the named executives. When Mr. Gitzel becomes president and CEO on July 1, 2011, his STI target will increase further to 95%.

	2011 STI target of			2010 STI target of
Name and position	base salary			base salary
Gerald Grandey		95	%		80	%
CEO
Kim Goheen		60	%		50	%
Senior Vice-President and CFO
Timothy Gitzel		70% / 95	%		65	%
President
George Assie		n/a			55	%
Senior Vice-President, Marketing and Business Development
Gary Chad		50	%		45	%
Senior Vice-President, Governance, Law and Corporate Secretary

Long-term incentives

In 2011 on the recommendation of the human resources and compensation committee, the board approved assigning fixed target percentages for each executive position. This aligns with the practice of the majority of our compensation peer group.

The fixed targets were based on a review of the current market data available, and set near the median of the market data. The table below shows the LTI fixed targets for the named executives. Mr. Gitzel’s target will not change when he becomes president and CEO on July 1, 2011.

2011 management proxy circular     89

	2011 LTI target of			2010 target range of
Name and position	base salary			base salary
Gerald Grandey		300	%	300% to 450%
CEO
Kim Goheen		200	%	150% to 225%
Senior Vice-President and CFO
Timothy Gitzel		300	%	250% to 400%
President
George Assie		n/a		175% to 265%
Senior Vice-President, Marketing and Business Development
Gary Chad		150	%	80% to 120%
Senior Vice-President, Governance, Law and Corporate Secretary

When Mr. Gitzel becomes president and CEO on July 1, 2011, he will receive a retention incentive consisting of 50,000 stock options that vest over three years, and 70,000 restricted share units that will not vest until July 1, 2014.

Options and PSUs were awarded to the named executives on March 1, 2011, after we released our 2010 results. While our 2010 performance is taken into consideration, we grant these long-term incentives to motivate executives to help us meet our performance targets over the coming years, and to tie a portion of their future compensation to our longer term performance.

The table below shows the options and PSUs that were granted to our named executives in March 2011. The options vest over three years, and have an exercise price of $39.53 for a period of eight years. The PSUs vest at the end of a three-year period and have a grant date value of $39.53 per unit, based on the closing price of Cameco shares on the TSX on the day before the grant.

The expected value of the long-term compensation awards is made up of 60% options and 40% PSUs.

Securities

Value of

under

options

Value of

Date when

options

on date of

Exercise

Expiry

PSUs

PSUs

performance

granted

grant1

price

date

granted2

granted3

period matures

Name

(#)

($)

($/security)

(mm/dd/yyyy)

(#)

($)

(mm/dd/yyyy)

Gerald Grandey

100,000

1,699,790

39.53

02/28/2019

25,000

988,250

12/31/2013

Kim Goheen

35,000

594,927

39.53

02/28/2019

10,000

395,300

12/31/2013

Timothy Gitzel

75,000

1,274,843

39.53

02/28/2019

25,000

988,250

12/31/2013

George Assie

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Gary Chad

25,000

424,948

39.53

02/28/2019

8,000

316,240

12/31/2013

Notes:
1.	Value of options
	Options granted on March 1, 2011 are valued at approximately $17.00 per option using the Black-Scholes option-pricing model. The compensation consultant used the following key assumptions in the model when comparing companies:

Dividend yield		Volatility		Risk-free rate		Expected life		Exercise price
(%)		(%)		(%)		(years)		($)
	0.9		50.1		1.5		5.5		39.53

	In its analysis for the human resources and compensation committee, the compensation consultant estimated the expected value of Cameco’s options using the expected life of the option (average of a full term of eight years and a three-year vesting period). This approach is consistent with the majority of companies in our compensation peer group and is sensitive to the assumptions used, the figures may not be directly comparable across companies, but for compensation valuation purposes a consistent approach has been used. The exercise price of $39.53 per option was based on the closing price of Cameco shares on the TSX on the day immediately before the grant.
2.	PSUs granted
	The amounts reflect 100% of the original number of PSUs awarded and have not been adjusted to reflect performance. The actual number of PSUs earned can vary from 0 to 150% of the original number granted based on corporate performance (and up to 200% for exceptional performance).

90     cameco corporation

3.	Value of PSUs granted
	The amounts represent the number of PSUs granted to each named executive, multiplied by $39.53, the closing price of Cameco shares on the TSX on the day immediately before the grant.
	The PSUs granted on March 1, 2011 are for the three-year performance period from January 1, 2011 to December 31, 2013. The payout will be following the end of the performance period, pro-rated for the period during the three years he was an employee, unless the named executive leaves the organization earlier because of retirement, death or termination without cause. If the named executive leaves Cameco because of a change of control, then all of the unvested PSUs will vest and be paid out at their target value. If he resigns or is terminated with cause, all of his PSUs are cancelled and he forfeits the payout.

Shareholder proposals

Shareholders who meet eligibility requirements under the Canada Business Corporations Act (CBCA) can submit a shareholder proposal as an item of business for our annual shareholder meeting in 2012.

Proposals must be submitted to our corporate secretary by January 6, 2012 for next year’s annual meeting. Only shareholder proposals that comply with the CBCA requirements received by that date, and our responses, will be printed in the management proxy circular we send to shareholders next spring.

Other information

Information available online

A number of our documents are available on our website (cameco.com), SEDAR (sedar.com) and EDGAR (sec.gov/edgar.shtml) including:

• 2010 annual financial review which includes the audited financial statements and MD&A for the most recently completed financial year

• our most recent annual information form, which has additional information about our audit committee on pages 119-120, the audit committee charter in Appendix A, and other information required by Canadian securities regulators.

Our code of conduct and ethics, our articles of incorporation and the bylaws, and all of the board committee mandates are also available on our website.

Filings with the US Securities and Exchange Commission (SEC) can be accessed under Filings and forms on the SEC website (sec.gov).

Documents available in print

You can request a printed copy of the following documents at no charge from our corporate secretary:

• our 2010 annual financial review which includes the audited financial statements and MD&A for the most recently completed financial year

• any subsequent quarterly reports

• our most recent annual information form

• our code of conduct and ethics.

2011 management proxy circular     91

Appendix A

Interpretation

For the purposes of this Circular:

a person is an “associate” of another person if:

i. one is a corporation of which the other is an officer or director;

ii.	one is a corporation that is controlled by the other or by a group of persons of which the other is a member;
iii.	one is a partnership of which the other is a partner;
iv.	one is a trust of which the other is a trustee;
v.	both are corporations controlled by the same person;
vi.	both are members of a voting trust or parties to an arrangement that relates to voting securities of the Corporation; or
vii.	both are at the same time associates, within the meaning of any of (i) to (vi) above, of the same person;

provided that:

viii.	if a resident associated with a non-resident submits to the Board of Directors of the Corporation a statutory declaration stating that no voting shares of the Corporation are held, directly or indirectly, for a non-resident, that resident and non-resident are not associates of each other, provided the statutory declaration is not false;
ix.	two corporations are not associates pursuant to (vii) above by reason only that each is an associate of the same person pursuant to (i) above;
x.	if any person appears to the Board to hold voting shares to which are attached not more than the lesser of four one-hundredths of 1% of the votes that may be cast to elect Directors of the Corporation and 10,000 such votes, that person is not an associate of any other person and no other person is an associate of that person in relation to those voting shares.

“beneficial ownership” includes ownership through a trustee, legal representative, agent or other intermediary.

“control” means control in any manner that results in control in fact, whether directly through ownership of securities or indirectly through a trust, an agreement, the ownership of any body corporate or otherwise.

“non-resident” means:

i.	an individual, other than a Canadian citizen, who is not ordinarily resident in Canada;
ii.	a corporation incorporated, formed or otherwise organized outside Canada;
iii.	a foreign government or agency thereof;
iv.	a corporation that is controlled by non-residents, directly or indirectly, as defined in any of (i) to (iii) above;
v.	a trust:

a.	established by a non-resident as defined in any of (ii) to (iv) above, other than a trust for the administration of a pension fund for the benefit of individuals, a majority of whom are residents; or
b.	in which non-residents as defined in any of (i) to (iv) above have more than 50% of the beneficial interest; or

vi. a corporation that is controlled by a trust described in (v) above.

“person” includes an individual, corporation, government or agency thereof, trustee, executor, administrator, or other legal representative.

“resident” means an individual, corporation, government or agency thereof or trust that is not a non-resident.

The foregoing definitions are summaries only and are defined in their entirety by the provisions of the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada) and the Articles of the Corporation.

92     cameco corporation

Appendix B

Board mandate

PURPOSE

The purpose of the board of directors (“board”) is to supervise the management of the business and affairs of the corporation. The board of directors will discharge this responsibility by developing and determining policy by which the business and affairs of the corporation are to be managed and by overseeing the management of the corporation.

COMPOSITION

The board is elected by the shareholders at the annual meeting of the shareholders of the corporation. The board shall appoint the chair annually from among its non-executive independent members. As fixed by the articles of the corporation, the board shall consist of at least three and not more than fifteen members. A majority of the directors shall be resident Canadians.

A majority of the directors shall be independent pursuant to standards for independence adopted by the board (as provided in Appendix A to this mandate).

MEETINGS

The board will schedule at least six regular meetings annually and as many additional meetings as necessary to carry out its duties effectively. The board will hold special meetings at least once a year to specifically discuss strategic planning and strategic issues.

A meeting of the board may be called by the chair, the chief executive officer or any two directors. The corporate secretary shall, upon the direction of any of the foregoing, arrange a meeting of the board. Notice of the time and place of each meeting of the board must be given to each director either by personal delivery, electronic mail, facsimile or other electronic means not less than 48 hours before the time of the meeting or by mail not less than 96 hours before the date of the meeting. Board meetings may be held at any time without notice if all of the directors have waived or are deemed to have waived notice of the meeting.

A majority of the members of the board, or such other number as the directors may by resolution determine, shall constitute a quorum. No business may be transacted by the board except at a meeting of its members at which a quorum of the board is present. Each director is expected to attend all meetings of the board. A director who is unable to attend a board meeting in person may participate by telephone or teleconference.

At board meetings, each director is entitled to one vote and questions are decided by a majority of votes of the directors present. In case of an equality of votes, the chair of the meeting does not have a second or casting vote. The corporate secretary acts as secretary to the board. In the absence of the corporate secretary, the board may appoint any other person to act as secretary.

The board may invite such officers and employees of the corporation as it may see fit from time to time to attend at meetings of the board and assist thereat in the discussion and consideration of any matter.

DUTIES AND RESPONSIBILITIES

1. The board of directors has specific responsibilities for the following, which do not, in any way, limit or comprehensively define its overall responsibility for the stewardship of the corporation:

a.	selection, appointment, evaluation and if necessary the termination of the chief executive officer;
b.	satisfying itself as to the integrity of the senior executives of the corporation and as to the culture of integrity throughout the corporation;
c.	succession planning, including appointing, counselling and monitoring the performance of executive officers;
d.	oversight of the human resources policies of the corporation and while taking into account the views and recommendations of the human resources and compensation committee, approval of the compensation of the chief executive officer and the other executive officers;
e.	adoption of an annual strategic planning process, approval of annual strategic plans and monitoring corporate performance against those plans;
f.	approval of periodic capital and operating plans and monitoring corporate performance against those plans;
g.	oversight of the policies and processes which identify the corporation’s principal business risks, and the systems in place to mitigate these risks;
h.	policies to require ethical behaviour of the corporation and its directors and employees, and compliance with laws and regulations;
i.	oversight of the policies and processes for the implementation and integrity of the corporation’s internal control and management information systems and its financial reporting;

2011 management proxy circular     93

j.	assessment of the effectiveness of the board and its committees and overseeing the establishment of an appropriate orientation program for new directors and an education program for all directors;
k.	definition of the duties and the limits of authority of senior management, including approving a position statement for the chief executive officer;
l.	policies for disclosure of corporate information to facilitate effective communications with shareholders, other stakeholders and the public;
m.	health and safety and environmental policies and oversight of systems to enable compliance with these policies and all relevant laws and regulations;
n.	corporate governance including the relationship of the board of directors to management and taking reasonable steps to ensure the corporation has appropriate structures and procedures in place to permit the board of directors to effectively discharge its duties and responsibilities;
o.	calling meetings of shareholders and submission to the shareholders of any question or matter requiring approval of the shareholders;
p.	approval of directors for nomination and election, and recommendation of the auditors to be appointed at shareholders’ meetings, and filling a vacancy among the directors or in the office of the auditor;
q.	issuance of securities of the corporation;
r.	declaration of dividends and establishment of the dividend policy for the corporation;
s.	approval of the annual audited financial statements, quarterly financial statements and quarterly reports, management proxy circulars, takeover bid circulars, directors’ circulars, prospectuses, annual information forms and other disclosure documents required to be approved by the directors of a corporation under securities laws, regulations or rules of any applicable stock exchange;
t.	adoption, amendment or repeal of bylaws of the corporation;
u.	review and approval of material transactions not in the ordinary course of business; and
v.	other corporate decisions required to be made by the board of directors, or as may be reserved by the board of directors, to be made by itself, from time to time and not otherwise delegated to a committee of the board of directors or to the management of the corporation.

2. Subject to the provisions of applicable law and the bylaws of the corporation, the responsibilities of the board of directors may be delegated, from time to time, to committees of the board of directors on such terms as the board of directors may consider appropriate.

ORGANIZATIONAL MATTERS

1. The procedures governing the board shall be those in Parts 6 and 7 of the General Bylaws of the corporation.

2. The board shall annually review and assess the adequacy of its mandate.

3. The board shall participate in an annual performance evaluation.

94     cameco corporation

Appendix to the Board mandate

Definition of independent director and related definitions

In these guidelines:

1. Following are the criteria for determining independence for purposes of membership on the board:

a. “independent director” means a director who has no direct or indirect material relationship with the corporation. For this purpose, a material relationship means a relationship which could, in the view of the board, reasonably interfere with the exercise of a director’s independent judgment. Despite the foregoing, the following individuals are considered to have a material relationship with the corporation:

i.	an individual who is, or has been within the last three years, an employee or executive officer of the corporation;
ii.	an individual whose immediate family member is, or has been within the last three years, an executive officer of the corporation;
iii.	an individual who:

A.	is a partner of a firm that is the corporation’s internal or external auditor;
B.	is an employee of that firm; or
C.	was within the last three years a partner or employee of that firm and personally worked on the corporation’s audit within that time;

iv. an individual whose immediate family member:

A.	is a partner of a firm that is the corporation’s internal or external auditor;
B.	is an employee of that firm and participates in its audit, assurance or tax compliance (but not tax planning) practice; or
C.	was within the last three years a partner or employee of that firm and personally worked on the corporation’s audit within that time;

v.	an individual who, or whose immediate family member, is or has been within the last three years, an executive officer of an entity if any of the corporation’s current executive officers serve or served at that same time on the entity’s compensation committee;
vi.	an individual who received, or whose immediate family member received, more than US $100,000 (or Cdn. $75,000 in the case of an immediate family member who is employed as an executive officer of Cameco Corporation) in direct compensation from the corporation during any 12 month period within the last three years, other than as remuneration for acting in his or her capacity as a member of the board or any board committee, or as a part-time chair or vice-chair of the board or any board committee, and fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the corporation if the compensation is not contingent in any way on continued service (and, for greater certainty, “direct compensation” does not include compensation received by an immediate family member for service as an employee of the corporation unless that immediate family member is an executive officer of Cameco Corporation);
vii.	an individual who is a current employee, or whose immediate family member is a current executive officer, of an entity that has made payments to, or received payments from, the corporation for property or services in an amount which, in any of the last three fiscal years, exceeds the greater amount of $1 million, or 2% of such other entity’s consolidated gross revenues; and
viii.	an individual who serves as an officer, director or trustee of a tax exempt organization, and the corporation’s discretionary charitable contributions to that organization exceed 1.5% of that organization’s total annual consolidated gross revenues within any of the last three fiscal years (providing that the corporation’s matching of employee charitable contributions will not be included in the amount of the corporation’s contributions for this purpose).

b. For purposes of section 1(a) all references to “the corporation” are deemed to include a subsidiary entity of the corporation and a parent of the corporation.

2. For purposes of this Appendix A, “immediate family member” means a person’s spouse, parent, child, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, and anyone (other than a domestic employee of a person or family member) who shares that person’s home.

2011 management proxy circular     95

For purposes of this Appendix A, a person or company is considered to be a subsidiary entity of another person or company if:

a. it is controlled by:

i.	that other; or
ii.	that other and one or more persons or companies each of which is controlled by that other; or
iii.	two or more persons or companies, each of which is controlled by that other; or

b. it is a subsidiary entity of a person or company that is the other’s subsidiary entity.

3. For purposes of this Appendix A, “control” means the direct or indirect power to direct or cause the direction of the management and policies of a person or company, whether through ownership of voting securities or otherwise.

4. For purposes of this Appendix A, “person” means an individual, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator or other legal representative.

5. In determining independence for purposes of the audit committee, in addition to satisfying the board independence criteria, directors who are members of the audit committee will not be considered independent for the purpose of membership on the audit committee if:

a.	the audit committee member, or the member’s spouse, minor child or stepchild, or a child or stepchild who shares the member’s home, provides personal services to the corporation or its subsidiary for compensation (other than compensation for acting as a director);
b.	the audit committee member is a partner, member or principal of a consulting, legal, accounting, investment banking or financial services firm which provides services to the corporation or its subsidiary for fees, regardless of whether the audit committee member personally provided the services for which the fees are paid; or
c.	the audit committee member is an affiliated entity of the corporation or any of its subsidiaries, where:

i. a person or company is considered to be an affiliated entity of another person or company if:

A.	one of them controls or is controlled by the other or if both persons or companies are controlled by the same person or company, or
B.	the person is an individual who is:

I.	both a director and an employee of an affiliated entity; or
II.	an executive officer, general partner or managing member of an affiliated entity;

ii. despite subparagraph (c)(i)(B) above, an individual will not be considered to be an affiliated entity of the corporation if the individual:

A.	owns, directly or indirectly, no more than ten per cent of any class of voting securities of the corporation; and is not an executive officer of the corporation.
B.	Is not an executive officer of the corporation.

96     cameco corporation

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2011 management proxy circular     97

[CAMECO LOGO]
cameco.com

EX-99.3

Exhibit 99.3

Cameco Corporation
Use this proxy form to vote by proxy at our 2011 annual meeting of shareholders

This proxy is solicited by management.
Throughout this document, we, us, our and Cameco mean Cameco Corporation and you and your mean the person completing this form. When
Tuesday, May 17, 2011
1:30 p.m.

Where
Cameco Corporation
2121 - 11th Street West
Saskatoon, Saskatchewan

1
Declare your residency

If you do not provide this information, we will consider the shares represented by this proxy to be owned and controlled by a non-resident, which means the vote may have less impact.

You declare that the shares represented by this proxy are held, beneficially owned or controlled, either directly or indirectly, by a resident of Canada as defined below.

If the shares are held in the names of two or more people, you declare that all of these people are residents of Canada. o Yes
o No

When you sign this form, you are certifying that you have done whatever is reasonably possible to confirm residential status.

What do we mean by residency?

Cameco shares have restrictions on ownership and voting for residents and nonresidents of Canada. You can read about residency and voting starting on page 4 of the accompanying management proxy circular.

The definitions here are summaries only. The complete definitions are in the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada) and in our articles.

A resident is anyone who is not a non-resident. Residents can be individuals,	corporations, trusts and governments or government agencies.
A non-resident is: •  an individual, other than a Canadian citizen, who is not ordinarily resident in Canada •  a corporation •  that was incorporated, formed or otherwise organized outside Canada, or •   that is controlled by non-residents, either directly or indirectly	•   a trust •  that was established by a non-resident, other than a trust for the administration of a pension fund for individuals where the majority of the individuals are residents or •  where non-residents have more than 50% of the beneficial interest •  a foreign government or foreign government agency

Two ways to vote: in person or by proxy

Our annual meeting gives you the opportunity to vote on several items of Cameco business. It is also an opportunity to get an update on our business, meet face to face with management and interact with the board of directors.

Your vote is important, regardless of the number of shares you hold.

	Vote in person Come to our annual meeting and vote your shares in person. Do not complete this form.
	Vote by proxy This is the easiest way to vote. It means you give someone else — called your proxyholder — the authority to attend the meeting and vote for you.

You can vote by proxy in four ways:
•  By fax — Complete, date and sign this form and fax both pages to our transfer agent, CIBC Mellon Trust Company (CIBC Mellon)
•  By mail — Complete, date and sign this form and mail it to CIBC Mellon
•  On the internet — Go to
www.eproxyvoting.com/cameco and follow the instructions on screen. You will need your control number, which appears below your name and address on this form. •  By appointing someone else to attend the meeting for you — This person does not need to be a shareholder (see section 2). Make sure the person you are appointing is aware of it and attends the meeting for you. Your proxyholder will need to see a representative of CIBC Mellon when they arrive at the meeting.
If you are voting by proxy, please complete all five sections of this form, date and sign it, and return it right away.

               Your control number:

2	Appoint a proxyholder You can appoint Gerald W. Grandey or Gary M.S. Chad to be your proxyholder, or choose someone else to represent you and vote your shares at the meeting.
	This person does not need to be a shareholder.

o You appoint Gerald W. Grandey, or in his absence, Gary M.S. Chad.

o You appoint the following person to attend the meeting and vote on your behalf:

	If you do not check one of the boxes, we will assume you have appointed Gerald W. Grandey or, in his absence, Gary M.S. Chad, as your proxyholder.
3	Tell us your voting instructions When you complete this section, you are directing your proxyholder to follow these instructions when voting.
	Our board of directors and management recommend that shareholders vote For these items.
	If you do not specify how you want to vote your shares:

•  the Cameco officer you appointed as your proxyholder in section 2 will vote For each of the items below	•  the other proxyholder you appointed in section 2 can vote as he or she sees fit
If there are amendments or other items of business that properly come before the meeting, your proxyholder has the authority to vote at his or her discretion.

A Elect the directors
(see page 8 of the management proxy circular)

		For	Withhold		For	Withhold
1.	Daniel Camus	o	o	8.  Gerald W. Grandey	o	o
2.	John H. Clappison	o	o	9.  Nancy E. Hopkins	o	o
3.	Joe F. Colvin	o	o	10.  Oyvind Hushovd	o	o
4.	James R. Curtiss	o	o	11.  A. Anne McLellan	o	o
5.	Donald H.F. Deranger	o	o	12.  A. Neil McMillan	o	o
6.	James K. Gowans	o	o	13.  Victor J. Zaleschuk	o	o
7.	Timothy S. Gitzel	o	o

B	Appoint the auditors (see page 21 of the management proxy circular)	For	Withhold
	Appoint KPMG LLP as auditors	o	o
C	Amendments to our bylaws (see page 22 of the management proxy circular) You are being asked to confirm two amendments to our general bylaws to increase the quorum for meetings of our shareholders and clarify the minimum quorum for meetings of our board of directors:	For	Against
		o	o
	Resolved that the amendment of Bylaw No. 6 (a bylaw relating generally to the conduct of the business and affairs of Cameco Corporation) approved at meetings of Cameco’s board of directors on November 4, 2010 and February 11 , 2011 is hereby confirmed by:

1. deleting the first sentence of Section 5.2 and replacing it with the following:
A quorum for any meeting of shareholders shall be at least two persons present and holding or representing by proxy not less than twenty-five (25) percent of the total number of issued and outstanding shares of the Corporation entitled to vote at such meeting; and

2. deleting the first sentence of Section 7.7 and replacing it with the following:
A quorum for any meeting of the Board of Directors of the Corporation shall consist of a majority of the directors of the Corporation.

D	Have a say on our approach to executive compensation (see page 23 of the management proxy circular) As this is an advisory vote, the results will not be binding on the board.	For	Against
	Resolved, on an advisory basis and not to diminish the role and responsibilities of the board of directors, that the shareholders accept the approach to executive compensation disclosed in Cameco’s management proxy circular delivered in advance of the 2011 annual meeting of shareholders.	o	o

4
Sign and date
When you sign here, you are:

• authorizing your proxyholder to vote according to your voting instructions at Cameco’s 2011 annual meeting of shareholders, or any meeting that is reconvened if it was postponed or adjourned

• revoking any proxy that you previously gave for this meeting.

	For shares registered in the name of a corporation, estate, trust or minor, an authorized officer or attorney must sign this form and state his or her position. This person may also have to provide proof that he or she is authorized to sign.
	Signature (if your shares are held in more than one name, either person can complete and sign this form)
	Date (if you leave this blank, we will consider the date to be the day this form was mailed to you)
	Position (complete this if you are a guardian, or signing by power of attorney on behalf of a corporation, estate or trust)
5	Mail, fax or vote online We must receive your completed form before 1:30 p.m. CST on Monday, May 16, 2011. If the meeting is postponed or adjourned, we must receive the form at least 24 hours before the meeting is reconvened.

By fax	By mail
Toll free from anywhere in North America:	Use the envelope provided or mail to:
1.866.781.3111
	CIBC Mellon Trust Company
From outside North America:	Attn: Proxy department
1.416.368.2502	P.O. Box 721
Remember to fax both pages of this form.	Agincourt, Ontario M1S 0A1

If you prefer to vote on the internet, we need to receive your internet voting instructions before 1:30 p.m. CST on Friday, May 13, 2011.
Go to www.eproxyvoting.com/cameco and follow the instructions on screen.

EX-99.4

Exhibit 99.4

2011 Business Review KEEPING PACE WITH GLOBAL URANIUM DEMAND

2010 2009 2008 2007 2006 Operations

Revenue $2,124 $2,315 $2,183 $1,905 $1,418 Net earnings 515 1,099 450 416 376

Adjusted net earnings1,2 496 528 525 554 237 Cash provided by operations3 507 690 530 756 327

Capital expenditures 470 393 531 362 339 Financial Position

Total assets $7,671 $7,394 $7,011 $5,371 $5,140 Total debt 1,026 1,041 1,313 726 705

Shareholders’ equity 5,216 4,844 3,514 2,744 2,741 Financial Ratios

Current ratio (current assets/current liabilities) 4.3:1 3.3:1 1.5:1 1.9:1 2.7:1 Return on common shareholders’ equity 10% 26% 14% 15% 15%

Net debt to capitalization n/a4 n/a4 26% 18% 12% Cash from operations/total net debt n/a4 n/a4 42% 127% 88%

Production (Cameco’s Share) Uranium production (million lbs U3O8) 22.8 20.8 17.3 19.8 21.0

Fuel services (million kgU) 15.4 12.3 8.3 12.9 15.4 Production (100% Basis)

Electricity generation (terawatt hours)5 25.9 24.6 24.7 25.3 25.8 1 Adjusted net earnings, a non-GAAP measure, should be considered as supplemental in nature and not a substitute for related financial information prepared in accordance with GAAP.

Consolidated net earnings are adjusted in order to provide a more meaningful basis for period-to-period comparisons of the financial results.

2 We have changed our method for determining adjusted net earnings to exclude all amounts related to our investment in Centerra Gold Inc. Previously, we had included our share of operating income from Centerra in our adjusted earnings measures. A reconciliation of adjusted net earnings to net earnings is available on our website at cameco.com/investors.

3 Cash flows are shown after working capital requirements (which may fluctuate significantly from year to year). Please see 2010 annual financial statements and MD&A for further information.

4 Not applicable. For 2009 and 2010, cash and short-term investments exceeded total debt. 5 Represents 100% of output from Bruce Power Limited Partnership (Cameco has a 31.6% interest in Bruce Power).

Dollars are expressed in $Cdn millions. FIVE-YEAR FINANCIAL SUMMARY

Uranium Revenue ($billions)

1.51 1.55

10 1.37 09

08 Cameco’s uranium revenue is expected

to rebound in 2011. Uranium Production

(million pounds) 17.3

20.8 10 22.8

09 08

Cameco’s uranium production rose 10% in 2010 from 2009.

Fuel Services Revenue ($millions)

252 276

10 301 09

08 Revenue from fuel services was up

despite the strong Canadian dollar. Fuel Services Production

(million kgU) 8.3

12.3 10 15.4

09 08

Cameco’s fuel production increased 25% in 2010 over 2009.

We are well positioned to take full advantage of the growth in nuclear energy. Cameco has a geologically and geographically diverse reserve and resource base, low-cost mines, a strategy to double our annual production to 40 million pounds by 2018, and the financial flexibility to get us there. The uranium contract portfolio we’ve built over the past 23 years, and our discipline and expertise in managing our operations efficiently and costeffectively, give us a steady revenue stream that we can rely on as we grow. At the same time, we’re providing healthy dividends. We’ve increased our annual dividend seven times in the last nine years, including an announced 43% increase from $0.28 to $0.40 per share starting in 2011. Integral to our success is a strong and dedicated group of employees. In addition to being among the top 100 employers in Canada again this year, we were recognized once again as one of Canada’s Best Diversity Employers. This is particularly significant, given our goal to reach 67% northern employment at our northern Saskatchewan operations, and a record of achievement that speaks well for us as we move ahead at Kintyre in Australia. The nuclear business is a long-term story: there’s no predicting the ups and downs of the commodity cycle. But nuclear energy is in demand, and that demand is growing. Cameco, with its new leadership, is uniquely positioned to grow and be successful, and to build value for our shareholders. We’re very excited about the years ahead. Jerry Grandey CEO

CAMECO IS POSITIONED TO CATCH THE VALUE IN THE MARKET AS WE DOUBLE ANNUAL PRODUCTION BY 2018.

DO BLE PLAY CAMEC

MARKE A Safe, Healthy

and Rewarding Workplace A Clean Environment

Supportive Communities Outstanding Financial

Performance OF SUCCESS:

FOUR MEASURES CAMECO’S

In 2010, we began to see the growth we’ve been anticipating become reality,

as the demand for nuclear power and uranium fuel continued to build around

the world. We acknowledge the tragic events in

Japan and the short-term challenges that the nuclear industry will face, but

the long-term fundamentals remain the same. Many countries are starting

or expanding their nuclear programs, including India, South Korea, Brazil,

Russia, Vietnam and the United Arab Emirates. China is the leader by far,

with over a third of all reactors under construction in the world today.

Overall, we expect about 100 (net) new nuclear reactors will be built

by 2020. In 2010, these nuclear growth

programs began to have an impact on the market. For example,

China began to secure longer-term uranium supplies, and we signed

two key agreements for a total of 52 million pounds. We see

considerable potential to expand our relationships in this important region.

KEEPING PACE WITH GLOBAL URANIUM DEMAND

the production of clean electricity by nuclear power plants around the world.

We also own Cameco Fuel Manufacturing Inc. based in Ontario,

MORE THAN MINING

DOUBLE U PROJECT PIPELINE Millennium

McArthur River extension Inkai block 3

Kintyre Inkai expansion (blocks 1 & 2)

US ISR expansion Cigar Lake

McArthur River / Key Lake Rabbit Lake / Eagle Point

Inkai (blocks 1 & 2) US ISR

Feasibility Construction Detailed assessment Construction Ramp up

Scoping Construction Ramp up Pre-feasibility Construction Ramp up

Construction Ramp up Production Existing production

2011 > 2018 Pre-feasibility Construction Ramp up

Feasibility Construction Ramp up Projects

under evaluation

Development projects

Operating properties

million lbs U3O8

40 Estimated timelines are subject to the material risks and assumptions described in the last page at Caution about forward-looking information, and on pages 2-3 and 16-19 of our annual MD&A.

NUCLEAR FUTURE: WHY LONG-TERM GROWTH IN THE NUCLEAR INDUSTRY MEANS OPPORTUNITY FOR CAMECO TODAY. 1. Fuel buying for the future is underway.

With the global reactor fleet expected to increase by more than 20% over the next decade, many

countries and utilities are beginning to procure fuel supplies today.

On average, the first load of fuel for a new powergenerating facility — called the first core — is more

than double the annual reload requirement. To ensure adequate supply, first-core requirements

are generally contracted four to six years ahead of power generation.

This new demand is beginning to impact the uranium market. In 2010, China committed to

purchase more than 170 million pounds of uranium under long-term contracts.

The growing demand helped spark a 50% increase in the average spot-market price for uranium in

the second half of 2010, creating an opportunity to use our market insights to capitalize on

pricing changes. 2. Growing demand fuels price increases.

Expanding long-term fuel requirements are creating a need for new investment in uranium exploration

and production. Developing new supply can take more than a decade and uranium producers need

strong demand-driven prices to commit to long-term investments.

Over the next 10 years, we anticipate demand for uranium will increase moderately, with the potential

for more rapid growth toward the end of the period, as the construction of nuclear plants accelerates

and customers procure first cores. The expected continued growth in demand supports

our plan to invest in development and additional sources of future supply. Growing demand will

add value to our target of Double U. 3. We have a unique ability to benefit from price

increases and demand growth. Our large portfolio of low-cost mining operations,

our extensive long-term contract portfolio supported by 476 million pounds of proven and probable

mineral reserves and our market intelligence provide us with an advantage in capitalizing on

demand and price growth in the uranium industry.

As one of the largest producers, we have relationships with global customers who depend

on our ability to meet their long-term needs. This gives us an advantage over competitors

whose uranium production is a secondary part of their business and over smaller producers

who cannot provide security of supply. For investors, we represent a unique, liquid,

pure-play opportunity in the nuclear industry — with the large-scale reserve base to meet the

long-term needs of global customers and the singular focus to capture value as prices rise.

3 1. Long-term growth in the nuclear industry

2. Higher uranium prices 3. Double U

Fuel Services Our Port Hope conversion facility

produces both UF6 and UO2 which, after further processing, is used for

which produces fuel bundles and reactor components for Candu reactors.

At Blind River, we refine U3O8 from mines around the world into UO3.

Springfields Fuels Ltd. in the United Kingdom converts five million kilograms

of uranium into UF6 annually for us through a toll processing agreement.

Electricity We own 31.6% of Bruce Power Limited

Partnership in Ontario, which operates four nuclear power plants in Ontario.

AS WE INCREASE ANNUAL PRODUCTION, WE ARE ALSO

INVESTING IN OUR FUEL SERVICES CAPABILITIES TO SUPPORT

OUR OVERALL GROWTH IN THE NUCLEAR BUSINESS.

McArthur River/Key Lake Northern Saskatchewan, Canada

McArthur River is the world’s largest high-grade uranium mine, with an average

reserve grade of over 15% — approximately 100 times the world average. We are

transitioning to new mining areas and refurbishing the mill at Key Lake to ensure

continued reliable production. We are a 70% owner and operator of the mine.

Project Overview Cigar Lake Project Northern Saskatchewan, Canada

Cigar Lake, under development, is the world’s second largest high-grade deposit,

with an average reserve grade of 17%. We expect it to come into production in

mid-2013 and, after a three-year ramp up, provide us with an additional 9 million

pounds of uranium annually. We are a 50% owner and operator of the mine.

Inkai Mine Republic of Kazakhstan

Inkai is a very significant uranium deposit. In 2010, we continued to ramp up production

at Inkai blocks 1 and 2, exceeding 2009 production by 136%. We are seeking

approval to increase annual production from these blocks to 5.2 million pounds (our

share 3.1 million pounds). We continue to investigate the opportunities in block 3,

which shows great potential. We jointly own Inkai (60%) with Kazatomprom (40%).

2010 Production 13.9 million lbs U3O8 (our share) — 2.6 million lbs U3O8 (our share) In 2011, we will continue work on the

McArthur River extension project, to advance the underground exploration drift

to the north of the current mining areas. We will also begin work on a feasibility

study for the zones north of the current mining areas.

Goals & Milestones In 2010, we completed dewatering the underground development and began

implementing a surface freezing strategy. In 2011, we expect to complete sinking

shaft 2, remediation of the underground workings, and resume underground

construction. In 2011, we expect to continue delineation

drilling at block 3, and begin developing infrastructure and engineering for a test

leach facility. We are co-operating with our partner to eventually obtain government

approval to double annual production to 10.4 million pounds (our share 5.7 million

pounds) from blocks 1 and 2. Uranium Assets

476 million lbs proven and probable mineral reserves

DOUBLE TIME: AS NEW PROJECTS COME ONLINE, AND EXISTING ONES INCREASE CAPACITY, CAMECO’S PLAN IS TO DOUBLE URANIUM PRODUCTION B

3 Global energy demand and a significant increase in nuclear reactor

construction represent an opportunity for our long-term growth as one of the

world’s largest uranium producers. With utilities beginning to build fuel

supplies for new reactors, market prices for uranium have risen. With our

focus on uranium, we have unmatched market intelligence that allows us to

capitalize on shifts in prices. Our plan to double annual uranium

production to 40 million pounds by 2018 will increase our ability

to capitalize on the nuclear renaissance by selling higher

volumes at higher prices. TO VALUE CREATION

THREE ROADS CAMECO’S

Kintyre Project Western Australia

We own 70% of and operate Kintyre, an advanced uranium exploration project in

Western Australia. It adds potential for low-cost production and diversifies our

geographic reach and deposit types. We are working on a prefeasibility study.

Rabbit Lake Mine and Mill Northern Saskatchewan, Canada

In 2010, the mineral reserves and mine life were, once again, increased at Rabbit

Lake. It has been in production for more than three decades, producing 183 million

pounds over that time. We are refurbishing the mill to ensure continued reliable

production. We expect the mill to process about half the uranium from Cigar Lake

when it comes into production. Smith Ranch-Highland

Wyoming, US Crow Butte

Nebraska, US Our US operating mines are longestablished

in situ recovery operations. Smith Ranch-Highland operates as a

combined uranium production facility, the largest in the United States. Crow Butte is

the first uranium mine in Nebraska. Millennium Project

Northern Saskatchewan, Canada Millennium shows potential as a

uranium deposit that could be mined in the future. Should Millennium prove

economic, it could take advantage of the planned increase in milling capacity

at Key Lake. Our share of the project is 42%.

3.8 million lbs U3O8 2.5 million lbs U3O8 — — In 2011, we will continue to move toward

a production decision. We expect to generate a mineral resource estimate,

carry out further exploration, complete a memorandum of understanding for a

mine development agreement with the Martu, submit an environmental review

and management program to the regulator, and complete the prefeasibility study.

In 2010, we added mineral reserves, extending Rabbit Lake’s expected mine

life by two years to 2017. In 2011, we expect to produce 3.6 million pounds.

We are planning to expand the tailings management facility by mid-2016 to

support the extended mine life and future mill operation.

Smith Ranch-Highland and Crow Butte are both slated for expansion. In 2011,

we expect applications for expansion to be reviewed by the regulator and

production of 2.5 million lbs. In 2010, we completed our mine design,

achieving positive results. In 2011, we expect to complete environmental

assessment work and submit the environmental impact study to the

regulators in late 2011 or early 2012. We will also undertake further studies

and design work to advance the project. BY 2018. E Existing production U Under development P Potential

Common Shares Toronto (CCO) | New York (CCJ)

Transfer Agents and Registrars For information on common share holdings, dividend cheques, lost share

certificates and address changes, contact: In Canada: In the United States:

CIBC Mellon Trust Company BNY Mellon Shareowner Services P.O. Box 7010 480 Washington Blvd.

Adelaide Street Postal Station Jersey City, New Jersey 07310 Toronto, Ontario M5C 2W9 U.S.A.

Canada Telephone:

1-800-387-0825 (toll-free within Canada and the United States) OR

1-416-643-5500 (from any country other than Canada and the United States)

Fax: 1-416-643-5501 (all countries)

cibcmellon.com/investorinquiry Annual Meeting

The annual meeting of shareholders of Cameco Corporation is scheduled to be held on Tuesday, May 17, 2011 at 1:30 p.m. at Cameco’s head office

in Saskatoon, Saskatchewan. Dividend Policy

The board of directors has established a policy of paying a quarterly dividend of $0.10 ($0.40 per year) per common share for 2011. This policy

will be reviewed from time to time in light of the company’s cash flow, earnings, financial position and other relevant factors.

Inquiries Cameco Corporation

2121 — 11th Street West Saskatoon, Saskatchewan S7M 1J3

Phone: 306-956-6200 Fax: 306-956-6201 Caution about forward-looking information

We are making statements and providing information about our expectations for the future which are considered to be forward-looking information or forward-looking statements under Canadian

and United States securities laws. These include our statements about our aim to double our annual uranium production by 2018 and how we expect to achieve this goal, our statement that our uranium

revenue is expected to rebound in 2011, the timing expectations shown in our “Double U Project Pipeline”, the number of new nuclear reactors we expect will be built by 2020 and our statement that

our uranium contract portfolio and discipline and expertise in managing our operations give us a steady revenue stream that we can rely on as we grow. They also include other statements using

words such as will, slated, potential, could, expect, ensure, continue, plan, anticipate, seek and target, or statements described as goals or milestones. These statements represent our views as of March 14,

2011, and can change significantly. We are presenting this information to help you understand management’s current views of our future prospects, and it may not be appropriate for other

purposes. We will not necessarily update this information unless we are required to by securities laws.

This information is based on a number of material assumptions, and is subject to a number of material risks, which are discussed in our current annual MD&A, including under the heading

“Caution about forward-looking information”. In particular, we have made assumptions about 2018 production levels at our existing mines, and assumptions about the development of mines that are not

operating yet and their 2018 production levels. If an assumption about one or more mines proves to be incorrect, we will not reach our 2018 target production level unless the shortfall can be made up

by additional production at another mine. The material risks that could prevent us from reaching our target include the risks that we may not be able to maintain or increase production levels at McArthur

River, Inkai and our other operating properties, there are further delays in reaching full production levels at Cigar Lake, development of Kintyre is delayed because of political, regulatory or Aboriginal

issues, we cannot move ahead with production at Kintyre, Millennium or our other projects under evaluation, we cannot upgrade mineral resources to mineral reserves, lack of milling capacity,

uranium prices or development and operating costs make it uneconomical to develop projects under evaluation, and disruption in production or development due to natural phenomena, labour disputes,

political risks or other development and operating risks. Qualified Persons

Information of a scientific and technical nature concerning Cigar Lake was prepared under the

supervision of Grant Goddard, P. Eng., Cameco’s Vice-President, Saskatchewan Mining North, concerning McArthur River was prepared under the supervision of David Bronkhorst, P. Eng.,

Cameco’s Vice-President, Saskatchewan Mining South, and concerning Inkai was prepared under the supervision of Charles Foldenauer, JV Inkai’s General Manager, Operations and Development.

Each of these individuals is a qualified person for the purpose of NI 43-101. CAMECO.COM FOR COMPREHENSIVE FINANCIAL INFORMATION VISIT:

INVESTOR INFORMATION

EX-99.5

Exhibit 99.5

Cameco 2010 Annual Financial Review KEEPING PACE WITH GLOBAL URANIUM DEMAND 2010 Annual Financial Review

Cameco’s vision is to be a dominant nuclear energy company producing uranium fuel and generating clean electricity. Our goal is to be the supplier, partner, investment and employer of choice. We are making statements and providing information about our expectations for the future which are considered to be forward-looking information or forward-looking statements under Canadian and United States securities laws. These include statements about our aim to double our annual uranium production to 40 million pounds by 2018 and how we expect to achieve that goal, and our expectation that demand for uranium will grow and there will a shortage of uranium supply. We are presenting this information to help you understand management’s current views of our future prospects, and it may not be appropriate for other purposes. We will not necessarily update this information unless we are required to by securities laws. This information is based on a number of material assumptions, and is subject to a number of material risks, which are discussed in our annual MD&A contained in this document, including under the heading “Caution about forward-looking information”.

The nuclear fuel cycle Candu Cycle Light Water Cycle Cameco ’s operations and investments span from exploration to electricity generation . 1 Mining There are three ways to mine uranium, depending on the depth of the orebody and the deposit’s geological characteristics: • Open pit mining is used if the ore is near the surface. The ore is usually mined using drilling and blasting. • Underground mining is used if the ore is too deep to make open pit mining economical. Tunnels and shafts provide access to the ore. • In situ recovery (ISR) does not require large scale excavation. Instead, holes are drilled into the ore and a solution is used to dissolve the uranium. The solution is pumped to the surface where the uranium is recovered. 1 Milling Ore from open pit and underground mines is processed to extract the uranium and package it as a powder typically referred to as uranium concentrate (U3O8) or yellowcake. The leftover processed rock and other solid waste (tailings) is placed in an engineered tailings facility. 2 Refining Refining removes the impurities from the uranium concentrate and changes its chemical form to uranium trioxide (UO3). 3 Conversion For light water reactors, the UO3 is converted to uranium hexafluoride (UF6) gas to prepare it for the next stage of processing. For heavy water reactors like the Candu reactor, the UO3 is converted into powdered uranium dioxide (UO2). 4 Enrichment Uranium is made up of two main isotopes: U-238 and U-235. Only U-235 atoms, which make up 0.7% of natural uranium, are involved in the nuclear reaction (fission). The enrichment process increases the concentration of U-235 to between 3% and 5% by separating U-235 atoms from the U-238. Enriched UF6 gas is then converted to powdered UO2. 5 Fuel manufacturing Natural or enriched UO2 is pressed into pellets, which are baked at a high temperature. These are packed into zircaloy or stainless steel tubes, sealed and then assembled into fuel bundles. 6 Generation Nuclear reactors are used to generate electricity. Fission of U-235 atoms in the reactor fuel creates heat that generates steam to drive turbines. The fuel bundles in the reactor need to be replaced as the U-235 atoms are depleted, typically after one or two years depending upon the reactor type. The used – or spent – fuel is stored or reprocessed. Spent fuel management The majority of spent fuel is safely stored at the reactor site. A small amount of spent fuel is reprocessed. The reprocessed fuel is used in some European and Japanese reactors.

2010 Awards Fuelling A Culture of Excellence Governance Gavel Awards (Canadian Coalition for Good Governance) Best Disclosure of Board Governance Practices and Director Qualifications PAR (Progressive Aboriginal Relations) Program (Canadian Council for Aboriginal Business) Part of the program since 2001, Cameco retains Gold Level certification for “innovative programs and engagement of Aboriginal people that have made an enduring impact on the business, Aboriginal communities, and demonstrate best practice for those companies beginning their journey”. 24th Annual ARC Awards International (MerComm, Inc.) Online Annual Report, Mining Ferrous & Non-Ferrous category: Bronze Investor Relations Global Rankings Top 5 Investor Relations Website, North America 42nd Annual Emergency Response/Mine Rescue Skills competition, Proficiency Skills category (Saskatchewan Mining Association) 30-minute written exam, bench test and practical demonstration of gas testing techniques: First place, McArthur River; Runner-up, Rabbit Lake Award in Honour of World Day for Safety and Health at Work, April 28 (South Kazakhstan Oblast) High performance in improving safety and health along with compliance with labour law requirements among the enterprises of the atomic industry: JV Inkai 2009 Peak Performance Award (Nebraska Safety Council) In recognition of safety performance: Crow Butte operation Canadian Institute of Mining, Metallurgy and Petroleum Awards John T. Ryan Trophy Best safety record, metal mines: Cameco McArthur River Special Safety Award Certificate Outstanding safety record in 2009: Cameco Cigar Lake Excellence in Environmental Business Award (Port Hope and District Chamber of Commerce) Environmental performance including production of nuclear fuel used to generate clean, carbon-free electricity; company core value to protect the environment; and support for the new Ganaraska Forest Centre: Cameco Port Hope Canada’s Best Diversity Employers (Mediacorp Canada Inc.) Employers across Canada that have exceptional workplace diversity and inclusiveness programs Financial Post’s Top 10 Best Companies to Work For (Mediacorp Canada Inc.) Fast-growing companies in Canada that offer tremendous career advancement opportunities together with leading-edge employee perks and benefits Saskatchewan’s Top 20 Best Employers (Mediacorp Canada Inc.) Saskatchewan employers that lead their industries in offering exceptional places to work Canada’s Top 100 Employers (Mediacorp Canada Inc. Exceptional workplaces by: (1) Physical Workplace; (2) Work Atmosphere & Social; (3) Health, Financial & Family Benefits; (4) Vacation & Time Off; (5) Employee Communications; (6) Performance Management; (7) Training & Skills Development; and (8) Community Involvement

Message from the Chair

Dear Shareholder,

2010 marked another successful year for Cameco. The tragic events in Japan have caused short-term challenges in the nuclear industry, but the long-term fundamentals for nuclear energy are very positive. The company is in a strong financial position, our growth strategy is taking hold, and a number of new markets are welcoming nuclear power as a source of clean energy.

The board is responsible for overseeing management and Cameco’s affairs, and ensuring that our core values are reflected in everything we do. Nowhere is this more important than working with management to develop Cameco’s strategic direction to ensure long-term success.

Management is charged with a strategy of doubling uranium production by 2018, to achieve its vision to be a dominant nuclear energy company. While it is still early days, management met all of its operating targets this year. The board is very pleased with the progress to date and confident in management’s strategy to achieve its goals.

Opportunity is not without its risks, however. The board and its committees have also been devoting more time and attention to risk oversight. The board works with management to identify the company’s principal risks, and to ensure we have a robust system for managing them across the organization, reporting regularly and mitigating risk as much as possible. It has also been devoting more attention to priority areas like compensation risk and the transition to International Financial Reporting Standards (IFRS), as well as operating and financial risks, among others.

Strong leadership and effective succession planning are also critical to our long-term success. The board has had ongoing discussions about succession planning and approved some key changes this year, as outlined in Jerry Grandey’s letter to shareholders on the next page. Briefly, Tim Gitzel was appointed president, and will succeed Jerry Grandey as chief executive officer on July 1, 2011 as Jerry retires as CEO and member of the board at the end of June 2011. Bob Steane replaced Tim as senior vice-president and chief operating officer, and Ken Seitz became senior vice-president, marketing and business development on George Assie’s retirement.

As CEO since 2003, Jerry led considerable growth in the company and developed a solid management team with great abilities and experience. I wish to thank him and wish him much success. Tim Gitzel joined Cameco in January 2007, as senior vice-president and chief operating officer and was appointed president last May. He brings extensive experience in Canadian and international uranium mining activities to his role as president and CEO through 17 years of senior management experience. He will be also nominated to the board at the 2011 annual meeting.

In December the board approved a planned increase in the annual dividend from $0.28 to $0.40 per share starting in 2011 — our seventh increase in nine years, and a sign of our confidence in the predictability of Cameco’s revenue stream.

Our ability to create shareholder value is rooted in a strong culture founded on core values of safety and environment, people, integrity and excellence in everything we do. The board adopted value statements in 2010 that embody our current practices in these areas. The code of conduct and ethics has been revised to reinforce our standards of ethical conduct and make the code more user friendly, and a new shareholder engagement statement in our governance guidelines highlights the board’s commitment to open and honest dialogue with shareholders.

I would like to thank George Ivany who is retiring from the board at the 2011 annual meeting. During his 12 years on the board, George served on all five committees and made valuable contributions with his broad experience in education and science. After an extensive search, the nominating, corporate governance and risk committee has nominated Daniel Camus to be elected to our board. Mr. Camus brings extensive international experience to the board, including his experience as a senior executive of a major European energy operator with significant transactional experience in China and India.

On behalf of the board, I would like to thank Jerry and his team for a successful 2010.
I look forward to many exciting developments in 2011.

Victor J. Zaleschuk
Chair of the board

March 14, 2011

Message from the CEO

Dear Shareholder,

Cameco is well positioned to catch the value in the market as we double annual production by 2018.

In 2010, we began to see the growth we’ve been anticipating become reality, as the demand for nuclear power and uranium fuel continued to build around the world.

We acknowledge the tragic events in Japan and the short-term challenges that the nuclear industry will face, but the long-term fundamentals remain the same. In emerging markets, China is the leader by far, with over a third of all reactors under construction in the world today. India, Brazil and the United Arab Emirates are also growing. Turkey has chosen two sites for new plants, and Vietnam and Jordan are interested in building their first facilities. Russia and South Korea, among others, are continuing to expand their nuclear programs. And the United States, our largest customer, is returning to nuclear power after a 30-year absence from new reactor construction. It’s planning to build between four and eight new reactors over the next decade. Overall, we’re expecting about 100 (net) new nuclear reactors to be built by 2020. You can read more about this on page 11.

2010 also saw these nuclear growth programs impact the market. For example, China began to secure longer-term uranium supplies, and we signed two key agreements for a total of 52 million pounds. These agreements are laying the groundwork for long-term uranium supply arrangements, with considerable potential for us to expand our relationships in this important region.

But as demand grows, uranium supply is not being replenished at a sufficient pace. That pushed prices up in 2010, and increased the need for new sources. It’s also presenting an excellent opportunity for uranium suppliers who are poised to benefit.

Already one of the largest suppliers of uranium and fuel services in the world, Cameco has a geologically and geographically diverse reserve and resource base, low-cost mines, a strategy to double our production and the financial flexibility to get us there. These factors, combined with an experienced and dedicated team, means we’re well positioned to take full advantage of the growth in nuclear energy.

2010: another great year

This year, we met all of our major targets, and our revenue was in line with the guidance we provided throughout the year. Our cash from operations remained strong at $507 million and we ended the year with $1.3 billion in cash on hand. We increased production by 2 million pounds — exceeding our goal for this year and our results in 2009 — and reduced our unit costs for the second consecutive year. Cigar Lake is back on track, and production at Inkai and McArthur River/Key Lake are well above last year. Our US operations continue to perform well and at Rabbit Lake we added another two years of reserves, extending the estimated mine life to 2017.

This was also our first full year up and running at Port Hope since 2007, and although there were a few operational issues, we made great progress in revitalizing and eventually returning harbour access to the community.

On track to double production

Our strategy is to double our uranium production to 40 million pounds by 2018 — all from existing assets. Approximately half of this production is from mines that are already operating. The other half is from projects that are under development or in the feasibility stage.

Our planning process is disciplined and well defined. We have a clear development plan for each project, and measurable milestones designed to move us toward our goal. We’re constantly evaluating each project’s feasibility in the context of changing business conditions, which gives us the ability to respond to both positive and negative developments in the industry. You can read about our pipeline of projects on page 16.

Financial flexibility

Achieving our goal of doubling production will require sustained investment and we expect to meet this requirement without the need for significant additional funding. Our reported earnings and cash flows will be impacted as many costs associated with our growth initiatives will be expensed as we go. This is an inevitable consequence of growth.

Cameco is in a very strong financial position, which gives us considerable financial flexibility. The uranium contract portfolio we’ve built over the past 23 years, and our discipline and expertise in managing our operations efficiently and cost-effectively, gives us a steady revenue stream that we can rely on as we grow.

At the same time, we’re providing healthy dividends to shareholders. We’ve increased our annual dividend seven times in the last nine years, including a planned 43% increase from $0.28 to $0.40 per share in 2011.

Growing responsibly

All of our success is built on a record of increasing operational excellence.

Companies are under growing scrutiny for the way they conduct their businesses, and there has been a significant increase in stakeholder expectations for environmentally and socially responsible business practices. Rather than viewing sustainable development as an ‘add-on’ to traditional business activity, we see it as integral to the way we do business, and have made it a strategic priority, integrating it into our values, objectives and compensation.

Since 2002, we’ve been using four categories to define what we are committed to deliver, and how we measure our results: outstanding financial performance, a safe, healthy and rewarding workplace, a clean environment and supportive communities. Every year we’re making strides in each of these areas — all of which build shareholder value.

Take some time to review our sustainability report on our website for more information about our progress in these areas.

Developing our leadership

It’s important for every company to have a succession strategy, and this year we made some important changes to position our leadership team for the long term:

• Tim Gitzel was appointed president. Tim joined Cameco in 2007 as senior vice-president and chief operating officer, and it’s under his guidance that we’ve become as operationally strong as we are today.

• Bob Steane, a 30-year Cameco veteran, moved into Tim’s role, bringing years of invaluable expertise to this position.

• Ken Seitz, who has been with Cameco since 2004, was promoted to senior vice-president, marketing and business development, replacing George Assie, who retired on December 31. George will continue to share his knowledge and expertise with Cameco by serving on some of our subsidiary boards.

Supporting this team is a strong and dedicated group of employees working together to achieve our goals. In addition to being among the top 100 employers in Canada again this year, we were recognized as one of Canada’s Best Diversity Employers.

Gerald W. Grandey
CEO

This is particularly significant, given our goal to reach 67% northern (or RSN) employment at our northern Saskatchewan operations, and something that speaks well for us as we move ahead at Kintyre in Australia.

On February 22, 2011, the board and I announced my retirement at the end of June 2011 with Tim Gitzel being our new CEO effective July 1, following our succession plan. Cameco will be in good hands with very strong and capable leadership going forward. I would like to extend my gratitude to our many friends and stakeholders. Without their long-term support, Cameco would not be the success it is today.

The long term is now

The nuclear business is a long-term story: there’s no predicting the ups and downs of the commodity cycle. But nuclear energy is in demand, and that demand is growing. Cameco is uniquely positioned to grow and be successful, and to build value for our shareholders.

We’re very excited about the years ahead.

Gerald W. Grandey
CEO

March 14, 2011

Management’s discussion and analysis
2010 Highlights		4
About Cameco		7
About the nuclear energy industry		9
Our strategy		15
Financial results		28
Our operations and development projects		53
Mineral reserves and resources		84
Additional information		90
2010 Consolidated financial statements
Report of management’s accountability		100
Auditor’s report		101
Consolidated financial statements		102
Notes to consolidated financial statements		107
Investor information	inside back cover

Throughout this document, the terms we, us, our and Cameco mean Cameco Corporation and its subsidiaries.

Management’s discussion and analysis

This management’s discussion and analysis (MD&A) includes information that will help you understand management’s perspective of our audited consolidated financial statements and notes for the year ended December 31, 2010. The information is based on what we knew as of February 11, 2011.

We encourage you to read our audited consolidated financial statements and notes as you review this MD&A. You can find more information about Cameco, including our audited consolidated financial statements and our most recent annual information form, on our website at cameco.com, on SEDAR at sedar.com or on EDGAR at sec.gov. You should also read our annual information form before making an investment decision about our securities.

Unless we have specified otherwise, all dollar amounts are in Canadian dollars. The financial information in this MD&A and in our financial statements and notes are prepared according to Canadian generally accepted accounting principles (Canadian GAAP), unless otherwise indicated. We also prepared a reconciliation of our annual financial statements to US GAAP, which has been filed with securities regulatory authorities. We present our mineral reserve and resource estimates as required by Canadian securities law. See Important information for US investors on page 85.

Caution about forward-looking information

Our MD&A includes statements and information about our expectations for the future. When we discuss our strategy, plans, future financial and operating performance, or other things that have not yet taken place, we are making statements considered to be forward-looking information or forward-looking statements under Canadian and United States securities laws. We refer to them in this MD&A as forward-looking information.

Key things to understand about the forward-looking information in this MD&A:

• It typically includes words and phrases about the future, such as: believe, estimate, anticipate, expect, plan, intend, predict, goal, target, project, potential, strategy and outlook (see examples on page 2).

• It represents our current views, and can change significantly.

• It is based on a number of material assumptions, including those we’ve listed below, which may prove to be incorrect.

• Actual results and events may be significantly different from what we currently expect, due to the risks associated with our business. We list a number of these material risks below. We recommend you also review our annual information form, which includes a discussion of other material risks that could cause actual results to differ significantly from our current expectations.

Forward-looking information is designed to help you understand management’s current views of our near and longer term prospects, and may not be appropriate for other purposes. We will not necessarily update this information unless we are required to by securities laws.

2010 Annual financial review   1

Examples of forward-looking information in this MD&A

• our expectations about future worldwide uranium supply and demand

• spot prices in 2011 are expected to be volatile

• our goal for doubling annual production by 2018 to 40 million pounds and our expectation that existing cash balances and operating cash flows will meet anticipated capital requirements without the need for any significant additional financing to reach this goal

• our 2011 objectives

• the outlook for each of our operating segments for 2011, and our consolidated outlook for the year

• our expectation that we will invest significantly in expanding production at our existing mines and advancing projects as we pursue our growth strategy

• our expectation that cash balances will decline gradually as we use the funds in our business and to pursue our growth plans

• our expectation that for the next several years our capital expenditures will be similar to 2011

• our expectation that our operating and investment activities in 2011 will not be constrained by the financial covenants in our general credit facilities

• our uranium price sensitivity analysis

• forecast production at our uranium operations from 2011 to 2015

• our expectation that Inkai will receive all the necessary approvals and permits to meet its 2011 and future annual production targets

• the likely terms and volumes to be covered by long-term delivery contracts that we enter into in 2011 and in future years

• future production at our fuel services operations

• future royalty and tax payments and rates

• our future plans for each of our uranium operating properties, development projects and projects under evaluation, and fuel services operating sites

• our mid-2013 target for initial production from Cigar Lake, the expected benefits of our surface freeze strategy and our 2011 Cigar Lake plans

• our mineral reserve and resource estimates

• the discussion of the expected impact of International Financial Reporting Standards (IFRS) on our financial statements, internal control over financial reporting and disclosure controls and procedures, our business activities in general, and our estimate of IFRS opening statement of financial position and interim period financial results

Material risks

• actual sales volumes or market prices for any of our products or services are lower than we expect for any reason, including changes in market prices or loss of market share to a competitor

• we are adversely affected by changes in foreign currency exchange rates, interest rates or tax rates

• production costs are higher than planned, or necessary supplies are not available, or not available on commercially reasonable terms

• our estimates of production, purchases, costs, decommissioning or reclamation expenses, or our tax expense estimates, prove to be inaccurate

• we are unable to enforce our legal rights under our existing agreements, permits or licences, or are subject to litigation or arbitration that has an adverse outcome

• there are defects in, or challenges to, title to our properties

• our mineral reserve and resource estimates are inaccurate, or we face unexpected or challenging geological, hydrological or mining conditions

• we are affected by environmental, safety and regulatory risks, including increased regulatory burdens or delays

• we cannot obtain or maintain necessary permits or approvals from government authorities

• we are affected by political risks in a developing country where we operate

• we are affected by terrorism, sabotage, blockades, accident or a deterioration in political support for, or demand for, nuclear energy

• there are changes to government regulations or policies, including tax and trade laws and policies

• our uranium and conversion suppliers fail to fulfil delivery commitments

• delay or lack of success in remediating and developing Cigar Lake

• we are affected by natural phenomena, including inclement weather, fire, flood and earthquakes

• our operations are disrupted due to problems with our own or our customers’ facilities, the unavailability of reagents, equipment, operating parts and supplies critical to production, lack of tailings capacity, labour shortages, labour relations issues, strikes or lockouts, underground floods, cave ins, tailings dam failures, and other development and operating risks

• new IFRS standards or changes in the standards or their interpretation

2   cameco corporation

Material assumptions

• sales and purchase volumes and prices for uranium, fuel services and electricity

• expected production costs

• expected spot prices and realized prices for uranium, and other factors discussed on page 43, Price sensitivity analysis: uranium

• tax rates, foreign currency exchange rates and interest rates

• decommissioning and reclamation expenses

• mineral reserve and resource estimates

• the geological, hydrological and other conditions at our mines

• our Cigar Lake remediation and development plans succeed

• our ability to continue to supply our products and services in the expected quantities and at the expected times

• our ability to comply with current and future environmental, safety and other regulatory requirements, and to obtain and maintain required regulatory approvals

• our operations are not significantly disrupted as a result of political instability, nationalization, terrorism, sabotage, blockades, breakdown, natural disasters, governmental or political actions, litigation or arbitration proceedings, the unavailability of reagents, equipment, operating parts and supplies critical to production, labour shortages, labour relations issues, strikes or lockouts, underground floods, cave ins, tailings dam failure, lack of tailings capacity, or other development or operating risks

• our IFRS related forecasts are not significantly impacted by new IFRS standards or changes in the standards or their interpretation or changes in our policy choices

2010 Annual financial review   3

2010 Highlights

Cameco is well positioned as the world becomes increasingly focused on nuclear as a source of clean, reliable and affordable energy. We are among the world’s largest uranium producers, in a market where demand is growing, and a pure-play nuclear energy investment.

Our vision is to be a dominant nuclear energy company producing uranium fuel and generating clean electricity.

We have long-term objectives for each of our three business segments:

• uranium — double our annual production to 40 million pounds by 2018 from existing assets

• fuel services — invest in our fuel services business to support our overall growth in the nuclear business

• electricity — maintain steady cash flow while looking at options to extend the operating life of the four Bruce B units

We made excellent progress this year at our operations and on our projects.

Strong financial performance

Net earnings in 2010 were $515 million. Last year, net earnings were higher by $584 million, due mainly to the one time gain on the sale of our interest in Centerra Gold Inc. (Centerra) and higher unrealized gains on financial instruments. Revenue was in line with our guidance, and uranium unit costs were 7% lower than in 2009. We ended the year with $1.3 billion cash on hand. We intend to use these funds to advance our growth strategy.

Highlights
December 31
($ millions except where indicated)		2010		2009		change
Revenue			2,124		2,315		(8	)%
Gross profit			744		750		(1	)%
Net earnings			515		1,099		(53	)%
$  per common share (diluted)			1.30		2.82		(54	)%
Adjusted net earnings (non-GAAP, see page 29)			496		528		(6	)%
$  per common share (adjusted and diluted)			1.25		1.35		(7	)%
Cash provided by operations (after working capital changes)			507		690		(27	)%
Average realized prices	$US/lb		43.63		38.25		14	%
Uranium	$Cdn/lb		45.81		45.12		2	%
Fuel services	$Cdn/kgU		16.86		17.84		(5	)%
Electricity	$Cdn/MWh		58		64		(9	)%

Shares and stock options outstanding

At February 10, 2011, we had:

• 394,435,383 common shares and one Class B share outstanding

• 7,432,998 stock options outstanding, with exercise prices ranging from $5.88 to $46.88

Dividend policy

Our board of directors has established a policy of paying a quarterly dividend of $0.10 ($0.40 per year) per common share. This policy will be reviewed from time to time based on our cash flow, earnings, financial position, strategy and other relevant factors.

4    cameco corporation

Excellent progress this year

In our uranium segment this year, production was 10% higher than 2009 and 6% higher than our plan at the beginning of 2010. We had a number of successes at our mining operations. Key highlights:

• Achieved the best safety performance in our history, exceeding 2009’s award winning performance.

• Received approval for production flexibility at McArthur River, which allowed us to exceed our production target by 6%.

• Extended Rabbit Lake’s expected mine life by two years to 2017.

• Continued to ramp up production at Inkai and exceeded 2009 production by 136%.

• Finished dewatering the underground development at Cigar Lake, substantially completed securing the underground development areas and began implementing a surface freeze strategy we expect will provide a number of benefits. You can read more about this on page 73.

In our fuel services segment, production was 25% higher than 2009 due to the routine operation of the Port Hope UF₆ plant. In 2009, the plant was shut down for the first five months of the year.

In our electricity segment, Bruce Power Limited Partnership (BPLP) generated 25.9 terawatt hours (TWh) of electricity, at a capacity factor of 91%. Our share of earnings before taxes was $166 million.

Our investment in GE-Hitachi Global Laser Enrichment LLC (GLE) continues to progress. GLE successfully completed initial testing of its enrichment technology, which met key performance criteria. GLE is continuing its testing, and has begun engineering design work for a commercial facility. In addition, we have continued to work with GLE on potential customer contracts for the facility. The US Nuclear Regulatory Commission is assessing GLE’s application for a commercial facility construction and operating licence.

We continued to advance our exploration activities, spending $11 million at five brownfield exploration projects, and $48 million for resource delineation at Kintyre and Inkai block 3. We spent about $37 million on regional exploration programs. Saskatchewan saw the most expenditures, followed by Australia, northern Canada, Asia, the US and South America.

Highlights		2010		2009		change
Uranium	Production volume (million lbs)		22.8		20.8		10	%
	Sales volume (million lbs)		29.6		33.9		(13	)%
	Revenue ($ millions)		1,374		1,551		(11	)%
Fuel services	Production volume (million kgU)		15.4		12.3		25	%
	Sales volume (million kgU)		17.0		14.9		14	%
	Revenue ($ millions)		301		276		9	%
Electricity	Output (100%) (TWh)		25.9		24.6		5	%
	Revenue (100%)		1,509		1,640		(8	)%
	Our share of earnings before taxes ($ millions)		166		224		(26	)%

2010 Annual financial review   5

Key market facts

Demand for electricity is expected to nearly double from 2008 to 2035, driven mainly by growth in the developing world as it seeks to diversify sources of energy and provide security of supply.

• The world is increasingly recognizing the benefits of nuclear energy as it searches for alternatives to carbon-based electricity generation, and for energy diversification and security.

• At the start of 2011, there were 441 commercial nuclear power reactors operating in 30 countries, providing about 14% of the world’s electricity.

• At the start of 2011, there were 65 reactors under construction and, by 2020, we estimate 104 new reactors (net) to come on line.

• Most of this new build is being driven by rapidly developing countries like China and India, which have severe energy deficits and want clean sources of electricity to improve their environment and sustain economic growth.

• Over the next decade, demand for uranium to fuel existing and new reactors, and build strategic inventories is expected to grow by an average of 2.5% per year.

• To meet global demand over the next 10 years, we expect 66% of uranium supply will come from mines that are currently in operation, 16% from finite sources of secondary supply (mainly Russian highly enriched uranium (HEU), government inventories and limited recycling), and 18% will have to come from new sources of supply.

• With uranium assets on three continents, including high-grade reserves and low-cost mining operations in Canada, and investments that cover the nuclear fuel cycle – we are ideally positioned to benefit from the world’s growing need for clean, reliable energy.

6    cameco corporation

About Cameco

Our head office is in Saskatoon, Saskatchewan. We are one of the world’s largest uranium producers, with uranium assets on three continents. Nuclear energy plants around the world use our uranium products to generate one of the cleanest sources of electricity available today.

Uranium

We are one of the world’s largest uranium producers, and in 2010 accounted for about 16% of the world’s production. We have controlling ownership of the world’s largest high-grade reserves, with ore grades up to 100 times the world average, and low-cost operations.

Product

• uranium concentrates (U₃O₈)

Mineral reserves and resources

Mineral reserves

• approximately 475 million pounds proven and probable

Mineral resources

• approximately 140 million pounds measured and indicated and 355 million pounds inferred

Global exploration

• focused on four continents

Operating properties

• McArthur River and Key Lake, Saskatchewan

• Rabbit Lake, Saskatchewan

• Smith Ranch-Highland, Wyoming

• Crow Butte, Nebraska

• Inkai, Kazakhstan

Development project

• Cigar Lake, Saskatchewan

Projects under evaluation

• Inkai blocks 1 and 2 production increase, Kazakhstan

• Inkai block 3, Kazakhstan

• McArthur River extension, Saskatchewan

• Kintyre, Australia

• Millennium, Saskatchewan

Fuel services

We are an integrated uranium fuel supplier, offering refining, conversion and fuel manufacturing services.

Products

• uranium trioxide (UO₃)

• uranium hexafluoride (UF₆) (control about 35% of western world capacity)

• uranium dioxide (UO₂) (the world’s only commercial producer of natural UO₂)

• fuel bundles, reactor components and monitoring equipment used by Candu reactors

Operations

• Blind River refinery, Ontario (refines U₃O₈ to UO₃)

• Port Hope conversion facility, Ontario (converts UO₃ to UF₆ or UO₂)

• Cameco Fuel Manufacturing Inc., Ontario (manufactures fuel bundles and reactor components)

• a toll conversion agreement with Springfields Fuels Ltd. (SFL), Lancashire, United Kingdom (UK) (to convert UO₃ to UF₆ — expires in 2016)

We also have a 24% interest in GE-Hitachi Global Laser Enrichment LLC (GLE) in North Carolina, with General Electric (51%) and Hitachi Ltd. (25%). GLE is testing a third-generation technology that, if successful, will use lasers to commercially enrich uranium.

2010 Annual financial review   7

Electricity

We generate clean electricity through our 31.6% interest in the Bruce Power Limited Partnership (BPLP), which operates four nuclear reactors at the Bruce B generating station in southern Ontario.

Capacity

• 3,260 megawatts (MW) (100% basis) (about 15% of Ontario’s electricity)

We also have agreements to manage the procurement of fuel and fuel services for BPLP, including:

• uranium concentrates

• conversion services

• fuel fabrication services

Global presence

8   cameco corporation

About the nuclear energy industry

According to the World Energy Outlook for 2010 (OECD/International Energy Agency), population growth and industrial development will lead to a near doubling of electricity consumption from 2008 to 2035. Most of this energy will be used by developing (non-OECD) countries as their populations and standards of living increase.

Nuclear power is a clean source of electricity, and generation capacity is growing

As the demand for energy increases, governments, media and consumers are becoming increasingly aware of the dangers and effects of air pollution and climate change, and the importance of low-emission sources of electricity. Increasingly, nuclear energy is recognized as a sustainable alternative to carbon-based electricity that provides energy diversity and security.

Nuclear power can generate electricity with no toxic air pollutants and very low carbon dioxide (CO₂) or other greenhouse gas emissions. It has the capacity to produce enough electricity on a global scale to meet our growing needs, and while it isn’t the only solution, it is an affordable and sustainable source of clean, reliable energy. In a carbon-constrained world, nuclear energy will be an even more important part of the future energy mix.

2010 Annual financial review   9

At the start of 2011, there were 441 commercial nuclear power reactors operating in 30 countries. Countries around the world are increasing their capacity to generate nuclear power by refurbishing or uprating nuclear reactors and building new ones.

China is expected to lead the world in the construction of nuclear power plants as electricity demand continues its rapid growth. India is also moving forward with ambitious growth plans to diversify its sources of energy and obtain a secure source of electricity. As at January 1, 2011:

• China was operating 13 reactors, building between 25 and 30 and planning more. We expect a net increase of 54 reactors by 2020.

• India was operating 19 reactors and had several under construction. We expect a net increase of 13 reactors by 2020.

This year the government of Canada signed a civil nuclear co-operation agreement with India to export nuclear technology, equipment and uranium to support India’s growing nuclear energy industry. Canada is the eighth nation to sign such an agreement with India since the Nuclear Suppliers Group lifted a 34-year ban on nuclear co-operation with India in 2008. Licencing arrangements for these exports still have to be negotiated by the two governments and discussions are ongoing.

Russia and South Korea continue to expand their nuclear generating capacity. Several non-nuclear countries, like United Arab Emirates, Turkey, Vietnam and Italy, are laying the groundwork to proceed with nuclear power development.

In the UK, government commitment to the future of nuclear energy is strong, driven by the need to limit CO₂ emissions, and by concerns about energy security as current reactors approach the end of their operating lives.

The US continues to make progress toward new nuclear development with pre-construction activities for new reactors underway in two states and one reactor under construction in another.

10   cameco corporation

We have long-term supply contracts in 12 of these countries, including China. We are in discussions with India to provide uranium for their growing reactor program.

Demand for uranium is growing

We forecast that world demand will be almost 2.3 billion pounds of U₃O₈ over the next 10 years. This estimate assumes utilities will build strategic inventories of about 160 million pounds of U₃O₈ to support their reactor programs.

China’s significant activity in the long-term market this year is a sign of the growing demand for uranium and one of the main drivers behind the recent increase in the uranium price. China has been relatively active in the spot market over the last few years, but in 2010, it advanced its reactor build program and started to secure uranium under long-term contracts. We signed two long-term contracts with Chinese utilities this year, to supply more than 50 million pounds of uranium.

2010 Annual financial review   11

We expect 66% of global uranium supply over the next 10 years to come from existing primary production sources, production from mines that are currently in commercial operation.

We expect 16% to come from existing secondary supply sources. Most of these sources are finite and will not meet long-term needs. One of the largest current sources of secondary supply is uranium derived from Russian highly enriched uranium (HEU). All deliveries from this source are expected to be made by the end of 2013, when the Russian HEU commercial agreement expires. The US government also makes some of its inventories available to the market, although in much smaller quantities.

We expect the remaining 18% will come from new sources of supply.

In 2010, five producers of uranium concentrates marketed 70% of world production and there were only three commercial providers of UF₆ conversion services in the western world. Barriers to entry for new competitors are high, and the lead time for new uranium production can be as long as 10 years or more, depending on the deposit type and location.

Given our extensive base of mineral reserves and resources, diversified sources of supply, global exploration program and vertical integration, we are well positioned to capitalize on the growing interest in nuclear energy.

Despite this growth, challenges remain

Many countries face major obstacles to new nuclear plant construction, including significant upfront capital costs, political opposition and uncertain regulatory environments. In some locations, nuclear energy may not be competitive with other sources of electricity. A country’s first new-generation nuclear plants will face significant business risks, including first-time costs, financing, licensing, schedule and construction costs.

While several countries are making progress on the management of used fuel and other radioactive waste from the nuclear fuel cycle, it is still a controversial issue. Many environmental groups continue to oppose the nuclear power industry. There are nuclear plant phase-out programs in a number of European countries, including Germany. However, Germany recently announced plans to extend the lifespan of its nuclear plants by an average of 12 years. Nuclear power still does not qualify internationally for greenhouse gas emission credits, even though it has been recognized as a non-emitting technology in US energy legislation. The lack of climate change legislation in the US makes nuclear energy less competitive than it is in some other countries.

The long-term outlook is positive

Over the long term, we expect that the benefits of nuclear energy will prevail over the challenges, and market fundamentals for uranium and fuel services will remain positive as:

• we expect demand to continue to exceed worldwide production

• secondary supplies currently filling the shortfall are finite

• primary production needs to increase to meet future demand

Over the next 10 years, we anticipate demand for uranium and conversion services to increase moderately, with potential for more rapid growth toward the end of the period, as the construction and completion of nuclear plants accelerates.

12   cameco corporation

The industry in 2010

World consumption and production

We estimate global uranium consumption in 2010 was about 180 million pounds and production was 140 million pounds.

We expect global uranium consumption to increase to about 195 million pounds in 2011, and production to be approximately 150 million pounds. Secondary supplies should continue to bridge the gap. By 2020, we expect world uranium consumption to be about 230 million pounds per year, an average annual growth rate of about 2%.

We expect world consumption for UF₆ and natural UO₂ conversion services to increase by about 7% in 2011.

Industry prices

Utilities are well covered under existing contracts and have been building up inventory levels of U₃O₈ since 2004, so we expect uranium demand in the near term to be discretionary. Spot prices in 2011 are expected to be volatile.

	2010		2009		change
Uranium ($US/lb U3O8) 1
Average spot market price		46.83		46.06		2	%
Average long-term price		60.92		65.50		(7	)%
Fuel services
($US/kgU UF6)1
Average spot market price
• North America		9.11		7.16		27	%
• Europe		9.83		8.82		11	%
Average long-term price
• North America		12.21		11.91		3	%
• Europe		13.27		13.20		1	%
Note: the industry does not publish UO2 prices.
Electricity ($/MWh)
Average Ontario electricity spot price		36		30		20	%

¹ Average of prices reported by TradeTech and Ux Consulting (Ux)

2010 Annual financial review   13

Contract volumes

The Ux estimate for 2010 spot market sales is about 50 million pounds, 7% below the record high of 54 million pounds in 2009. Utilities were responsible for 39% of the purchases. With spot price volatility throughout the year, utilities and others took advantage of periods of lower spot prices to make opportunistic purchases.

We expected long-term contracting volumes in 2010 to be similar to 2009, but they ended significantly higher. Industry estimates are that China agreed to purchase about 170 million pounds under long-term contracts, accounting for about 70% of all long-term purchase volumes. We estimate long-term contracting volumes in 2011 will be between 150 and 200 million pounds, depending on supply, market expectations, and market prices.

14   cameco corporation

Our strategy

Our vision is to be a dominant nuclear energy company producing uranium fuel and generating clean electricity. Our goal is to be the supplier, partner, investment and employer of choice in the nuclear industry.

We are a pure-play nuclear investment with a proven track record and the strengths to take advantage of the world’s rising demand for clean, safe and reliable energy. Our core strengths make us unique:

• a large portfolio of low-cost mining operations and geographically diverse uranium assets

• controlling interests in the world’s largest high-grade uranium reserves

• extensive mineral reserves and resources to support our growth strategy

• excellent growth potential from existing assets, combined with an advanced global exploration program

• multiple sources of conversion and the ability to increase production

• a strong customer base and a worldwide marketing presence

• an extensive portfolio of long-term sales contracts supported by long-life assets

• innovative technology and experience operating in technically challenging environments

• an enterprise-wide risk management system tied directly to our strategy and objectives

• conservative financial management and the financial strength to support our growth

• among the first to build relationships in emerging markets

The focus of our growth strategy continues to be on our uranium segment. With the significant increase in nuclear reactor construction around the world, utilities and countries are building up their strategic inventories. In 2010, this resulted in increased long-term contracting and drove uranium spot prices significantly higher.

Our extraordinary assets, contract portfolio, employee expertise and comprehensive industry knowledge give us the ability to capitalize on any increase in uranium demand and prices, increasing shareholder value.

At the same time, we are managing our fuel services segment to better service our customers and expand our market share.

We plan to use the cash we have available to sustain and increase our production from existing assets. We will consider other uranium production opportunities as they arise.

We have long-term objectives for each of our three business segments:

• uranium — double our annual production to 40 million pounds by 2018 from existing assets

• fuel services — invest in our fuel services business to support our overall growth in the nuclear business

• electricity — maintain steady cash flow while gaining exposure to new opportunities

These are supported by annual objectives, which you’ll find starting on page 25.

2010 Annual financial review   15

Uranium: doubling production by 2018

We have a strategy and process in place to double our annual production to 40 million pounds by 2018, which we expect to come from three sources:

• operating properties

• development projects

• projects under evaluation

This chart below shows how we expect each of these sources to progress towards achieving our 2018 production goal.

About half of the total expected 2018 annual production is from mines that are already operating. The other half is from projects that are in development or under evaluation. To reach our goal, we expect existing cash balances and operating cash flows will meet anticipated capital requirements without the need for significant additional funding.

We expect to spend, on average, between $20 million and $25 million per year for the next three years to assess the feasibility of projects under evaluation. These amounts will be expensed as incurred.

This is not a complete list of all the projects we are currently evaluating. Many projects are early stage. As we evaluate them, the mix of projects to reach our 2018 goal may change. Our evaluation process is designed to provide flexibility in development decisions. You can read about our stage gate process on page 17.

Operating properties

Our sources of production are McArthur River/Key Lake, Rabbit Lake, Smith Ranch-Highland, Crow Butte and Inkai.

We plan to maintain the base of our current production at these operations, and to expand production where we can by developing new mining zones. We are upgrading the mills at Key Lake and Rabbit Lake to support our growing production.

Inkai blocks 1 and 2, in Kazakhstan, have the potential to significantly increase production. Based on current mineral reserves, we expect Rabbit Lake to produce until 2017, although work is ongoing to extend its mine life even further.

16   cameco corporation

Development project

Cigar Lake is our project in development. It is a superior, world-class deposit that we expect to generate 9 million pounds of uranium per year for Cameco (18 million pounds per year in total) after we finish remediation and construction, and ramp up to full production. We are targeting initial production in mid-2013.

Projects under evaluation

We are evaluating several potential sources of production, including expanding McArthur River, increasing production at Inkai blocks 1 and 2, and advancing Inkai block 3, Kintyre and Millennium.

• The McArthur River extension is expected to expand our existing mining area, which is part of the most prolific high-grade uranium system in the world.

• Under a memorandum of understanding with our Inkai partner, National Atomic Company KazAtomProm Joint Stock Company (Kazatomprom), we are in discussions to increase annual production from blocks 1 and 2, which would result in our share increasing to 5.7 million pounds.

• Inkai block 3, in Kazakhstan, has the potential to become a significant source of production.

• Our acquisition in 2008 of a 70% interest in Kintyre, in Australia, adds potential for low-cost production and diversifies our production by geography and deposit type.

• Millennium is a uranium deposit in northern Saskatchewan that we expect will take advantage of the mill at Key Lake.

Our strategy is to advance these projects through a stage gate process that includes several defined decision points in the assessment and development stages. At each point, we re-evaluate the project based on current competitive, economic, social, legal, political and environmental considerations. If it continues to meet our criteria, we proceed to the next stage. This process allows us to build a pipeline of projects ready for a production decision.

2010 Annual financial review   17

Growth beyond 2018

Our active global exploration program, combined with our disciplined acquisition strategy, will add to our pipeline of future production sources. Our program is directed at replacing mineral reserves and resources as they are depleted by our production, and ensuring our growth beyond 2018.

Exploration

We have maintained an active exploration program throughout the uranium price cycle, which has helped us secure land with exploration and development prospects that are among the best in the world. In addition, our exploration efforts have increased uranium mineral reserves and resources at our operations. We have direct interests in almost 70 active exploration projects in six countries, over 100 experienced professionals searching for the next generation of deposits, and ownership interests in approximately 4.3 million hectares (10.6 million acres) of land mainly in Canada, Australia, Kazakhstan, the US, Mongolia and Peru. Many of these projects are advanced through joint ventures with both junior and major uranium companies.

For properties that meet our investment criteria, we will partner with other companies through strategic alliances, equity holdings and traditional joint venture arrangements. Our leadership position and industry expertise in both exploration and corporate social responsibility make us a partner of choice.

Acquisition

We have a dedicated team looking for opportunities to acquire companies that are already producing or are nearing that stage. We will invest when an opportunity is available at the right time and the right price. Our acquisition strategy complements our exploration strategy, and together they are building a development pipeline of prospective uranium projects.

This discussion of our strategy, our process to double our annual uranium production by 2018, and our growth beyond that date is forward-looking information. It is based on the assumptions and subject to the material risks discussed on pages 2 and 3, and specifically on the assumptions and risks listed here.

Assumptions

Our statements about doubling annual production by 2018 to 40 million pounds reflect our current production target for 2018. Although we are confident in our efforts to reach that target, we cannot guarantee that we will. We have made assumptions about 2018 production levels at each of our existing operating mines, except those that we do not expect will still be operating then. We have also made assumptions about the development of mines that are not operating yet and their 2018 production levels. We believe these assumptions are reasonable, individually and together, but if an assumption about one or more mines proves to be incorrect, we will not reach our 2018 target production level unless the shortfall can be made up by additional production at another mine.

18   cameco corporation

Material risks that could prevent us from reaching our target

• we cannot locate additional reserves and identify appropriate methods of mining to maintain and increase production levels at McArthur River

• our partner or the Kazakh government does not support an increase in production to the expected level at Inkai, blocks 1 and 2, or we don’t reach the full production level as quickly as we expect

• we cannot bring block 3 into production at Inkai if the feasibility study is not favourable or we cannot secure partner or government approval

• remediation and development at Cigar Lake is not completed on schedule, or we do not reach the full production level as quickly as we expect

• development of Kintyre is delayed due to political, regulatory or indigenous people issues

• we cannot obtain a favourable feasibility study for Kintyre or the Millennium project, or we cannot reach agreement with our project partners to move ahead with production at Kintyre or Millennium

• the Key Lake mill does not have enough capacity to handle anticipated production increases, and we aren’t able to expand its capacity or to identify alternative milling arrangements

• the projects under evaluation do not proceed or, if they do, are not completed on schedule or don’t reach full production levels as quickly as we expect

• uranium prices and development and operating costs make it uneconomical to develop projects under consideration

• we cannot obtain or maintain necessary permits or approvals from government authorities

• disruption in production or development due to natural phenomena, labour disputes, political risks, blockades or other acts of social or political activism, lack of tailings capacity, or other development and operation risks

Fuel services: capturing synergies

Our fuel services segment is strategically important because it helps support the growth of the uranium segment. Offering a range of products and services to customers helps us broaden our business relationships and expand our uranium market share.

We are one of three commercial suppliers of UF₆ in the western world. Our focus is on cost-competitiveness and operational efficiency as we gradually increase production at our world-class conversion facility to support the growing demand. We’re also expanding into innovative areas like laser enrichment technology to broaden our fuel cycle participation and help us serve our customers more effectively.

Electricity: capturing added value

Our investment in BPLP is an excellent source of cash flow and a logical fit with our other businesses. Our focus is on maintaining steady cash flow, building synergies with our other segments and looking at the option to extend the operating life of the four Bruce B units.

2010 Annual financial review   19

Building on our strengths

World-class assets

We have a large portfolio of low-cost mining operations and geographically diverse uranium assets, and controlling interests in the world’s largest high-grade uranium reserves.

Strong customer relationships

We have large, reliable customers that need uranium regardless of world economic conditions, and we expect the uranium contract portfolio we’ve built to provide a solid revenue stream for years to come.

Uranium price leverage

Our plans to increase our production of uranium, combined with our contracting strategy, are designed to give us increasing leverage when uranium prices go up, and to protect us when prices decline.

Financial strength

We are in a strong financial position to proceed with our growth plans, and the stability of our revenue stream allowed us to announce plans to increase annual dividends again this year, to $0.40 per share starting in 2011.

Disciplined portfolio management

We have a disciplined portfolio management process that incorporates all capital projects into a single capital plan and uses a stage gate decision process (see page 17). This ensures our capital projects are aligned with our strategic objectives, and that business benefits are measurable and attainable.

Focused risk management

We have a formal enterprise-wide risk management process that we apply consistently and systematically across our organization. Risk management is a core element of our strategy and our objectives, and we use it to continuously improve our organization. It will underpin decisions we make as we move ahead with our growth strategy.

Innovation

We are always looking for ways to improve processes, to increase safety and environmental performance, and reduce costs. We are currently working on projects in all aspects of operations, including upgrading the Key Lake and Rabbit Lake mills.

Reputation

We believe strongly in our values and apply them consistently in our operations and business dealings. We are recognized as a reliable supplier and business partner, strong community supporter, international problem solver and employer of choice.

20   cameco corporation

Managing our growth

Our ability to grow is a function of our people, processes, assets and reputation, and the ability to enhance and leverage these strengths to add value and build competitive advantage.

We use four categories to define what we are committed to deliver, and how we will measure our results:

• outstanding financial performance

• a safe, healthy and rewarding workplace

• a clean environment

• supportive communities

We introduced these measures of success in 2002, to proactively address the financial, social and environmental aspects of our business. We believe that each is integral to the company’s overall success and that, together, they will ensure our long-term sustainability.

Focus on long-term sustainability

Companies are under growing scrutiny for the way they conduct their businesses, and there has been a significant increase in stakeholder expectations for environmentally and socially responsible business practices.

Rather than viewing sustainable development as an ‘add-on’ to traditional business activity, we see it as integral to the way we do business, and have made it a strategic priority, integrating it into our objectives and compensation policies.

You can find out more in our sustainable development report and annual information form, which are on our website (cameco.com).

Outstanding financial performance

Our financial results depend heavily on the prices we realize in our uranium and fuel services segments, on the cost of supply, and on sales and production volumes.

Managing contracts

We sell uranium and fuel services directly to nuclear utilities around the world, as uranium concentrates, UO₂, UF₆, conversion services or fuel fabrication.

Uranium is not traded in meaningful quantities on a commodity exchange. Utilities buy the majority of their uranium and fuel services products under long-term contracts with suppliers, and meet the rest of their needs on the spot market.

Our extensive portfolio of long-term sales contracts — and the long-term, trusting relationships we have with our customers — are core strengths for us.

Because we sell large volumes of uranium every year, our net earnings and operating cash flows are affected by changes in the uranium price. Our contracting strategy is to secure a solid base of earnings and cash flow by maintaining a balanced contract portfolio that maximizes our realized price. Market prices are influenced by the fundamentals of supply and demand, geopolitical events, disruptions in planned supply and other market factors. Contract terms usually reflect market conditions at the time the contract is accepted, with deliveries beginning several years in the future.

Our current uranium contracting strategy is to sign contracts with terms of 10 years or more that include mechanisms to protect us when market prices decline, and allow us to benefit when market prices go up. Our portfolio includes a mix of fixed-price and market-related contracts, which we target at a 40:60 ratio. Fixed-price contracts are typically based on the industry long-term price indicator at the time the contract is accepted, adjusted for inflation to the time of delivery. Market-related contracts may be based on either the spot price or the long-term price as quoted at the time of delivery, and often include floor prices adjusted for inflation and some include ceiling prices also adjusted for inflation.

This is a balanced approach that reduces the volatility of our future earnings and cash flow, and that we believe delivers the best value to shareholders over the long term. It is also consistent with the contracting strategy of our

2010 Annual financial review   21

customers. This strategy has allowed us to add increasingly favourable contracts to our portfolio that will enable us to benefit from any increases in market prices in the future.

The majority of our contracts include a supply interruption clause that gives us the right to reduce, on a pro rata basis, defer or cancel deliveries if there is a shortfall in planned production or in deliveries under the Russian HEU commercial agreement.

We are heavily committed under long-term uranium contracts until 2016, so we are becoming increasingly selective when considering new commitments.

The majority of our fuel services contracts are at a fixed price per kgU, adjusted for inflation, and reflect the market at the time the contract is accepted.

Managing our supply

We sell more uranium than we produce every year. We meet our delivery commitments using uranium we obtain:

• from our own production

• by purchasing uranium under both spot and long-term purchase agreements — mostly under the Russian HEU commercial agreement

• from our existing inventory — we target inventories of about six months of forward sales of uranium concentrates and UF₆

We participate in the uranium spot market from time to time, including making spot purchases to take advantage of opportunities to place the material into higher priced contracts. We determine the appropriate extent of our spot market activity based on the current spot price and various factors relating to our business. In addition to being a source of profit, this activity provides insight into the underlying market fundamentals and supports our sales activities.

Managing our costs

Like all mining companies, our uranium segment is affected by the rising price of inputs like labour and fuel. In 2010, labour, production supplies and contracted services made up 85% of the production costs at our uranium mines. Labour (35%) was the largest component. Production supplies (25%) included fuels, reagents and other items. Contracted services (25%) included mining and maintenance contractors, air charters, security and ground freight.

Operating costs in our fuel services segment are mainly fixed. In 2010, labour accounted for about 50% of the total. The largest variable operating cost is for energy (natural gas and electricity), followed by zirconium and anhydrous hydrogen fluoride.

Our costs are also affected by the mix of products we produce and those we buy. We have long-term contracts to buy uranium and conversion services at fixed prices that are lower than the current published spot and long-term prices. As noted above, we also buy on the spot market, which, while profitable, can be at prices that are much higher than our other sources of supply.

To help us operate efficiently and cost-effectively as we grow, we manage operating costs and improve plant reliability by prudently investing in production infrastructure, new technology and business process improvements.

22   cameco corporation

A safe, healthy and rewarding workplace

We strive to foster a safe, healthy and rewarding workplace at all of our facilities, and measure progress against key indicators, such as conventional and radiation safety statistics, employee sentiment toward the company and employment creation.

To achieve our growth objectives, we need to build an engaged, qualified and diverse organization capable of leading and implementing our strategies. Our challenge is to retain our current workforce and compete for the limited number of people available, both to replace retiring employees and to support our growth. Our long-term people strategy includes identifying critical segments and planning our workforce to meet this challenge.

Our approach seems to be working: we were included in the Financial Post’s Top 10 Best Companies to Work For in Canada for 2010 for our employee policies, programs and role in the community, and Mediacorp named us one of Canada’s Top 100 Employers for both 2010 and 2011. You can find out more about our awards on our website.

A clean environment

We are committed to operating our business with respect and care for the local and global environment. We strive to be a leader in environmental practices and performance by complying with and moving beyond legal and other requirements.

We are committed to integrating environmental leadership into everything we do. In 2005, we launched a formal environmental leadership initiative, and set objectives and performance indicators to measure our progress in protecting the air, water and land near our operations, and in reducing the amount of waste we generate and energy we use.

Reducing our impact

We have been working to reduce the impact we have on the environment. This includes monitoring and reducing our effect on air, water and land, reducing the greenhouse gases we produce and the amount of energy we consume, and managing the effects of waste.

We are investing in management systems and safety initiatives to achieve operational excellence, and this is improving our safety and environmental performance and operating efficiency.

We have developed new water treatment technologies that have improved the quality of the water released from our Saskatchewan uranium milling operations, and are working on other projects to reduce waste, improve the reclamation process and manage waste rock more effectively.

We have also completed an energy assessment at each of our North American operations, and developed management plans for reducing our energy intensity and greenhouse gas emissions.

We are maximizing the lifespan of our operating sites to limit the environmental impact of operations, and revitalizing the Key Lake mill (in operation for 28 years) and Rabbit Lake mill (in operation for 36 years).

Like other large industrial organizations, we use chemicals in our operations that could be hazardous to our health and the environment if they are not handled correctly. We train our employees in the proper use of hazardous substances and in emergency response techniques.

We meet with communities who are affected by our activities to tell them what we’re doing and to receive feedback and further input. For example, in Saskatchewan, we participate in the Athabasca Working Group and Northern Saskatchewan Environmental Quality Committee. In Ontario, we liaise with our communities by regularly holding educational and environment-focused activities.

2010 Annual financial review   23

Supportive communities

To maintain public support for our operations (our social licence to operate) and our global reputation, we need the respect and support of communities, indigenous people, governments and regulators affected by our operations.

We build and sustain the trust of local communities by being a leader in corporate social responsibility (CSR). Through our CSR initiatives, we educate, engage, employ and invest in the people in the regions where we operate.

For example, in northern Saskatchewan in 2010:

• 50% of the employees at our mines were local residents

• 78% of services to our northern minesites — approximately $295 million — went to northern businesses

• we engaged in project discussions with communities impacted by our operations and exploration activities, making 120 community visits to give them information and garner grassroots support early in the process

• we donated over $2.5 million to northern and aboriginal initiatives for youth, health and wellness, education and literacy, and culture and recreation

• provided $100,000 in scholarships to post-secondary students

Our operations are closely regulated to give the public comfort that we are operating in a safe and environmentally responsible way. Regulators approve the construction, startup, continued operation and any significant changes to our operations. Our operations are also subject to laws and regulations related to safety and the environment, including the management of hazardous wastes and materials.

Our objectives are consistent with those of our regulators — to keep people safe and to protect the environment. We pursue these goals through open and co-operative relationships with all of our regulators. We work to earn their trust and that of other stakeholders by continually striving to protect people and the environment.

24   cameco corporation

Measuring our results

We set corporate, business unit and departmental objectives every year under our four measures of success, and these become the foundation for a portion of annual employee compensation.

		2011 objectives
		This is forward-looking information.
2010 objectives	Results	See page 1 for more information.
Outstanding financial performance
Production	Exceeded	Production
•  Produce 21.5 million pounds of U3O8 and between 14 million and 16 million kgU from fuel services.	•  Our share of U3O8 production was 22.8 million pounds, or 106% of plan. •  We produced 15.4 million kgU at fuel services.	•  Produce 21.9 million pounds of U3O8 and between 15 million and 16 million kgU from fuel services.
Financial measures
Corporate performance	Exceeded	Corporate performance
•  Achieve budgeted net earnings and cash flow from operations (before working capital changes). Costs •  Strive for unit costs below budget.	•  Net earnings were higher than budget. •  Cash flow from operations before working capital changes was higher than budget. •  Unit costs for uranium production and fuel services were below budget.	•  Achieve budgeted net earnings and cash flow from operations (before working capital changes). Costs •  Strive for unit costs below budget.
Growth
Cigar Lake	Exceeded	Cigar Lake
•  Access and secure underground workings and continue with remediation work on schedule. Reinitiate shaft 2 development. •  Update the technical report.	•  Successfully dewatered and re-entered the mine using innovative technology. •  Resumed shaft 2 development. •  Issued technical report.	•  Advance the project towards mid-2013 startup by completing remediation of all underground workings and advancing shaft 2 sinking.
Inkai	Partially achieved	Inkai
•  Advance Inkai block 3 delineation and begin a feasibility study. Initiate a feasibility study to increase production at Inkai blocks 1 and 2, and secure necessary regulatory approvals.	•  Block 3 delineation was advanced and supported initiation of a 5-year resource appraisal work plan and test leach facility required by the Kazakh authorities. Approval in principle to operate blocks 1 and 2 at 3.9 million pounds per annum (100% basis) was received, but not for design capacity of 5.2 million pounds per annum.	•  Advance block 3 mineral resource delineation and the engineering design of a test leach facility. Advance construction of site infrastructure. •  Receive approval to increase annual production from blocks 1 and 2 to design capacity of 5.2 million pounds per annum (100% basis). Pursue our longer term objective of receiving approval to double annual production from blocks 1 and 2 by advancing the conversion joint venture project with Kazatomprom.

2010 Annual financial review   25

2010 objectives	Results	2011 objectives
Outstanding financial performance
Growth (continued)
Kintyre	Achieved	Kintyre
•  Advance project evaluation to allow a production decision as soon as possible.	•  Completed delineation drilling and core logging. •  Made progress on environmental baseline studies, supporting submission of an environmental scoping document to the Australian regulator.	•  Continue to advance project evaluation to allow a production decision as soon as possible.
Exploration and innovation	Exceeded	Exploration and innovation
•  Replace mineral reserves and resources at the rate of annual U3O8 production based on a three-year rolling average. •  Continue to advance extension of McArthur River and the Millennium project to provide future sources of production. •  Support production growth and improved operating efficiencies through targeted research, development and technological innovation.	•  Additions to reserves and resources exceeded production by an average of 8 million pounds per year in each of the last three years (2008 to 2010). •  The McArthur River extension project and the Millennium project were advanced through the stage gate process. •  Cameco’s Research Centre advanced a number of projects aimed at improving our environmental performance and process efficiencies at our operations.	•  Replace mineral reserves and resources at the rate of annual U3O8 production based on a three-year rolling average. •  Support production growth and improved operating efficiencies through targeted research, development and technological innovation. McArthur River extension •  Advance the underground exploration drifts to the north of current mining areas and initiate a feasibility study. Millennium •  Continue to advance the Millennium project toward a project decision.
Management	Achieved	Management
•  Continue integrating portfolio management into our management, planning and budgeting processes. •  Deliver planned capital projects within 10% of budget.	•  Portfolio management is now fully integrated into the planning and budgeting process. •  Capital projects were delivered within 10% of budget.	•  Sustain and grow production in accordance with our strategy to double uranium production by 2018 by advancing pipeline uranium projects through the stage gate process. •  Deliver planned capital projects within 10% of budget.
Safe, healthy and rewarding workplace
•  Strive for no lost-time injuries at all Cameco-operated sites and, at a minimum, maintain a long-term downward trend in combined employee and contractor injury frequency and severity, and radiation doses. •  Develop a formal implementation plan for the risk standard and begin implementation.	Exceeded •  Overall, exceptionally strong safety performance in 2010. •  Lost-time incident frequency for employees and contractors was 0.24 per 200,000 hours worked compared to a target of 0.5 — the best performance in Cameco’s history. Medical aid frequency and severity were also significantly better than target. Achieved •  All operations met or exceeded their 2010 implementation milestones.	•  Strive for no lost-time injuries at all Cameco-operated sites and, at a minimum, maintain a long-term downward trend in combined employee and contractor injury frequency and severity, and radiation doses. •  Complete implementation of the risk standard and integrate it into our quality management system. Adopt a risk policy and implement improvements to the risk governance structure at the management and board level.

26   cameco corporation

2010 objectives	Results	2011 objectives
Clean environment
•  Strive for zero reportable environmental incidents, reduce the frequency of incidents and have no significant incidents at Cameco-operated sites.	Achieved •  There were 22 reportable environmental incidents, an improvement over 2009 (28 incidents), and below our long-term average of 30. There were no significant environmental incidents.	•  Strive for zero reportable environmental incidents, reduce the frequency of incidents and have no significant incidents at Cameco-operated sites. •  Improve year-over-year performance in corporate environmental leadership indicators.
•  Improve year-over-year performance in corporate environmental leadership indicators.	Achieved •  Five out of eight key performance indicators showed an improvement relative to 2009.
Supportive communities
•  Build awareness and support for Cameco through community investment, business development programs and public relations.	Achieved •  We received positive feedback from our annual polls in Port Hope and Saskatchewan. •  We were named one of Canada’s Top 100 employers, and one of the top 10 companies to work for in Canada.	•  Develop long-term relationships by engaging with stakeholders important to our sustainability. •  Ensure support from our employees, impacted communities, investors, governments and the general public through communications, community investment and business development.
•  Advance our projects by securing support from indigenous communities affected by our operations.	Achieved •  Established and maintained positive relationships with groups impacted by our various operating activities.

2010 Annual financial review   27

Financial results

This section of our MD&A discusses our performance, financial condition and outlook for the future.

2010 consolidated financial results	29
Outlook for 2011	35
Liquidity and capital resources	36
2010 financial results by segment	42
Uranium	42
Fuel services	45
Electricity	46
Fourth quarter results	48
Fourth quarter consolidated results	48
Quarterly trends	49
Fourth quarter results by segment	50

28   cameco corporation

2010 consolidated financial results

In 2009, we sold all of our shares of Centerra.

We have recast our consolidated financial results for 2008 and 2009 for comparison to show the impact of Centerra as a discontinued operation, as required under Canadian GAAP. The change affected a number of financial measures, including revenue, gross profit, administration costs and income tax expense. See note 24 to the financial statements for more information.

Highlights							change from
December 31 ($ millions except per share amounts)	2010		2009		2008		2009 to 2010
Revenue		2,124		2,315		2,183		(8	)%
Gross profit		744		750		829		(1	)%
Net earnings		515		1,099		450		(53	)%
$  per common share (basic)		1.31		2.83		1.29		(54	)%
$  per common share (diluted)		1.30		2.82		1.28		(54	)%
Adjusted net earnings (non-GAAP, see below)		496		528		525		(6	)%
$  per common share (adjusted and diluted)		1.25		1.35		1.49		(7	)%
Cash provided by operations (after working capital changes)		507		690		530		(27	)%

Net earnings

Our net earnings were $584 million lower than last year primarily as a result of:

• selling our interest in Centerra and recording an after tax gain of $374 million in 2009

• recording an after tax profit of $19 million relating to unrealized mark-to-market gains on financial instruments, compared to a gain of $189 million in 2009

• lower earnings in our electricity business due to a decline in realized prices

• higher exploration expenses, which rose by $47 million mainly due to evaluation activities at Kintyre and Inkai block 3

Three-year trend

Our net earnings normally trend with revenue, but in recent years have been significantly influenced by unusual items.

In 2008, we stopped applying hedge accounting to our portfolio of foreign exchange contracts and, due to the decline in the Canadian dollar relative to the US dollar, recorded $148 million in unrealized mark-to-market losses. We also recorded $30 million in charges to reduce the carrying value of certain investments.

In 2009, we sold our interest in Centerra and recorded a net gain of $374 million. We also recorded $244 million in unrealized mark-to-market pretax gains on our foreign exchange contracts.

Adjusted net earnings (non-GAAP measure)

We use adjusted net earnings, a non-GAAP measure, as a more meaningful way to compare our financial performance from period to period. Adjusted net earnings is our GAAP-based net earnings, adjusted for earnings from discontinued operations and unrealized mark-to-market gains and losses on our financial instruments, which we believe do not reflect underlying performance.

2010 Annual financial review    29

Adjusted net earnings is non-standard supplemental information, and not a substitute for financial information prepared in accordance with GAAP. Other companies may calculate this measure differently. The table below reconciles adjusted net earnings with our net earnings.

($ millions)	2010			2009			2008
Net earnings (GAAP measure)		515			1,099			450
Adjustments (after tax)
Earnings from discontinued operations		—			(382	)1		(84	)1
Unrealized gains on financial instruments		(19	)		(189	)		166
Stock option expense (recovery)		—			—			(33	)
Investment writedowns		—			—			26
Adjusted net earnings (non-GAAP measure)		496			528			525

¹ We have changed our method for determining adjusted earnings to exclude all amounts related to our investment in Centerra. Previously, we had included our share of operating income from Centerra in our adjusted earnings measure.

The table below shows what contributed to the change in adjusted net earnings for 2010.

($ millions)
Adjusted net earnings — 2009		528
Change in gross profit by segment (we calculate gross profit by deducting from revenue the cost of products and services sold, and depreciation, depletion and reclamation (DDR))
Uranium	Lower sales volume	(62	)
	Higher realized prices ($US)	188
	Foreign exchange impact on realized prices	(168	)
	Lower costs	57
	change — uranium	15
Fuel services	Higher sales volume	7
	Lower realized prices ($Cdn)	(17	)
	Lower costs	20
	change — fuel services	10
Electricity	Higher sales volume	13
	Lower realized prices ($Cdn)	(70	)
	Lower costs	16
	change — electricity	(41	)
Other changes
Exploration expense		(47	)
Administration expense		(20	)
Realized gains on derivatives & foreign exchange		33
Reduced losses from associated companies		26
Interest expense		13
Income taxes		(35	)
Miscellaneous		14
Adjusted net earnings — 2010		496

30    cameco corporation

Three-year trend

Our adjusted net earnings have been relatively stable over the past three years.

The 1% increase from 2008 to 2009 resulted from:

• higher profits from our electricity business, relating to a higher realized selling price

• partially offset by lower profits in our uranium business, which were impacted by higher unit costs

The 6% decrease from 2009 to 2010 resulted from:

• lower profits from our electricity business, relating to a lower realized selling price

• higher exploration expenses

• higher income taxes

• partially offset by improved profits in the uranium business, relating to the lower cost of sales

Revenue

The table below shows what contributed to the change in revenue this year.

($ millions)
Revenue — 2009	2,315
Uranium
Lower sales volume	(191	)
Higher realized prices ($Cdn)	20
Fuel services
Higher sales volume	38
Lower realized prices ($Cdn)	(17	)
Electricity
Higher sales volume	29
Lower realized prices ($Cdn)	(70	)
Revenue — 2010	2,124

See Financial results by segment for more detailed discussion.

Three-year trend

In 2009, revenue rose by $0.1 billion to a record $2.3 billion, due to higher realized prices in all business segments. The most significant increase was in the electricity business, where the price rose to $64/MWh from $57/MWh in 2008.

In 2010, revenue declined by 8% to $2.1 billion due largely to reduced sales volumes in the uranium business and a lower realized price in electricity. The decline in sales volumes was matched with an increase in inventories.

Average realized prices

								change from
		2010		2009		2008		2009 to 2010
Uranium1	$US/lb		43.63		38.25		39.52		14	%
	$Cdn/lb		45.81		45.12		43.91		2	%
Fuel services	$Cdn/kgU		16.86		17.84		15.85		(5	)%
Electricity	$Cdn/MWh		58		64		57		(9	)%

¹ Average realized foreign exchange rate ($US/$Cdn): 2010 — $1.05, 2009 — $1.18 and 2008 — $1.11.

2010 Annual financial review    31

Outlook for 2011

We expect consolidated revenue to be 10% to 15% higher in 2011 due to:

• higher sales volumes in the uranium and fuel services businesses

• increases in realized prices in the uranium and fuel services businesses

• partially offset by lower realized prices for electricity

Our customers choose when in the year to receive deliveries of uranium and fuel services products, so our quarterly delivery patterns, and therefore our sales volumes and revenue, can vary significantly. We expect the trend in delivery patterns in 2011 to be somewhat different than in 2010, with deliveries heavily weighted to the second half of the year. We expect the fourth quarter to account for about one-third of our 2011 sales volumes.

Corporate expenses

Administration

($ millions)	2010		2009		change
Direct administration		141		122		16	%
Stock-based compensation		15		14		7	%
Total administration		156		136		15	%

Direct administration costs in 2010 were $19 million (16%) higher than in 2009 as we continued to pursue and evaluate growth opportunities. The increase is largely related to increased hiring and analysis of business opportunities to achieve our growth plans. These costs were lower than we forecast as we narrowed the scope of some business development activities during the year.

We recorded $15 million in stock-based compensation expenses this year under our stock option, deferred share unit, performance share unit and phantom stock option plans, compared to $14 million in 2009. See note 22 to the financial statements.

Outlook for 2011

We expect administration costs (not including stock-based compensation) to be about 15% to 20% higher than in 2010 due to planned higher spending in support of our growth strategy.

Exploration

In 2010, uranium exploration expenses were $96 million compared to $49 million in 2009. The increase in 2010 largely reflects the increase in evaluation activities at the Kintyre and Inkai block 3 projects in Australia and Kazakhstan. Our exploration efforts in 2010 focused on Canada, the United States, Mongolia, Kazakhstan, Australia and South America.

Outlook for 2011

We expect exploration expenses to be about 5% to 10% lower than they were in 2010 due to a reduction in evaluation activities at the Kintyre project as we near the completion of the prefeasibility stage. See Our operations —Uranium exploration for more information.

Interest and other charges

Interest and other charges were $16 million higher than last year mainly as a result of recording $7 million in foreign exchange losses compared to gains of $21 million in 2009, partially offset by a $7 million increase in interest income attributable to higher cash balances. Gross interest charges this year were $10 million higher than last year attributable to our higher average debt level. See note 15 to the financial statements.

32    cameco corporation

Gains and losses on derivatives

In 2010, we recorded $75 million in mark-to-market gains on our financial instruments compared to gains of $244 million in 2009. Unrealized gains on financial instruments were lower in 2010 than 2009 as the Canadian dollar continued to strengthen against the US dollar, but to a lesser degree. We voluntarily removed the hedging designation on our foreign currency forward sales contracts effective August 1, 2008, and have since recognized unrealized mark-to-market gains and losses in earnings. See note 26 to the financial statements.

Income taxes

We recorded an income tax expense of $27 million in 2010 compared to $53 million in 2009. This was mainly due to a $235 million decrease in pretax earnings in 2010, which was largely attributable to the decline of $169 million in gains on derivatives.

On an adjusted net earnings basis, our effective tax rate in 2010 was 4%, or 7% higher than 2009 as:

• A higher proportion of taxable income was earned in jurisdictions with higher tax rates.

• In 2009, certain future tax liabilities recognized in prior years were reduced.

• In 2009, the statutory income tax rate in Canada was reduced, allowing us to reduce our provision for future income taxes.

On an adjusted net earnings basis, our tax expense was $20 million in 2010, compared to a recovery of $15 million in 2009.

Since 2008, Canada Revenue Agency (CRA) has disputed the transfer pricing methodology we used for certain uranium sale and purchase agreements and issued notices of reassessment for our 2003, 2004 and 2005 tax returns. We believe it is likely that CRA will reassess our tax returns for 2006 through 2010 on a similar basis. Our view is that CRA is incorrect, and we are contesting its position. In July 2009, we filed a Notice of Appeal relating to the 2003 reassessment with the Tax Court of Canada. In November 2010, we filed a Notice of Appeal relating to the 2004 reassessment with the Tax Court of Canada. We intend to object to the 2005 reassessment and pursue our appeal rights under the Income Tax Act. However, to reflect the uncertainties of CRA’s appeals process and litigation, we have provided $27 million for uncertain tax positions for the years 2003 through 2010. We believe that the ultimate resolution of this matter will not be material to our financial position, results of operations or liquidity over the period. However, an unfavourable outcome for the years 2003 to 2010 could be material to our financial position, results of operations or cash flows in the year(s) of resolution. See note 18 to the financial statements.

Outlook for 2011

On an adjusted net earnings basis, we expect our effective income tax rate will reflect a recovery of 0% to 5% as taxable income in Canada is expected to decline.

Foreign exchange

The exchange rate between the Canadian dollar and US dollar affects the financial results of our uranium and fuel services segments.

Sales of uranium and fuel services are routinely denominated in US dollars while production costs are largely denominated in Canadian dollars. We use planned hedging to try to protect net inflows (total uranium and fuel services sales less US dollar cash expenses and product purchases) from the uranium and fuel services segments against declines in the US dollar in the shorter term. Our strategy is to hedge net inflows over a rolling 60-month period. Our target for the first 12 months is to hedge 35% to 100% of net inflows. The target range declines every year until it reaches 0% to 10% of our net inflows (from 48 and 60 months).

We also have a natural hedge against US currency fluctuations as a portion of our annual cash outlays, including purchases of uranium and fuel services, is denominated in US dollars. The earnings impact of this natural hedge is more difficult to identify because inventory includes material added over more than one fiscal period.

2010 Annual financial review    33

At December 31, 2010:

• The value of the US dollar relative to the Canadian dollar was $1.00 (US) for $0.99 (Cdn), down from $1.00 (US) for $1.05 (Cdn) at December 31, 2009. The exchange rate averaged $1.00 (US) for $1.03 (Cdn) over the year.

• Our effective exchange rate for the year, after allowing for hedging, was about $1.00 (US) for $1.05 (Cdn), compared to $1.00 (US) for $1.18 (Cdn) in 2009.

• We had foreign currency contracts of $1.3 billion (US) and EUR 93 million at December 31, 2010. The US currency contracts had an average exchange rate of $1.00 (US) for $1.03 (Cdn).

• The mark-to-market gain on all foreign exchange contracts was $47 million compared to a $67 million gain at December 31, 2009.

Timing differences between the maturity dates and designation dates on previously closed hedge contracts can result in deferred gains or charges. At December 31, 2010, we had net deferred gains of $6 million which will be recognized in earnings in 2011.

We manage counterparty risk associated with hedging by dealing with highly rated counterparties and limiting our exposure. At December 31, 2010, all counterparties to foreign exchange hedging contracts had a Standard & Poor’s (S&P) credit rating of A or better.

Sensitivity analysis

At December 31, 2010, every one-cent change in the value of the Canadian dollar versus the US dollar would change our 2010 net earnings by about $9 million (Cdn). This sensitivity is based on an exchange rate of $1.00 (US) for $0.99 (Cdn).

34    cameco corporation

Outlook for 2011

Over the next several years, we expect to invest significantly in expanding production at existing mines and advancing projects as we pursue our growth strategy. The projects are at various stages of development, from exploration and evaluation to construction.

We expect our existing cash balances and operating cash flows will meet our anticipated capital requirements without the need for significant additional funding. Cash balances will decline gradually as we use the funds in our business and pursue our growth plans.

Our outlook for 2011 reflects the growth expenditures necessary to help us achieve our strategy. We do not provide an outlook for the items in the table that are marked with a dash.

See Financial results by segment for details.

2011 Financial outlook¹

	Consolidated	Uranium	Fuel services	Electricity
Production	—	21.9 million lbs	15 to 16 million kgU	—
Sales volume	—	31 to 33 million lbs	Increase 10% to 15%	—
Capacity factor	—	—	—	89%
Revenue compared to 2010	Increase 10% to 15%	Increase 15% to 20%2	Increase 5% to 10%	Decrease 10% to 15%
Unit cost of product sold (including DDR)	—	Increase 0% to 5%3	Increase 2% to 5%	Increase 10% to 15%
Direct administration costs compared to 20104	Increase 15% to 20%	—	—	—
Exploration costs compared to 2010	—	Decrease 5% to 10%	—	—
Tax rate	Recovery of 0% to 5%	—	—	—
Capital expenditures	$575 million5	—	—	$80 million

1	Commencing January 1, 2011, we will be reporting our financial results in accordance with IFRS. The information in our 2011 financial outlook has been prepared in accordance with IFRS and our policy choices thereunder to date. A discussion about our transition to IFRS begins on page 91.
2	Based on a uranium spot price of $73.00 (US) per pound (the Ux spot price as of February 7, 2011), a long-term price indicator of $73.00 (US) per pound (the Ux long-term indicator on January 31, 2011) and an exchange rate of $1.00 (US) for $1.00 (Cdn).
3	This increase is based on the unit cost of sale for produced material. If we decide to make discretionary purchases in 2011 then we expect the overall unit cost of product sold to increase further.
4	Direct administration costs do not include stock-based compensation expenses. See page 32 for more information.
5	Does not include our share of capital expenditures at BPLP.

Sensitivity analysis

For 2011:

• a change of $5 (US) per pound in each of the Ux spot price ($73.00 (US) per pound on February 7, 2011) and the Ux long-term price indicator ($73.00 (US) per pound on January 31, 2011) would change revenue by $34 million and net earnings by $26 million.

• a change of $5 in the electricity spot price would change our 2011 net earnings by $2 million, based on the assumption that the spot price will remain below the floor price provided for under BPLP’s agreement with the Ontario Power Authority (OPA).

2010 Annual financial review    35

Liquidity and capital resources

At the end of 2010, we had cash and short-term investments of $1.3 billion in a mix of short-term deposits and treasury bills, while our total debt amounted to $1 billion. We were in a similar position at the end of 2009.

We have large, reliable customers that need uranium regardless of world economic conditions, and we expect the uranium contract portfolio we’ve built to provide a solid revenue stream for years to come.

Our financial objective is to make sure we have the cash and debt capacity to fund our operating activities, investments, and growth. We have several alternatives to fund future capital needs, including our significant cash position, credit facilities, future operating cash flow and debt or equity financing, and are continually evaluating these options to make sure we have the best mix of capital resources to meet our needs.

Our strong financial position gives us the flexibility to fund longer term requirements until the balance accumulates to the point where it makes sense to refinance in the capital markets.

Financial condition

	2010		2009
Cash position ($ millions) (cash, cash equivalents, short-term investments)		1,260		1,304
Cash provided by operations ($ millions) (net cash flow generated by our operating activities after changes in working capital)		507		690
Cash provided by operations/net debt (net debt is total consolidated debt, less cash and cash equivalents)		n/a		n/a
Net debt/total capitalization (total capitalization is total long-term debt and equity)		n/a		n/a

Credit ratings

Third-party ratings for our commercial paper and senior debt as of December 31, 2010:

Security	DBRS	S&P
Commercial paper	R-1 (low)	A-1 (low)1
Senior unsecured debentures	A (low)	BBB+

¹ Canadian National Scale Rating. The Global Scale Rating is A-2.

36    cameco corporation

Liquidity

($ millions)	2010			2009
Cash and cash equivalents at beginning of year		1,304			64
Cash from operations		507			690
Investment activities
Additions to property, plant and equipment		(470	)		(393	)
Dispositions		—			871
Acquisitions		—			—
Other investing activities		11			(36	)
Financing activities
Change in debt		(10	)		(231	)
Issue of shares		18			442
Dividends		(106	)		(93	)
Other financing activities		10			—
Exchange rate on changes on foreign currency cash balances		(4	)		(10	)
Cash and short-term investments at end of year		1,260			1,304

Cash from operations

Cash from operations was 27% lower than in 2009 mainly due to higher working capital requirements relating to increased inventory levels and a reduction in accounts payable. Not including working capital requirements, our operating cash flows in the year were up $2 million. See note 19 to the financial statements.

Investing activities

Cash used in investing includes acquisitions and capital spending.

Acquisitions and divestitures

In 2010, we concluded no significant acquisitions or divestitures. In 2009, we sold our interest in Centerra for net proceeds of $871 million. We concluded no significant acquisitions in 2009.

Talvivaara Agreement

On February 7, 2011, we signed two agreements with Talvivaara Mining Company Plc (Talvivaara) to buy uranium produced at the Sotkamo nickel-zinc mine in eastern Finland. Under the first agreement with Talvivaara, we will provide an up-front payment, to a maximum of $60 million (US), to cover certain construction costs. This amount will be repaid through the initial deliveries of uranium concentrates. Once the full amount has repaid, we will continue to purchase the uranium concentrates produced at the Sotkamo mine through a second agreement, which provides for the purchase of uranium using a pricing formula that references market prices at the time of delivery. The second agreement expires on December 31, 2027.

2010 Annual financial review    37

Capital spending

We classify capital spending as growth or sustaining. Growth capital is money we invest to generate incremental production, and for business development. Sustaining capital is the money we spend to keep our operations at current production levels.

(Cameco’s share in $ millions)	2010 plan			2010 actual		2011 plan
Growth capital
Cigar Lake		111			90		176
Inkai		4			5		9
McArthur River		—			—		14
Millennium		—			—		6
US ISR		—			—		13
Total growth capital		115			95		218
Sustaining capital
McArthur River/Key Lake		220			165		169
US ISR		53			45		38
Rabbit Lake		56			49		85
Inkai		18			5		19
Fuel services		29			20		32
Other		9			8		14
Total sustaining capital		385			292		357
Capitalized interest		52			48		—
Total uranium & fuel services		552	1		435		575
Electricity (our 31.6% share of BPLP)		41			35		80

¹ We updated our 2010 capital cost estimate in the Q2 MD&A to $510 million and in the Q3 MD&A to $475 million.

Capital expenditures were 21% below our 2010 plan mainly as a result of reduced activity at our Saskatchewan uranium operations. We do not expect this reduction in capital expenditures in 2010 will impact our plans to double annual uranium production by 2018. The variance at Cigar Lake was due mainly to the cleanup and remediation of the underground workings taking longer than originally expected and the revision to project schedules as a result of the decision to proceed with surface freezing. The variance at McArthur River was due mainly to a change in the mine development plans and postponement of some capital projects that were not critical to production. The variance at Key Lake was mainly a result of delays in the construction of the acid and oxygen plants and deferring some of the other Key Lake revitalization projects.

Outlook for investing activities

We expect total capital expenditures for uranium and fuel services to be 32% higher in 2011, as a result of higher spending for:

• growth capital at Cigar Lake

• sustaining capital at Rabbit Lake

Major sustaining expenditures in 2011 include:

• McArthur River/Key Lake — At McArthur River, the largest component is mine development at about $50 million. Other projects include site facility expansion and equipment purchases. At Key Lake, construction of the new acid, steam and oxygen plants continues at an estimated cost of $30 million. Additional work to revitalize the mill will also be undertaken, as well as work on the tailings facilities.

• US in situ recovery (ISR) — Wellfield construction and well installation is the largest project at approximately $25 million. We also plan to work on the development of the Gas Hills and North Butte projects.

38    cameco corporation

• Rabbit Lake — At Eagle Point, the largest project includes mine development at about $20 million. Other projects include dewatering systems, continued work on mine ventilation expansion and replacement of components of the acid plant estimated at $24 million.

For the next several years, we expect our capital expenditures will be similar to 2011.

Financing activities

Cash from financing includes borrowing and repaying debt, and other financial transactions including paying dividends and providing financial assurance. In the fourth quarter, we renewed a $100 million revolving credit facility until February 2012.

As a result of our significant cash balance, there was little in the way of financing activities in 2010.

2009 was a very active year for us. We carried out six separate transactions to build on our already strong financial position, and to support our corporate strategy:

• We issued approximately 26.7 million common shares, netting $440 million, and put in place or renewed $600 million in revolving lines of credit.

• We issued 10-year debentures bearing interest at a rate of 5.67%, netting $495 million. At the same time, we cancelled a $500 million revolving credit facility that was to mature in June 2010.

• We renewed a $100 million revolving credit facility until February 2011, and sold our interest in Centerra, netting $871 million.

Long-term contractual obligations

December 31, 2010			2012		2014
($ millions)	2011		and 2013		and 2015		2016 and beyond		Total
Long-term debt		13		31		337		572		953
Interest on long-term debt		53		105		96		113		367
Provision for reclamation		14		23		22		406		465
Provision for waste disposal		1		2		2		33		38
Other liabilities		—		—		—		374		374
Total		81		161		457		1,498		2,197

We now have unsecured lines of credit of about $1.2 billion, which include the following:

• A $500 million, unsecured revolving credit facility that matures November 30, 2012. In addition to borrowing directly from this facility, we can use up to $100 million of it to issue letters of credit, and we keep up to $400 million available to provide liquidity for our commercial paper program, as necessary. The facility ranks equally with all of our other senior debt. At December 31, 2010, there was nothing outstanding under this credit facility, and nothing outstanding under our commercial paper program.

• A $100 million, unsecured revolving credit facility that matures on February 4, 2012. At December 31, 2010, there was nothing outstanding under this credit facility.

• Approximately $600 million in short-term borrowing and letters of credit provided by various financial institutions. We use these facilities mainly to provide financial assurance for future decommissioning and reclamation of our operating sites, and as overdraft protection. At December 31, 2010, we had approximately $550 million outstanding in letters of credit.

We have $800 million in senior unsecured debentures:

• $300 million bearing interest at 4.7% per year, maturing on September 16, 2015

• $500 million bearing interest at 5.67% per year, maturing on September 2, 2019

We have issued a $73 million (US) promissory note to GLE to support future development of its business. We do not expect any amounts to be drawn on this note until 2012.

2010 Annual financial review     39

Debt covenants

Our revolving credit facilities include the following financial covenants:

• our funded debt to tangible net worth ratio must be 1:1 or less

• our tangible net worth must be more than $1.25 billion

• other customary covenants and events of default

Funded debt is total consolidated debt less the following: non-recourse debt, $100 million in letters of credit, cash and short-term investments.

Not complying with any of these covenants could result in accelerated payment and termination of our revolving credit facilities. At December 31, 2010, we complied with all covenants, and we expect to continue to comply in 2011.

Off-balance sheet arrangements

We had two kinds of off-balance sheet arrangements at the end of 2010:

• purchase commitments

• financial assurances

Purchase commitments

December 31, 2010			2012		2014
($ millions)	2011		and 2013		and 2015		2016 and beyond		Total
Purchase commitments1		266		620		173		6		1,065

¹ Denominated in US dollars, converted to Canadian dollars as of December 31, 2010 at the rate of $0.99.

Most of these are commitments to buy uranium and fuel services products under long-term, fixed-price arrangements.

At the end of 2010, we had committed to $1.1 billion (Cdn) for the following:

• About 27 million pounds U₃O₈ equivalent from 2011 to 2014. Of these, about 23 million pounds are from our agreement with Techsnabexport Joint Stock Company (Tenex) to buy uranium from dismantled Russian weapons (the Russian HEU commercial agreement) through 2013.

• Over 36 million kgU as UF₆ in conversion services from 2011 to 2016 primarily under our agreements with Springfields Fuels Ltd. (SFL) and Tenex.

• Almost 1.1 million Separative Work Units (SWU) of enrichment services to meet existing forward sales commitments under agreements with a non-western supplier.

Non-delivery by Tenex or SFL under their agreements could have a material adverse effect on our financial condition, liquidity and results of operations.

Tenex, SFL and the SWU supplier do not have the right to terminate their agreements other than pursuant to customary event of default provisions.

40    cameco corporation

Financial assurances

December 31
($ millions)	2010		2009		change
Standby letters of credit		550		592		(7	)%
BPLP guarantees		82		87		(6	)%
Total		632		679		(7	)%

Standby letters of credit mainly provide financial assurance for the decommissioning and reclamation of our mining and conversion facilities. We are required to provide letters of credit to various regulatory agencies until decommissioning and reclamation activities are complete. Letters of credit are issued by financial institutions for a one-year term.

Our total commitment for financial guarantees on behalf of BPLP was an estimated $94 million at the end of the year. See note 25 to the financial statements.

Balance sheet

December 31							change from
($ millions except per share amounts)	2010		2009		2008		2009 to 2010
Inventory		543		453		398		20	%
Total assets		7,671		7,394		7,011		4	%
Long-term financial liabilities		1,465		1,471		1,800		(1	)%
Dividends per common share		0.28		0.24		0.24		17	%

Total product inventories increased by 20% to $543 million this year due to higher levels of inventory for uranium, where the quantities produced and purchased exceeded sales for the year. The average cost of uranium was lower as a result of fewer purchases at near-market prices.

At the end of 2010, our total assets amounted to $7.7 billion, an increase of $0.3 billion compared to 2009 due primarily to a higher rate of investment in property, plant and equipment. In 2009, the total asset balance increased by $0.4 billion, largely attributable to a higher cash balance.

The major components of long-term financial liabilities are long-term debt, future income taxes and the provision for reclamation. In 2010, our balance was similar to that of the prior year. In 2009, our balance declined by $0.3 billion primarily due to the repayment of debt during the year.

2010 Annual financial review     41

2010 financial results by segment

Uranium

Highlights	2010		2009		change
Production volume (million lbs)		22.8		20.8		10	%
Sales volume (million lbs)		29.6		33.9		(13	)%
Average spot price ($US/lb)		46.83		46.06		2	%
Average realized price
($US/lb)		43.63		38.25		14	%
($Cdn/lb)		45.81		45.12		2	%
Average unit cost of sales ($Cdn/lb U3O8) (including DDR)		28.40		30.59		(7	)%
Revenue ($ millions)		1,374		1,551		(11	)%
Gross profit ($ millions)		503		488		3	%
Gross profit (%)		37		31		19	%

Production volumes in 2010 were 10% higher than 2009 due to higher production at McArthur River/Key Lake and the continued rampup of production at Inkai.

Uranium revenues this year were down 11% compared to 2009, due to a 13% decline in sales volumes.

Sales volumes in 2010 were 13% lower than 2009 due to some customers deferring deliveries under contracts until 2011. In addition, given the discretionary nature of spot market demand and the low level of spot market prices during the first three quarters of 2010, we intentionally reduced our spot market sales for the year.

Our realized prices this year in US dollars were 14% higher than 2009 mainly due to higher prices under fixed-price sales contracts. Our Canadian dollar selling price, however, was only slightly higher than 2009 as it was impacted by a less favourable exchange rate. Our exchange rate averaged $1.05 compared to $1.18 in 2009.

Total cash cost of sales (excluding DDR) decreased by 23% this year, to $699 million ($23.32 per pound U₃O₈). This was mainly the result of the following:

• the 13% decline in sales volumes

• average unit costs for produced uranium were 6% lower

• average unit costs for purchased uranium were 17% lower due to fewer purchases at spot prices

• a lower proportion of sales of purchased uranium, which carries a higher cash cost

The net effect was a $15 million increase in gross profit for the year.

The following table shows our cash cost of sales per unit (excluding DDR) for produced and purchased material, including royalty charges on produced material, and the quantity of produced and purchased uranium sold.

	Unit cash cost of sale									Quantity sold
	($Cdn/lb U3O8)									(million lbs)
	2010		2009		change			2010		2009		change
Produced		22.45		23.86		(1.41	)		20.0		20.9		(0.9	)
Purchased		25.11		30.22		(5.11	)		9.6		13.0		(3.4	)
Total		23.32		26.33		(3.01	)		29.6		33.9		(4.3	)

42    cameco corporation

Outlook for 2011

We expect to produce 21.9 million pounds of U₃O₈ in 2011.

Based on the contracts we have in place, we expect to sell between 31 million and 33 million pounds of U₃O₈ in 2011. We expect the unit cost of sales to be 0% to 5% higher than in 2010. This increase is based on the unit cost of sale for produced material. If we decide to make discretionary purchases in 2011 then we expect the overall unit cost of product sold to increase further.

Based on current spot prices, revenue should be about 15% to 20% higher than it was in 2010 as a result of increases in expected realized prices and sales volumes in 2011.

Price sensitivity analysis: uranium

The table below is not a forecast of prices we expect to receive. The prices we actually realize will be different from the prices shown in the table.

It is designed to indicate how the portfolio of long-term contracts we had in place on December 31, 2010 would respond to different spot prices. In other words, we would realize these prices only if the contract portfolio remained the same as it was on December 31, 2010, and none of the assumptions we list below change.

Expected realized uranium price sensitivity under various spot price assumptions
(rounded to the nearest $1.00)

($US/lb U3O8)
Spot prices	$20		$40		$60		$80		$100		$120		$140
2011		38		41		47		52		57		63		68
2012		36		40		50		58		68		77		86
2013		43		45		54		63		73		82		90
2014		44		47		55		64		74		83		91
2015		40		45		55		65		75		85		94

The table illustrates the mix of long-term contracts in our December 31, 2010 portfolio, and is consistent with our contracting strategy. It has been updated to reflect deliveries made and contracts entered into up to December 31, 2010.

Our portfolio includes a mix of fixed-price and market-price contracts, which we target at a 40:60 ratio. We signed many of our current contracts in 2003 to 2005, when market prices were low ($11 to $31 (US)). Those that are fixed at lower prices or have low ceiling prices will yield prices that are lower than current market prices. These older contracts are beginning to expire, and we are starting to deliver into more favourably priced contracts.

Our portfolio is affected by more than just the spot price. We made the following assumptions (which are not forecasts) to create the table:

Sales

• sales volumes on average of 32 million pounds per year

Deliveries

• customers take the maximum quantity allowed under each contract (unless they have already provided a delivery notice indicating they will take less)

• we defer a portion of deliveries under existing contracts for 2011 and 2012

Prices

• the average long-term price indicator is the same as the average spot price for the entire year (a simplified approach for this purpose only). Since 1996, the long-term price indicator has averaged 13% higher than the spot price. This differential has varied significantly. Assuming the long-term price is at a premium to spot, the prices in the table will be higher.

• we deliver all volumes that we don’t have contracts for at the spot price for each scenario

Inflation

• is 2.0% per year

2010 Annual financial review     43

Tiered royalties

As sales of material we produce at our Saskatchewan properties increase, so do the tiered royalties we pay. The table below indicates what we would pay in tiered royalties at various realized prices. We record tiered royalties as a cost of sales.

This table assumes that we sell 100,000 pounds U₃O₈ and that there is no capital allowance available to reduce royalties, and is based on 2010 rates. The index value to calculate rates for 2011 is not available until April 2011.

Realized		Tier 1 royalty		Tier 2 royalty		Tier 3 royalty
price		6% x		4% x		5% x
($Cdn)	(sales price - $17.51)			(sales price - $26.27)		(sales price - $35.03)		Total royalties
25			44,940		—		—		44,940
35			104,940		34,920		—		139,860
45			164,940		74,920		49,850		289,710
55			224,940		114,920		99,850		439,710
65			284,940		154,920		149,850		589,710
75			344,940		194,920		199,850		739,710
85			404,940		234,920		249,850		889,710

44    cameco corporation

Fuel services

(includes results for UF₆, UO₂ and fuel fabrication)

Highlights	2010		2009		change
Production volume (million kgU)		15.4		12.3		25	%
Sales volume (million kgU)		17.0		14.9		14	%
Realized price ($Cdn/kgU)		16.86		17.84		(5	)%
Average unit cost of sales ($Cdn/kgU) (including DDR)		13.39		14.47		(7	)%
Revenue ($ millions)		301		276		9	%
Gross profit ($ millions)		60		50		20	%
Gross profit (%)		20		18		11	%

The Port Hope UF₆ conversion plant operated for a full year in 2010, increasing production volumes by 25% over 2009. In 2009, the facility was shut down for the first five months of the year.

Total revenue increased by 9% due to a 14% increase in sales volumes.

Our Canadian dollar realized price for UF₆ was affected by a less favourable exchange rate. Our exchange rate averaged $1.05 in 2010 compared to $1.18 in 2009.

The total cost of products and services sold (including DDR) increased by 6% ($241 million compared to $226 million in 2009) due to the increase in sales volumes. The average unit cost of sales was 7% lower due to lower costs for purchased material and the return to operational status of the UF₆ facility.

The net effect was a $10 million increase in gross profit.

Outlook for 2011

We expect production in 2011 to be similar to 2010, in the range of 15 million to 16 million kgU.

We expect the average realized price for our fuel services products to decline by 2% to 5%, sales volumes to increase by 10% to 15% and revenue to be 5% to 10% higher.

2010 Annual financial review     45

Electricity

BPLP

(100% — not prorated to reflect our 31.6% interest)

Highlights
($ millions except where indicated)	2010			2009			change
Output — terawatt hours (TWh)		25.9			24.6			5	%
Capacity factor (the amount of electricity the plants actually produced for sale as a percentage of the amount they were capable of producing)		91	%		87	%		5	%
Realized price ($/MWh)		58			64	1		(9	)%
Average Ontario electricity spot price ($/MWh)		36			30			20	%
Revenue		1,509			1,640			(8	)%
Operating costs (net of cost recoveries)		930			905			3	%
Cash costs		785			770			2	%
Non-cash costs		145			135			7	%
Income before interest and finance charges		579			735			(21	)%
Interest and finance charges		36			4			800	%
Cash from operations		643			754			(15	)%
Capital expenditures		111			123			(10	)%
Distributions		525			610			(14	)%
Operating costs ($/MWh)		36			35	1		3	%

¹ Based on actual generation of 24.6 TWh plus deemed generation of 1.2 TWh. Deemed generation in 2010 was insignificant.

Our earnings from BPLP

Highlights
($ millions except where indicated)	2010			2009			change
BPLP’s earnings before taxes (100%)		543			731			(26	)%
Cameco’s share of pretax earnings before adjustments (31.6%)		172			231			(26	)%
Proprietary adjustments		(6	)		(7	)		(14	)%
Earnings before taxes from BPLP		166			224			(26	)%

BPLP’s results in 2010 are largely the result of lower revenues, which were 8% lower than 2009 due to a 9% decrease in realized electricity prices. BPLP’s average realized price reflects spot sales, revenue recognized under BPLP’s agreement with the Ontario Power Authority (OPA) and revenue from financial contracts.

BPLP has an agreement with the OPA under which output from each B reactor is supported by a floor price (currently $48.96/MWh) that is adjusted annually for inflation. The floor price mechanism and any associated payments to BPLP for the output from each individual B reactor will expire on a date specified in the agreement. The expiry dates are December 31, 2015 for unit B6, December 31, 2016 for unit B5, December 31, 2017 for unit B7 and December 31, 2019 for unit B8. Revenue is recognized monthly, based on the positive difference between the floor price and the spot price. BPLP does not have to repay the revenue from the agreement with the OPA to the extent that the floor price for the particular year exceeds the average spot price for that year.

The agreement also provides for payment if the Independent Electricity System Operator reduces BPLP’s generation because Ontario baseload generation is higher than required. The amount of the reduction is considered ‘deemed

46    cameco corporation

generation’, and BPLP is paid either the spot price or the floor price — whichever is higher. Deemed generation was insignificant in 2010.

During 2010, BPLP recognized revenue of $339 million under the agreement with the OPA, compared to $514 million in 2009.

BPLP also has financial contracts in place that reflect market conditions at the time they were signed. Contracts signed in 2006 to 2008, when the spot price was higher than the floor price, reflected the strong forward market at the time. BPLP receives or pays the difference between the contract price and the spot price. Since the electricity market in Ontario has weakened, BPLP has been putting fewer contracts in place.

BPLP sold the equivalent of about 42% of its output under financial contracts in 2010, compared to 57% in 2009.

BPLP’s operating costs were $930 million this year compared to $905 million in 2009.

The net effect was a decrease in our share of earnings before taxes of 26%.

BPLP distributed $525 million to the partners in 2010. Our share was $166 million. The partners have agreed that BPLP will distribute excess cash monthly, and will make separate cash calls for major capital projects.

BPLP’s capacity factor was 91% in 2010.

Outlook for 2011

We expect the average capacity factor for the four Bruce B reactors to be 89% in 2011, and actual output to be about 2% lower than it was in 2010. The 2011 realized price for electricity is projected to be about 5% to 10% lower than 2010 as BPLP has fewer financial contracts in place for 2011. At December 31, 2010, BPLP had about 7.5 TWh under financial contracts, which is equivalent to about 30% of Bruce B generation at its planned capacity factor. We expect that revenue will decline by 10% to 15% as a result.

We expect the average unit cost (net of cost recoveries) to be 10% to 15% higher in 2011, and total operating costs to rise by about 5% to 10%, mainly due to higher costs for planned outages and maintaining the workforce.

2010 Annual financial review     47

Fourth quarter results

Fourth quarter consolidated results

	Three months ended
Highlights	December 31
($ millions except per share amounts)	2010		2009		change
Revenue		673		659		2	%
Gross profit		245		206		19	%
Net earnings		207		598		(65	)%
$  per common share (basic)		0.52		1.52		(66	)%
$  per common share (diluted)		0.52		1.52		(66	)%
Adjusted net earnings (non-GAAP, see page 29)		191		170		12	%
$  per common share (adjusted and diluted)		0.48		0.43		12	%
Cash provided by operations (after working capital changes)		120		188		(36	)%

In the fourth quarter of 2010, our net earnings were $207 million ($0.52 per share diluted), a decrease of $391 million compared to $598 million ($1.52 per share diluted) in 2009. We had a $374 million net gain in the fourth quarter of 2009 related to the sale of our interest in Centerra.

The 12% increase in adjusted net earnings in the quarter was from higher profits in our uranium segment relating to a higher average realized selling price and a lower unit cost of sales, partially offset by lower profits in the electricity business due to a lower realized price.

We use adjusted net earnings, a non-GAAP measure, as a more meaningful way to compare our financial performance from period to period. See page 29 for more information. The table below reconciles adjusted net earnings with our net earnings.

	Three months ended
	December 31
($ millions)	2010			2009
Net earnings (GAAP measure)		207			598
Adjustments (after tax)
Earnings from discontinued operations		—			(424	)1
Unrealized gains on financial instruments		(16	)		(4	)
Adjusted net earnings (non-GAAP measure)		191			170

¹ We have changed our calculation of adjusted earnings to exclude amounts related to our investment in Centerra. In previous years, this calculation included our share of earnings from Centerra.

We recorded an income tax expense of $7 million this quarter, based on adjusted net earnings, compared to a $3 million expense in 2009.

48    cameco corporation

Direct administration costs were $47 million in the quarter, $8 million higher than the same period last year. Stock-based compensation expenses were $8 million in the quarter, compared to $3 million in the fourth quarter of 2009 due to a 41% increase in our share price during the fourth quarter of 2010. See note 22 to the financial statements.

	Three months ended
	December 31
($ millions)	2010		2009
Direct administration		47		39
Stock-based compensation		8		3
Total administration		55		42

Quarterly trends

Highlights								2010								2009
($ millions except per share amounts)	Q4		Q3			Q2		Q1		Q4		Q3		Q2		Q1
Revenue		673		419			546		486		659		518		645		493
Net earnings		207		98			68		142		598		172		247		82
$  per common share (basic)		0.52		0.25			0.17		0.37		1.52		0.44		0.64		0.23
$  per common share (diluted)		0.52		0.25			0.17		0.36		1.52		0.44		0.64		0.22
Adjusted net earnings (non-GAAP, see page 29)		191		80			114		111		170		94		161		103
$  per share diluted		0.48		0.20			0.29		0.28		0.43		0.24		0.41		0.27
Earnings from continuing operations		207		98			68		142		174		195		269		79
$  per common share (basic)		0.52		0.25			0.17		0.37		0.44		0.49		0.68		0.23
$  per common share (diluted)		0.52		0.25			0.17		0.36		0.44		0.49		0.68		0.23
Cash provided by operations		120		(18	)		272		133		188		175		147		180

Key things to note:

• Our financial results are strongly influenced by the performance of our uranium segment, which accounted for 68% of consolidated revenues in the fourth quarter of 2010.

• The timing of customer requirements, which tend to vary from quarter to quarter, drives revenue in the uranium and fuel services segments.

• Net earnings do not trend directly with revenue due to unusual items and transactions that occur from time to time. We use adjusted net earnings, a non-GAAP measure, as a more meaningful way to compare our results from period to period (see page 29 for more information).

• Cash from operations tends to fluctuate as a result of the timing of deliveries and product purchases in our uranium and fuel services segments.

• Quarterly results are not necessarily a good indication of annual results due to the variability in customer requirements noted above.

2010 Annual financial review   49

Fourth quarter results by segment

Uranium

	Three months ended
	December 31
Highlights	2010		2009		change
Production volume (million lbs)		6.4		6.7		(4	)%
Sales volume (million lbs)		9.1		10.0		(9	)%
Average spot price ($US/lb)		58.29		45.96		27	%
Average realized price
($US/lb)		48.50		40.64		19	%
($Cdn/lb)		50.10		43.51		15	%
Average unit cost of sales ($Cdn/lb U3O8) (including DDR)		29.89		30.29		(1	)%
Revenue ($ millions)		461		443		4	%
Gross profit ($ millions)		181		132		37	%
Gross profit (%)		39		30		30	%

Production volumes were 4% lower due to lower output at Rabbit Lake.

Uranium revenues were up 4% due to a 15% increase in the realized selling price, partially offset by a 9% decline in sales volumes.

Realized prices were higher due to higher prices under market-related and fixed-price sales contracts.

Total cash cost of sales (excluding DDR) decreased by 12% to $233 million ($25.30 per pound U₃O₈). This was mainly the result of the following:

• the 9% decline in sales volumes

• average unit costs for produced uranium were 26% higher

• average unit costs for purchased uranium were 14% lower due to fewer purchases at spot prices

The net effect was a $49 million increase in gross profit for the quarter.

The following table shows our cash cost of sales per unit (excluding DDR) for produced and purchased material, including royalty charges on produced material, and the quantity of produced and purchased uranium sold.

	Unit cash cost of sale							Quantity sold
Three months	($Cdn/lb U3O8)							(million lbs)
ended December 31	2010		2009		change			2010		2009		change
Produced		22.30		17.73		4.57			5.5		5.1		0.4
Purchased		29.93		34.72		(4.79	)		3.6		4.9		(1.3	)
Total		25.30		26.19		(0.89	)		9.1		10.0		(0.9	)

50   cameco corporation

Fuel services

(includes results for UF₆, UO₂ and fuel fabrication)

	Three months ended
	December 31
Highlights	2010		2009		change
Production volume (million kgU)		3.9		3.9		—
Sales volume (million kgU)		6.3		6.0		5	%
Realized price ($Cdn/kgU)		14.59		14.89		(2	)%
Average unit cost of sales ($Cdn/kgU) (including DDR)		12.87		12.43		4	%
Revenue ($ millions)		93		91		2	%
Gross profit ($ millions)		11		13		(15	)%
Gross profit (%)		12		14		(14	)%

Total revenue increased by 2% due to a 5% increase in sales volumes.

Our Canadian dollar realized price for UF₆ was similar to the prior year but was affected by a less favourable exchange rate. Our exchange rate averaged $1.03 in the fourth quarter compared to $1.07 in 2009.

The total cost of products and services sold (including DDR) increased by 5% ($82 million compared to $78 million in the fourth quarter of 2009) due to the increase in sales volumes. The average unit cost of sales was 4% higher due to increased sales of fuel fabrication, which carries a higher unit cost than other fuel services products.

The net effect was a $2 million decrease in gross profit.

2010 Annual financial review   51

Electricity

BPLP

(100% — not prorated to reflect our 31.6% interest)

	Three months ended
Highlights	December 31
($ millions except where indicated)	2010			2009			change
Output — terawatt hours (TWh)		6.6			6.4			3	%
Capacity factor		91	%		89	%		2	%
(the amount of electricity the plants actually produced for sale as a percentage of the amount they were capable of producing)
Realized price ($/MWh)		60			62	1		(3	)%
Average Ontario electricity spot price ($/MWh)		32			30			7	%
Revenue		393			422			(7	)%
Operating costs (net of cost recoveries)		221			218			1	%
Cash costs		184			183			1	%
Non-cash costs		37			35			6	%
Income before interest and finance charges		172			204			(16	)%
Interest and finance charges		7			1			600	%
Cash from operations		146			229			(36	)%
Capital expenditures		37			40			(3	)%
Distributions		120			220			(45	)%
Operating costs ($/MWh)		33			32	1		3	%

¹ Based on actual generation of 6.4 TWh plus deemed generation of 0.4 TWh in the fourth quarter.

Our earnings from BPLP

	Three months ended
Highlights	December 31
($ millions except where indicated)	2010			2009			change
BPLP’s earnings before taxes (100%)		165			203			(19	)%
Cameco’s share of pretax earnings before adjustments (31.6%)		52			64			(19	)%
Proprietary adjustments		(1	)		(2	)		(50	)%
Earnings before taxes from BPLP		51			62			(18	)%

Total electricity revenue decreased 7% as higher actual output was offset by a lower realized price. Realized prices reflect spot sales, revenue recognized under BPLP’s agreement with the OPA, and financial contract revenue. BPLP recognized revenue of $114 million this quarter under its agreement with the OPA, compared to $137 million in the fourth quarter of 2009. The equivalent of about 45% of BPLP’s output was sold under financial contracts this quarter, compared to 54% in the fourth quarter of 2009.

The capacity factor was 91% this quarter, up from 89% in the fourth quarter of 2009. Operating costs were $221 million compared to $218 million in 2009.

The result was an 18% decrease in our share of earnings before taxes.

BPLP distributed $120 million to the partners in the fourth quarter. Our share was $38 million. The partners have agreed that BPLP will distribute excess cash monthly, and will make separate cash calls for major capital projects.

52   cameco corporation

Our operations and development projects

This section of our MD&A is an overview of each of our operations, what we accomplished this year, our plans for the future and how we manage risk.

Uranium
Operating properties
McArthur River and Key Lake	58
Rabbit Lake	63
Smith Ranch-Highland	65
Crow Butte	67
Inkai	69
Development project
Cigar Lake	72
Projects under evaluation
Inkai blocks 1 and 2
production increase (see Inkai, above)	69
Inkai block 3 (see Inkai, above)	69
McArthur River extension
(see McArthur River, above)	58
Kintyre	77
Millennium	78
Exploration	79
Fuel services
Refining
Blind River refinery	80
Conversion and fuel manufacturing
Port Hope conversion services	81
Fuel Manufacturing	81
Springfields Fuels	81
Electricity
Bruce Power Limited Partnership	83

2010 Annual financial review   53

Managing the risks

The nature of our operations means we face many potential risks and hazards that could have a significant impact on our business. We have comprehensive systems and procedures in place to manage them, but there is no assurance we will be successful in preventing the harm any of these risks and hazards could cause.

Below we list the regulatory, environmental and operational risks that generally apply to all of our operations, development projects, and projects under evaluation. We also talk about how we manage specific risks in each operation or project update. These risks could have a material impact on our business in the near term.

We recommend you also review our annual information form, which includes a discussion of other material risks that could have an impact on our business.

Regulatory risks

A significant part of our economic value depends on our ability to:

• obtain and renew the licences and other approvals we need to operate, to increase production at our mines and to develop new mines. If we do not receive the regulatory approvals we need, or do not receive them at the right time, then we may have to delay, modify or cancel a project, which could increase our costs and delay or prevent us from generating revenue from the project. Regulatory review, including the review of environmental matters, is a long and complex process.

• comply with the conditions in these licences and approvals. In a number of instances, our right to continue operating facilities, increase production at our mines and develop new mines depends on our compliance with these conditions.

• comply with the extensive laws and regulations that govern our activities, including our growth plans. Environmental legislation imposes very strict standards and controls on almost every aspect of our operations and the mines we plan to develop, and are becoming more stringent in Canada and the US. Examples of these controls include that:

• we must complete an environmental assessment before we can begin developing a new mine or make any significant change to a plan that has already been approved

• we increasingly need regulatory approval to make changes to our operational processes, which can take a significant amount of time because it may require an environmental assessment or an extensive review of supporting information. The complexity of this process can be further compounded when regulatory approvals are required from multiple agencies.

We use significant management and financial resources to manage our regulatory risks.

Environmental risks

We have the safety, health and environmental risks associated with any mining and chemical processing company. All three of our business segments face unique risks associated with radiation.

Laws to protect the environment are becoming more stringent for members of the nuclear energy industry and have inter-jurisdictional aspects (both federal and provincial/state regimes are applicable). Once we have permanently stopped mining and processing activities, we are required to decommission the operating site to the satisfaction of the regulator. We have developed conceptual decommissioning plans for our operating sites and use them to estimate our decommissioning costs. As the site approaches or goes into decommissioning, regulators review our detailed decommissioning plan, and this can result in additional regulatory process, requirements, costs and financial assurances.

At the end of 2010, our estimate of total decommissioning and reclamation costs was $465 million. This is the undiscounted value of the obligation and is based on our current operations. We had accounting provisions of $280 million at the end of 2010 (the present value of the $465 million). Since we expect to incur most of these expenditures at the end of the useful lives of the operations they relate to, our expected costs for decommissioning and reclamation for the next five years are not material.

54   cameco corporation

We provide financial assurances for decommissioning and reclamation as letters of credit to regulatory authorities, as required. We had a total of $549 million in letters of credit supporting our reclamation liabilities at the end of 2010. Since 2001, all of our North American operations have had letters of credit in place that provide financial assurance in line with our preliminary plans for decommissioning for the sites.

Some of the sites we own or operate have been under ongoing investigation and/or remediation and planning as a result of historic soil and groundwater conditions. For example, we are addressing issues related to historic soil and groundwater contamination at Port Hope and Rabbit Lake.

We use significant management and financial resources to manage our environmental risks.

We manage environmental risks through our safety, health, environment and quality (SHEQ) management system. Our SHEQ management system is centralized and managed at the corporate level, and we implement it corporately and at our operations level. Our chief executive officer is responsible for ensuring that our SHEQ management system is implemented. Our board’s safety, health and environment committee also oversees how we manage our environmental risks.

In 2010, we invested:

• $76 million in environmental protection, monitoring and assessment programs, a decrease of 17% compared to 2009.

• $34 million in health and safety programs, unchanged compared to 2009

In 2011, spending for these programs is expected to be similar to 2010.

Operational risks

Other operational risks and hazards include:

• environmental damage

• industrial and transportation accidents

• labour shortages, disputes or strikes

• cost increases for contracted or purchased materials, supplies and services

• shortages of required materials and supplies

• transportation disruptions

• electrical power interruptions

• equipment failures

• non-compliance with laws and licences

• catastrophic accidents

• fires

• blockades or other acts of social or political activism

• natural phenomena, such as inclement weather conditions, floods and earthquakes

• unusual, unexpected or adverse mining or geological conditions

• underground floods

• ground movement or cave ins

• tailings pipeline or dam failures

• technological failure of mining methods

We have insurance to cover some of these risks and hazards, but not all of them, and not to the full amount of losses or liabilities that could potentially arise.

2010 Annual financial review   55

Uranium — production overview

Our production was 10% higher this year than it was in 2009 and 6% higher than our plan at the beginning of 2010. We had a number of successes at our mining operations in 2010.

At McArthur River/Key Lake:

• We increased production by 5% over 2009.

• We obtained approval for production flexibility, which allowed us to exceed our production target by 6%.

At Rabbit Lake:

• We added mineral reserves, extending the estimated mine life by two years to 2017.

At Inkai:

• We continued to ramp up production and exceeded our 2009 production by 136%.

• Production was 13% higher than our plan at the beginning of the year due to the completion of the processing facilities and a stable acid supply.

Uranium production

	Three months ended				Year ended
Cameco’s share	December 31				December 31
(million lbs U3O8)	2010		2009		2010		2009		2010 plan
McArthur River/Key Lake		4.0		4.0		13.9		13.3		13.1
Rabbit Lake		1.3		1.4		3.8		3.8		3.6
Smith Ranch-Highland		0.4		0.5		1.8		1.8		1.8
Crow Butte		0.2		0.2		0.7		0.8		0.7
Inkai		0.5		0.6		2.6		1.1		2.3
Total		6.4		6.7		22.8		20.8		21.5	1

¹ We updated our 2010 plan in our Q3 MD&A to 22 million pounds.

Outlook

We have geographically diversified sources of production. We expect to produce about 125 million pounds of U₃O₈ over the next five years from the properties listed below. Our strategy is to double our annual production to 40 million pounds by 2018, which we expect will come from our operating properties, development projects and projects under evaluation. These sources are discussed in the following section.

Cameco’s share of production — annual forecast to 2015

Current forecast
(million lbs U3O8)	2011		2012		2013		2014		2015
McArthur River/Key Lake		13.1		13.1		13.1		13.1		13.1
Rabbit Lake		3.6		3.6		3.6		3.6		3.6
US ISR		2.5		3.1		3.1		3.7		3.8
Inkai		2.7		3.1		3.1		3.1		3.1
Cigar Lake		—		—		1.0		2.0		5.6
Total		21.9		22.9		23.9		25.5		29.2

In 2013, production at McArthur River may be lower as we transition to mining upper zone 4.

In 2010, Inkai received approval in principle to produce at 3.9 million pounds per year (100% basis) and is seeking final approval through an amendment to the resource use contract.

56   cameco corporation

Our 2011 and future annual production targets assume Inkai receives the government approvals and support of our partner, Kazatomprom. More specifically, it must:

• obtain final approval to produce at an annual rate of 3.9 million pounds (our share 2.3 million pounds)

• obtain the necessary permits and approvals to produce at an annual rate of 5.2 million pounds (our share 3.1 million pounds)

• ramp up production to an annual rate of 5.2 million pounds this year

We expect Inkai to receive all of the necessary permits and approvals to meet its 2011 and future annual production targets and we anticipate it will be able to ramp up production as noted above.

There is no certainty, however, that Inkai will receive these permits or approvals or that it will be able to ramp up production this year. If Inkai does not, or if the permits and approvals are delayed, Inkai may be unable to achieve its 2011 and future annual production targets.

This forecast is forward-looking information. It is based on the assumptions and subject to the material risks discussed on pages 2 and 3, and specifically on the assumptions and risks listed here. Actual production may be significantly different from this forecast.

Assumptions

• we achieve our forecast production for each operation, which requires, among other things, that our mining plans succeed, processing plants are available and function as designed, we have sufficient tailings capacity and our reserve estimates are accurate

• we obtain or maintain the necessary permits and approvals from government authorities

• our production is not disrupted or reduced as a result of natural phenomena, labour disputes, political risks, blockades or other acts of social or political activism, shortage or lack of supplies critical to production, equipment failures or other development and operation risks

Material risks that could cause actual results to differ materially

• we do not achieve forecast production levels for each operation because of a change in our mining plans, processing plants are not available or do not function as designed, lack of tailings capacity or for other reasons

• we cannot obtain or maintain necessary permits or government approvals

• natural phenomena, labour disputes, political risks, blockades or other acts of social or political activism, shortage or lack of supplies critical to production, equipment failures or other development and operation risks disrupt or reduce our production

2010 Annual financial review   57

Uranium — operating properties

McArthur River/Key Lake

McArthur River is the world’s largest, high-grade uranium mine, and Key Lake is the largest uranium mill in the world.

Ore grades at the McArthur River mine are 100 times the world average, which means it can produce more than 18 million pounds per year by mining only 150 to 200 tonnes of ore per day. We are the operator.

McArthur River is one of our three material uranium properties.

Location	Saskatchewan, Canada
Ownership	69.805% — McArthur River
	83.33% — Key Lake
End product	U3O8
ISO certification	ISO 14001 certified
Deposit type	underground
Estimated reserves	234.2 million pounds — proven and probable
(our share)
Average reserve grade	U3O8 — 15.24%1
Estimated resources	11.8 million pounds (measured and indicated)
(our share)	104.8 million pounds (inferred)
Mining methods	currently: raiseboring
	under development: boxhole boring
Licensed capacity	mine and mill: 18.7 million pounds per year
	(can be exceeded — see Licensing below)
Total production 2000 to 2010	191.1 million pounds (McArthur River/Key Lake) (100% basis)
1983 to 2002	209.8 million pounds (Key Lake) (100% basis)
2010 production	13.9 million pounds (our share)
2011 forecast production	13.1 million pounds (our share)
Estimated decommissioning cost	$36.1 million — McArthur River
	$120.7 million — Key Lake

¹   For more information on the average grade, please see the 2010 update that follows in this section — Change in Average Reserve Grades

58   cameco corporation

Background

We use a number of innovative methods and techniques to mine the McArthur River deposit:

Ground freezing

The sandstone that overlays the deposit and basement rocks is water-bearing, with large volumes of water under significant pressure. We use ground freezing to form an impermeable wall around the area being mined. This prevents water from entering the mine, and helps stabilize weak rock formations.

In 2009, we developed an innovative, cathedral-shaped freezewall around zone 2, panel 5, allowing us to develop tunnels above and below the orebody. We expect this innovation will allow us to continue using raisebore mining as the main mining method at McArthur River and improve production efficiencies as we transition to other areas of the mine (see Planning for the future — Zone 4 below).

Raisebore mining

Raisebore mining is an innovative non-entry approach that we adapted to meet the unique challenges at McArthur River. It involves:

• drilling a series of overlapping holes through the ore zone from a raisebore chamber in waste rock above the ore

• collecting the broken ore at the bottom of the raises using line-of-sight remote-controlled scoop trams, and transporting it to a grinding circuit

• filling each raisebore hole with concrete once it is complete

• removing the equipment and filling the entire chamber with concrete when all the rows of raises in a chamber are complete

• starting the process again with the next raisebore chamber

We have successfully used the raisebore mining method to extract about 190 million pounds (100% basis) since we began mining in 1999.

McArthur River currently has four zones with delineated mineral reserves (zones 1 to 4). Zones A and B are categorized as inferred mineral resources. Parts of zones 1, 2, 3 and 4 also have mineral resources.

Until this year, we have mined only zone 2 since the mine started production. Zone 2 is divided into four panels (panels 1, 2, 3 and 5). Until late 2009, all mine production was from panels 1, 2 and 3, and there are still limited

2010 Annual financial review   59

reserves that we will extract from these panels in the next few years. Panel 5 represents the upper portion of zone 2, overlying a portion of the other panels.

We successfully transitioned to panel 5 last year, the first time development has been accomplished through the unconformity into the Athabasca sandstone.

We brought the lower mining area of zone 4 into production in the fourth quarter of 2010.

Boxhole boring

Given our success with the cathedral-shaped freezewall around zone 2, panel 5, the use of boxhole boring in our mine plan has been significantly narrowed in scope. We expect to be able to continue using raisebore mining as our main mining method for McArthur River.

Boxhole boring is similar to the raisebore method, but the drilling machine is located below the orebody, so development is not required above the orebody. This method is currently being used at only a few mines around the world, but has not been used for uranium mining.

Boxhole boring poses some technical challenges. We will continue to test this method in 2011; however, we expect it will only be used as a secondary method in areas where we determine raiseboring is not feasible. We may use it on a limited basis in 2013 to meet our production target.

2010 update

Production

Our share of production was 6% higher than our target of 13.1 million pounds U₃O₈, and a 5% increase over 2009. In 2009, we also exceeded our production target.

Our strong performance at both McArthur River and Key Lake allowed us to realize benefits under the production flexibility amendments to the McArthur River and Key Lake operating licences (see Licensing below).

New mining areas

Zone 2, panel 5 — We developed a second raisebore chamber. This is expected to improve production efficiency in the future.

Lower zone 4 — We completed the transition to this zone and began production during the fourth quarter.

Change in Average Reserve Grades

At McArthur River, average grade for our mineral reserves changed as follows:

• for our proven reserves: in 2010 the average grade is 17.29%, up from 15.72% in 2009

• for our probable reserves: in 2010 the average grade is 13.49%, down from 26.33% in 2009

As a consequence, the average grade for our proven and probable reserves in 2010 is 15.24%, down from 19.53% in 2009.

The addition of 260 thousand tonnes of ore to probable reserves resulted in the average grade decreasing in 2010. This increase of tonnes is due mostly to successful underground drilling and conversion of lower grade inferred resources to probable reserves. Our plan to use conventional blast-hole stoping in some areas also enabled us to convert lower grade resources to reserves. We do not expect this reduction in grade to have a material effect on operating costs. Please see our mineral reserves and resources section on page 84 for more information.

Mill revitalization

The Key Lake mill began operating in 1983. We are revitalizing the mill to ensure sustained reliable production and increase our uranium production capability. This year we focused on:

• building the acid, steam and oxygen processing plants

• securing our existing tailings capacity

Operational upgrades

The Key Lake revitalization plan includes upgrading circuits with new technology to simplify operations and improving environmental performance. As part of this plan, we are replacing the acid, steam and oxygen plants.

60   cameco corporation

This year we installed all structural steel and winterized the buildings. We installed all major equipment for the acid and steam plants, and are installing mechanical piping.

We expect to complete and commission all three plants in 2011.

Tailings capacity

We submitted a project description, the Key Lake extension project, to regulators to extend the lifespan of the Key Lake operation.

The project proposes to:

• allow continued processing of ore from the McArthur River mine and other potential mine developments

• increase long-term capacity of the Deilmann tailings management facility by allowing us to deposit tailings to a higher elevation

• increase annual mill production capacity to 25 million pounds U₃O₈

Licensing

The CNSC approved an amendment to our operating licence for McArthur River, giving us flexibility in the annual licensed production limit, similar to that received at Key Lake last year. The McArthur River mine can produce up to 20.7 million pounds U₃O₈ (100% basis) per year as long as average annual production does not exceed 18.7 million pounds. If production is lower than 18.7 million pounds in any year, we can produce more in future years until we recover the shortfall. After taking advantage of this provision in 2009 and this year, we still have the opportunity to recover about 4 million pounds (100% basis) in past production shortfalls.

After the mill is revitalized, annual production will depend mainly on mine production. We are continuing to plan for annual production of 18.7 million pounds (100% basis) for the next few years.

Exploration

We initiated a multi-year project, the McArthur River extension, to advance the underground exploration drifts to the north and to the south of the current mining operations. We expect this work to further delineate zones A and B inferred mineral resources to the north, and mineral resources to the south.

We received regulatory approval to continue developing the north exploration drift towards zone A and zone B. Over the next two years, we will carry out underground exploration from this drift to expand our knowledge of the size and grade of the ore in this area.

The surface lease has been reinstated to its original size, which will allow us to optimize the location for future mine workings for ongoing approved activities. We expect a fourth shaft will be necessary for ventilation of ongoing operations and for the eventual development of zones to the north of current mining areas.

Labour relations

We reached a new four-year collective agreement with unionized employees at McArthur River and Key Lake. The agreement expires on December 31, 2013.

Planning for the future

Production

We expect our share of production to be 13.1 million pounds U₃O₈ in 2011 and will look for opportunities to take advantage of the production flexibility provision in our licences.

New mining zones

Zone 2, panel 5 — In 2011, we expect to develop a third raisebore chamber.

Zone 4 — In 2011, we will begin work to install the freezewall required to bring the upper mining area of zone 4 into production.

Our initial plan was to mine upper zone 4 using boxhole boring. We now expect, however, to use raisebore mining in this area by applying the ground freezing experience we gained in zone 2, panel 5. By using raisebore mining, we expect to significantly improve production efficiencies compared to boxhole boring.

2010 Annual financial review   61

Tailings capacity

In 2011, we expect to:

• complete the detailed design for the stabilization of the Deilmann tailings management facility pitwalls

• start to relocate the infrastructure necessary to allow us to flatten the slope of the pitwalls

• advance work on the environmental assessment for the Key Lake extension project

Exploration

In 2011, we will continue work on the McArthur River extension project, to advance the underground exploration drift to the north of the current mining areas. We will carry out further surface exploration drilling of zone B. We will begin work on a feasibility study for the zones north of our current mining areas.

Managing ongoing risks

Production at McArthur River/Key Lake poses many challenges: control of groundwater, weak rock formations, radiation protection, water inflow, mining method uncertainty and changes to productivity, mine transitioning, regulatory approvals, tailings capacity, reliability of facilities at Key Lake, surface and underground fires. Operational experience gained since the start of production has resulted in a significant reduction in risk.

Water inflow risk

The greatest risk is production interruption from water inflows. A 2003 water inflow resulted in a three-month suspension of production. We also had a small water inflow in 2008 that did not impact production.

The consequences of another water inflow at McArthur River would depend on its magnitude, location and timing, but could include a significant interruption or reduction in production, a material increase in costs and a loss of mineral reserves.

We take the following steps to reduce the risk of inflows, but there is no guarantee that these will be successful:

• Ground freezing — Before mining, we drill freezeholes and freeze the ground to form an impermeable freezewall around the area being mined. Ground freezing reduces but does not eliminate the risk of water inflows.

• Mine development — We carry out extensive grouting and careful placement of mine development away from known groundwater sources whenever possible. In addition, we assess all planned mine development for relative risk, and apply extensive additional technical and operating controls for all higher risk development.

• Pumping capacity and treatment limits — Our standard for this project is to secure pumping capacity of at least one and a half times the estimated maximum sustained inflow. We review our dewatering system and requirements at least once a year and before beginning work on any new zone.

We believe we have sufficient pumping, water treatment and surface storage capacity to handle the estimated maximum sustained inflow.

Key Lake tailings capacity risk

Tailings from processing McArthur River ore are deposited in the Deilmann tailings management facility. At current production rates, the capacity of the Deilmann tailings management facility is five to six years, assuming we experience only minor losses in storage capacity due to sloughing from the pitwalls. Significant sloughing may constrain McArthur River production.

Sloughing of material from the pitwalls has occurred in the past and resulted in the loss of capacity. Technical studies show that stabilizing and reducing water levels in the pit enhances the stability of the pitwalls, thereby reducing the risk of pitwall sloughing. We doubled our dewatering treatment capacity, allowing us to stabilize the water level in the pit. The water level has been gradually reduced over the past two years.

In 2009, regulators approved our plan for the long-term stabilization of the Deilmann tailings management facility pitwalls. We are implementing the plan, and expect it will take approximately four years to complete the work.

We have also assessed options for long-term storage of tailings at Key Lake. We are proceeding with the environmental assessment to support an application for regulatory approval to deposit tailings in the Deilmann tailings management facility to a much higher level. This would provide us with enough tailings capacity to support many more years of mill production at Key Lake (see Tailings capacity above).

We also manage the risks listed on pages 54 and 55.

62   cameco corporation

Uranium — operating properties

Rabbit Lake

The Rabbit Lake operation, which opened in 1975, is the longest operating uranium production facility in North America, and the second largest uranium mill in the world.

Location	Saskatchewan, Canada
Ownership	100%
End product	U3O8
ISO certification	ISO 14001 certified
Deposit type	underground
Estimated reserves	25.5 million pounds (proven and probable)
Average reserve grade	U3O8 — 0.76%
Estimated resources	4.0 million pounds (indicated)
	10.2 million pounds (inferred)
Mining method	vertical blast-hole stoping
Licensed capacity	mill: maximum 16.9 million pounds per year; currently 11 million
Total production 1975 to 2010	182.5 million pounds
2010 production	3.8 million pounds
2011 forecast production	3.6 million pounds
Estimated decommissioning cost	$105.2 million

2010 update

Production

Production this year was the same as in 2009.

Continued to upgrade the mill

We completed the first phase of upgrades at the acid plant, replacing the convertor and heat recovery equipment.

Worked to extend the mine life

We added mineral reserves, extending the estimated mine life by two years to 2017. We have completed surface exploration drilling near the mine and have found new mineralization referred to as the Powell zone. In 2012, we are planning to start an underground drilling program to further evaluate this mineralization.

We installed and commissioned a new exhaust air raise at the Eagle Point mine to support future activities in the northern part of the mine.

2010 Annual financial review   63

Planning for the future

Production

We expect to produce 3.6 million pounds in 2011.

Milling

We expect to have sufficient tailings capacity to support milling of Eagle Point ore and a portion of the uranium solution from milling of Cigar Lake ore until mid-2016. We are planning to expand the existing tailings management facility to increase the tailings capacity by mid-2016 to support the extension of Rabbit Lake’s mine life, accommodate tailings from processing Cigar Lake uranium solution and provide a modest amount of additional tailings capacity for future processing opportunities. We need regulatory approval to proceed with any increase in capacity.

Exploration

We have extended our underground drilling reserve replacement program into 2011. We plan to test and evaluate areas east and northeast of the mine where we have had good results. Drilling will also continue on other parts of the property.

Reclamation

As part of our multi-year site-wide reclamation plan, we expect to spend $5.7 million in 2011 to reclaim facilities that are no longer in use.

Managing our risks

We manage the risks listed on pages 54 and 55.

64   cameco corporation

Uranium — operating properties

Smith Ranch-Highland

We operate Smith Ranch and Highland as a combined operation. Each has its own processing facility, but the Smith Ranch mill processes all the uranium. The Highland mill is currently idle.

Together, they form the largest uranium production facility in the United States.

Location	Wyoming, US
Ownership	100%
End product	U3O8
ISO certification	ISO 14001 certified
Estimated reserves	8.0 million pounds (proven and probable)
Average reserve grade	U3O8 — 0.09%
Estimated resources	22.5 million pounds (measured and indicated)
	6.6 million pounds (inferred)
Mining method	in situ recovery (ISR)
Licensed capacity	mine: 2 million pounds per year
	mill: 4 million pounds per year including Highland mill
Total production 2002 to 2010	13.6 million pounds
2010 production	1.8 million pounds
2011 forecast production	1.8 million pounds
Estimated decommissioning cost	$111.5 million (US)

2010 update

Production

We met our production target for the year.

Upgrades

We finished building five deep disposal wells, and received authorization to operate four of the five wells. We expect to receive authorization to operate the fifth well in 2011. These are expected to help us operate and restore groundwater more efficiently.

Licensing

We submitted the licence renewal application to the regulators. We expect production to continue throughout the licence renewal process.

2010 Annual financial review   65

Planning for the future

Production

We expect to produce 1.8 million pounds in 2011.

Reynolds Ranch expansion

We are seeking regulatory approval to proceed with our Reynolds Ranch expansion. The regulators have indicated they have a large volume of permits to process, therefore approval of our expansion is not expected to occur until late in 2011. We do not expect this delay to impact production.

Reserves and resources for Reynolds Ranch and Northwest Unit have been included in the totals for Smith Ranch-Highland reserves and resources. Both properties are adjacent to Smith Ranch-Highland.

Exploration

Additional exploration is underway with the objective of extending the mine life.

Managing our risks

The operating environment is becoming more complex as public interest and regulatory oversight increase. This may have a negative impact on our plans to increase production. We also manage the risks listed on pages 54 and 55.

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Uranium — operating properties

Crow Butte

Crow Butte was discovered in 1980 and began production in 1991. It is the first uranium mine in Nebraska, and is a significant contributor to the economy of northwest Nebraska.

Location	Nebraska, US
Ownership	100%
End product	U3O8
ISO certification	ISO 14001 certified
Estimated reserves	3.1 million pounds (proven and probable)
Average reserve grade	U3O8 — 0.12%
Estimated resources	11.2 million pounds (measured and indicated)
	5.6 million pounds (inferred)
Mining method	in situ recovery (ISR)
Licensed capacity (mine and mill)	1 million pounds per year
Total production 2002 to 2010	6.8 million pounds
2010 production	0.7 million pounds
2011 forecast production	0.7 million pounds
Estimated decommissioning cost	$35.2 million (US)

2010 update

Production

Production was in line with our forecast.

Licensing

The regulators continued their review of our applications to expand and re-license Crow Butte. They are planning public hearings in 2011 to consider our application. We expect production to continue throughout this licence renewal process.

2010 Annual financial review   67

Planning for the future

Production

In 2011, we expect to produce 0.7 million pounds.

Managing our risks

The operating environment is becoming more complex as public interest and regulatory oversight increase. This may have a negative impact on our plans to increase production. We also manage the risks listed on pages 54 and 55.

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Uranium — operating properties

Inkai

Inkai is a very significant uranium deposit, located in Kazakhstan. There are two production areas (blocks 1 and 2) and an exploration area (block 3). The operator is Joint Venture Inkai Limited Liability Partnership, which we jointly own (60%) with Kazatomprom (40%).

Inkai is one of our three material uranium properties.

Location	Central Kazakhstan
Ownership	60%
End product	U3O8
ISO certification	BSI OHSAS 18001
	ISO 14001 certified
Estimated reserves (our share)	72.9 million pounds (proven and probable)
Average reserve grade	U3O8 — 0.07%
Estimated resources (Our share)	18.3 million pounds (measured and indicated)
	153.0 million pounds (inferred)
Mining method	in situ recovery (ISR)
Licensed capacity (mine and mill)	approved in principle: 3.9 million pounds per year
	(our share 2.3 million pounds per year)
	application: expect to submit for 5.2 million pounds per year
	(our share 3.1 million pounds per year)
2010 production	2.6 million pounds (our share)
2011 forecast production	2.7 million pounds (our share)
Estimated decommissioning cost	$7 million (US)

2010 update

Production

Our share of production this year was significantly higher due to successful wellfield performance and the processing of uranium in inventory at the end of 2009. Production was 13% higher than our plan at the beginning of the year due to the completion of the processing facilities and a stable acid supply.

Operations

Inkai received state commissioning approval for the main processing plant, allowing full processing of uranium concentrate on site. The plant operated at production rates very close to design capacity for several months due to strong wellfield performance.

2010 Annual financial review   69

Project funding

We have a loan agreement with Inkai. As of December 31, 2010, there was:

• $314 million (US) of principal outstanding on the loan.

• a nominal amount of accrued interest and financing fees on the loan. In 2010, Inkai paid $49 million (US) in accrued interest and financing fees.

Inkai uses 100% of the cash available for distribution each year to pay accrued interest and financing fees. After those amounts are paid, Inkai then uses 80% of cash available for distribution each year to repay principal outstanding on the loan until it is repaid in full. The remaining 20% of cash available for distribution is paid to the owners.

We have also agreed to advance funds for Inkai’s work on block 3 until the feasibility study is complete.

Licensing

Inkai received approval in principle to:

• increase annual production from blocks 1 and 2 to 3.9 million pounds of U₃O₈ (100% basis)

• amend the block 3 licence to provide for a five-year appraisal period to carry out delineation drilling, mineral resource estimation, construction and operation of a test leach facility, and to complete a feasibility study

Inkai is in the process of finalizing the approval process with an amendment to its resource use contract.

Block 3 exploration

Inkai continued delineation drilling throughout the year and began planning for engineering and construction of a test leach facility.

Profits from block 3 production are to be shared on a 50:50 basis with our partner, instead of based on our ownership interests.

Uranium conversion project

Under the guidance of the memorandum of understanding signed in 2007 (see Doubling production below), we continued to work with our partner Kazatomprom to evaluate joint UF₆ conversion opportunities. This work includes examining the feasibility of a number of options and locations based on strategic and economic considerations.

Planning for the future

Production

We expect our share of production to be 2.7 million pounds in 2011.

Block 3 exploration

In 2011 we expect to:

• continue delineation drilling

• begin developing infrastructure and engineering for the test leach facility

Doubling production

As part of our strategy to double production by 2018, we are working with our partner, Kazatomprom, to implement our 2007 non-binding memorandum of understanding. The memorandum:

• targets future annual production capacity at 10.4 million pounds (our share 5.7 million pounds). While the existing project ownership would not change, our share of the additional capacity under the memorandum would be 50%.

• contemplates studying the feasibility of constructing a uranium conversion facility as well as other potential collaborations in uranium conversion

To implement the increase, we need a binding agreement to finalize the terms of the memorandum, and various approvals from our partner and the government. We expect our ability to double annual uranium production at Inkai will be closely tied to the success of the uranium conversion project.

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Managing our risks

Regulatory approvals

In 2010, Inkai received approval in principle to produce 3.9 million pounds per year (100% basis) and is seeking final approval with an amendment to the resource use contract.

Our 2011 and future annual production targets and mineral reserve estimates assume Inkai receives the necessary government approvals and the support of our partner, Kazatomprom. More specifically, Inkai must:

• obtain final approval to produce at an annual rate of 3.9 million pounds (our share 2.3 million pounds)

• obtain the necessary permits and approvals to produce at an annual rate of 5.2 million pounds (our share 3.1 million pounds)

• ramp up production to an annual rate of 5.2 million pounds this year

We expect Inkai to receive all of the necessary permits and approvals to meet its 2011 and future annual production targets and we anticipate it will be able to ramp up production as noted above.

There is no certainty, however, Inkai will receive these permits or approvals or that it will be able to ramp up production this year. If Inkai does not, or if the permits and approvals are delayed, then Inkai may be unable to achieve its 2011 and future annual production targets and we may have to recategorize some of Inkai’s mineral reserves as resources.

Taxes

A new tax code became law in Kazakhstan on January 1, 2009, and the resource use contract was amended to adopt it. We do not expect the new tax code to have a material impact at this time, but the elimination of tax stabilization under the new tax code could be material in the future. Under the new tax code, Inkai’s corporate income tax rate is 20% and the rate used to calculate the mineral extraction tax on uranium is 22%. See our annual information form for an overview of the changes brought about by the new tax code.

Supply of sulphuric acid

The supply of sulphuric acid has not been an issue for Inkai this year. However, given the importance of sulphuric acid to Inkai’s mining operations, we continue to closely monitor its availability. Our production may be less than forecast if there is a shortage.

Political risk

Kazakhstan declared itself independent in 1991 after the dissolution of the Soviet Union. Our Inkai investment, and our plans to increase production, are subject to the risks associated with doing business in developing countries, which have significant potential for social, economic, political, legal, and fiscal instability. Kazakh laws and regulations are still developing and their application can be difficult to predict. To maintain and increase Inkai production, we need ongoing support, agreement and co-operation from our partner and the government.

The principal legislation governing subsoil exploration and mining activity in Kazakhstan is the Subsoil Use Law dated June 24, 2010. It replaces the Law on the Subsoil and Subsoil Use, dated January 27, 1996.

In general, Inkai’s licences are governed by the version of the subsoil law that was in effect when the licences were issued in April 1999, and new legislation applies to Inkai only if it does not worsen Inkai’s position. Changes to legislation related to national security, among other criteria, however, are exempt from the stabilization clause in the resource use contract. The Kazakh government interprets the national security exemption broadly.

With the new subsoil law, the government continues to weaken its stabilization guarantee. The government is broadly applying the national security exception to encompass security over strategic national resources.

The resource use contract contains significantly broader stabilization provisions than the new subsoil law, and these contract provisions currently apply to us.

To date, the new subsoil law has not had a significant impact on Inkai. We continue to assess the impact. See our annual information form for an overview of this change in law.

We also manage the risks listed on pages 54 and 55.

2010 Annual financial review   71

Uranium — development project

Cigar Lake

Cigar Lake is the world’s second largest high-grade uranium deposit, with grades that are 100 times the world average. We are a 50% owner, and the mine operator, and expect the operation to use available capacity at our Rabbit Lake mill.

Cigar Lake, which is being developed, is one of our three material uranium properties.

Location	Saskatchewan, Canada
Ownership	50.025%
End product	U3O8
Deposit type	underground
Estimated reserves (our share)	104.7 million pounds (proven and probable)
Average reserve grade	U3O8 — 17.04%
Estimated resources (our share)	0.6 million pounds (measured and indicated)
	66.8 million pounds (inferred)
Mining method	jet boring
Target production date	mid-2013
Target annual production (our share)	9 million pounds after rampup
Estimated decommissioning cost	$27.7 million (to the end of construction)

Background

Development

We began developing the Cigar Lake underground mine in 2005, but development was delayed due to water inflows (two in 2006 and one in 2008). The first inflow flooded shaft 2, while it was under construction. The second inflow flooded the underground development and we began remediation late in 2006. In 2008, another inflow interrupted the dewatering of the underground development. We sealed the inflows and completed dewatering of shafts 1 and 2. In 2010, we continued remediation of the underground.

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Mining method

We will use a number of innovative methods and techniques to mine the Cigar Lake deposit:

•	Bulk freezing — The sandstone that overlays the deposit and basement rocks is water-bearing, with large volumes of water under significant pressure. We will freeze the ore zone and surrounding rock in the area to be mined, to prevent water from entering the mine and to help stabilize weak rock formations.
	In the past, bulk freezing has been done from underground. In 2010, however, we tested and began to implement an innovative surface freeze strategy, which we expect will provide the following benefits:

• reduce risk to the production schedule by advancing the availability of frozen ground and simplifying construction activities underground by moving some of the freezing infrastructure to surface

• move up to 10 million pounds forward in the production schedule

• improve mining costs and economics of the project

We expect the capital cost for surface freezing will be $80 to $85 million (100% basis). Our plan is to use a hybrid freezing approach. We will use surface freezing to shorten the rampup period and utilize underground freezing for the longer term development of the mine.

•

Jet boring — After many years of test mining, we selected jet boring, a non-entry mining method, which we have developed and adapted specifically for this deposit. This method is new to the uranium mining industry. Overall, our initial test program was a success and met all initial objectives. This method, however, has not been proven at full production. As we ramp up production, there may be some technical challenges, which could affect our production plans.

We are confident we will be able to solve challenges that may arise, but failure to do so would have a significant impact on our business.

2010 Annual financial review   73

Milling

For approximately two years after mining begins, we expect all Cigar Lake ore to be processed at Areva’s McClean Lake JEB mill. After production ramps up to planned full capacity, the JEB mill is expected to ship a portion of the uranium solution from milling of Cigar Lake ore to the Rabbit Lake mill for processing.

2010 update

During the year, we:

• completed dewatering the underground development

• substantially completed cleanup, inspection, assessment and securing of the underground development areas

• we prepared the ground around shaft 2 for freezing in preparation to resume shaft sinking

• began implementing a surface freeze strategy we expect will shorten the rampup period for the project by bringing forward uranium production into the early years and improve mining costs and project economics

• increased installed pumping capacity

• completed backfilling of the 420 and 465 metre levels

• resumed underground development in the south end of the mine

• completed the 2010 surface drilling program

Costs

As of December 31, 2010, we had:

• invested $492 million for our share of the construction costs to develop Cigar Lake

• invested $262 million related to test mining and infrastructure development (prior to our 2005 development decision)

• expensed $81 million in remediation expenses, including about $17 million in 2010

Exploration

We initiated a surface drilling program, which we expect will further delineate mineral resources to the east and west of current reserves.

Planning for the future

In 2011, we expect to:

• finish restoring all remaining underground mine systems, infrastructure and underground development areas

• complete the work to secure the mine

• resume underground construction

• complete the sinking of shaft 2

• complete the surface ore loadout facilities

• procure additional equipment for the jet boring system

• work to obtain regulatory approval of the environmental assessment that will allow the release of treated water directly to Seru Bay of Waterbury Lake

• work to obtain regulatory approval for the Cigar Lake mine plan

Technical report

In the technical report filed in 2010, we reported $912 million (100% basis) as our expected share of the total capital costs to complete the Cigar Lake project. This included completion of the underground development and surface construction, and completion of modifications at the Rabbit Lake and McClean Lake mills.

Later in 2011, we plan to issue a new technical report for Cigar Lake to reflect developments during 2010, including our decision to proceed with the surface freeze strategy. In the report, we will update our estimates including our capital cost estimate and production rampup schedule.

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Production

We are targeting initial production to begin in mid-2013.

The costs to complete Cigar Lake and our target dates for securing the mine and for initial production are forward-looking information. They are based on the assumptions and subject to the material risks discussed on pages 2 and 3, and specifically on the assumptions and risks listed here.

Assumptions

• natural phenomena, an equipment failure or other causes do not result in a material delay or disruption in our plans

• there are no additional water inflows

• the seals or plugs used for previous water inflows do not fail

• there are no labour disputes or shortages

• we obtain contractors, equipment, operating parts, supplies, and regulatory permits and approvals when we need them

• our mine plans are achieved, our processing plants are available and function as designed, sufficient tailings capacity is available and our mineral reserve estimates are accurate

Material risks

• an unexpected geological, hydrological or underground condition, such as an additional water inflow, further delays our progress

• we cannot obtain or maintain the necessary regulatory permits or approvals

• natural phenomena, labour disputes, equipment failure, delay in obtaining the required contractors, equipment, operating parts or supplies, or other reasons cause a material delay or disruption in our plans

• our mining plans change or do not succeed, our processing plants are not available or do not function as designed, sufficient tailings capacity is not available and our mineral reserve estimates are not accurate

Managing our risks

Cigar Lake is a challenging deposit to develop and mine. These challenges include control of groundwater, weak rock formations, radiation protection, water inflow, mining method uncertainty, regulatory approvals, tailings capacity, surface and underground fires and other mining-related challenges. To reduce this risk, we are applying our operational experience and the lessons we have learned about water inflows at McArthur River and Cigar Lake.

The greatest risk to development and production is from water inflows. The 2006 and 2008 water inflows were significant setbacks.

The consequences of another water inflow at Cigar Lake would depend on its magnitude, location and timing, but could include a significant delay in Cigar Lake’s remediation, development or production, a material increase in costs and a loss of mineral reserves. Although we are taking the following steps to mitigate the risks of water inflow, there can be no guarantee that these will be successful:

Bulk freezing

Two of the primary challenges in mining the deposit are control of groundwater and ground support. Bulk freezing reduces but does not eliminate the risk of water inflows.

Mine development

Our approach is to carry out extensive grouting and careful placement of mine development away from known groundwater sources whenever possible. In addition, we assess all planned mine development for relative risk, and apply extensive additional technical and operating controls for all higher risk development.

2010 Annual financial review   75

Pumping capacity and treatment limits

We increased our pumping capacity this year to meet our standard for this project, which is to secure pumping capacity of at least one and a half times the estimated maximum inflow.

We believe we have sufficient pumping, water treatment and surface storage capacity to handle the estimated maximum inflow.

We also manage the risks listed on pages 54 and 55.

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Uranium — projects under evaluation

Kintyre

Kintyre, which we acquired with a partner in 2008, adds potential for low-cost production and diversifies our geographic reach and deposit types. We are the operator.

Location	Western Australia
Ownership	70%
End product	U3O8
Deposit type	open pit

Background

In August 2008, we paid $346 million (US) to acquire a 70% interest in Kintyre.

2010 update

This year we:

• began the process for negotiating a mine development agreement with the Martu, the native land title holders for this property

• built a construction camp to support the prefeasibility assessment of the project

• completed a delineation drilling program

• carried out metallurgical testing to define the milling process

• initiated mining and infrastructure studies for the prefeasibility study

• initiated a hydrogeological drilling program to confirm process water supply

• carried out environmental baseline studies

• submitted the environmental referral document to initiate the environmental assessment process and submitted the environmental scoping document

• trained and hired a significant number of Martu people

Planning for the future

Our plan for 2011 is to keep moving the project towards a production decision. We expect to:

• generate a National Instrument 43-101 mineral resource estimate

• complete a memorandum of understanding for a mine development agreement with the Martu

• carry out further exploration drilling to test potential extensions of the deposit

• submit an environmental review and management program

• complete the prefeasibility study and decide whether to proceed to the feasibility stage

Managing the risks

To successfully develop this project, we need a positive feasibility study, regulatory approval and an agreement with the Martu. We also manage the risks listed on pages 54 and 55.

2010 Annual financial review     77

Uranium — projects under evaluation

Millennium

Millennium is a uranium deposit in northern Saskatchewan that we expect will use the mill at Key Lake. We are the operator.

Location	Saskatchewan, Canada
Ownership	42%
End product	U3O8
Deposit type	underground
Estimated resources	21.4 million pounds (indicated)
(our share)	4.3 million pounds (inferred)

Background

The Millennium deposit was discovered in 2000. The deposit was delineated through geophysical survey and drilling work between 2000 and 2007.

2010 update

This year we:

• completed our mine design with positive results achieved

• continued work on the environmental assessment, preparing us to submit the environmental impact statement late in 2011 or early 2012

Planning for the future

Our plan for 2011 is to keep moving the project towards a production decision. We expect to:

• complete the environmental assessment work and submit the environmental impact study to the regulators late in 2011 or early 2012

• undertake additional studies and design work required to advance the project

Managing the risks

The English River First Nation (ERFN) has selected surface lands covering the Millennium deposit in a claim for Treaty Land Entitlement (TLE). The Saskatchewan government has rejected the selection, but the ERFN has challenged the government’s decision in the courts. The TLE process does not affect our mineral rights, but it could have an impact on the surface rights and benefits we ultimately negotiate as part of the development of this deposit.

We also manage the risks listed on pages 54 and 55.

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Uranium — exploration

Exploration is key to ensuring our long-term growth, and since 2002 we have more than tripled our annual investment.

2010 update

Brownfield exploration

Brownfield exploration is uranium exploration near our existing operations, and includes expenses for advanced exploration projects where uranium mineralization is being defined.

We spent $11 million in five brownfield exploration projects, and $48 million for resource delineation at Kintyre and Inkai block 3.

Regional exploration

We spent about $37 million in regional exploration programs (including support costs). Saskatchewan was the largest region, followed by Australia, northern Canada, Asia, and South America.

We own a 30% interest in the Phoenix deposit, part of the Wheeler River joint venture in Saskatchewan, operated by 60% owner Denison Mines. In 2010, an initial estimate of 36 million pounds indicated mineral resources (100%) for zone A, the largest of four known mineralized zones of the deposit, was announced.

Plans for 2011

We plan to spend approximately $90 million on uranium exploration in 2011 as part of our long-term strategy. This includes activities at our projects under evaluation.

Brownfield exploration

About $9 million will be spent on five brownfield exploration projects in the Athabasca Basin and Australia. Our expenditures on projects under evaluation are expected to total $22 million, with the largest amounts spent on Kintyre and on further delineation of the Inkai block 3 resource.

Regional exploration

We expect to spend about $60 million on 54 projects worldwide, the majority of which are at drill target stage. Among the larger expenditures planned are $8 million on two adjacent projects in Nunavut, $5 million directed towards new targets in South Australia and Argentina, and a $4 million expenditure on the Wellington Range project in Northern Territory, Australia.

2010 Annual financial review    79

Fuel services — refining

Blind River refinery

Blind River is the world’s largest commercial uranium refinery, refining U₃O₈ from mines around the world into UO₃.

Location	Ontario, Canada
Ownership	100%
End product	UO3
ISO certification	ISO 14001 certified
Licensed capacity	approved: 18 million kgU as UO3 per year
	application: 24 million kgU as UO3 per year
Estimated decommissioning cost	$36 million

2010 update

Production

Our Blind River refinery produced 12.4 million kgU of UO₃, in line with our forecast. This ensured that SFL maintained its contractual inventories and Port Hope met its production requirements.

Managing our risks

We manage the risks listed on pages 54 and 55.

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Fuel services — conversion and fuel manufacturing

We control about 35% of western world UF₆ capacity.

Port Hope conversion services

Port Hope is the only uranium conversion facility in Canada, and one of only four in the western world. It is the only commercial supplier of UO₂ for Canadian-made Candu reactors.

Location	Ontario, Canada
Ownership	100%
End product	UF6, UO2
ISO certification	ISO 14001 certified
Licensed capacity	12.5 million kgU as UF6 per year
	2.8 million kgU as UO2 per year
Estimated decommissioning cost	$96 million

Cameco Fuel Manufacturing Inc. (CFM)

CFM produces fuel bundles and reactor components for Candu reactors.

Location	Ontario, Canada
Ownership	100%
End product	Candu fuel bundles and components
ISO certification	ISO 9001 certified
Licensed capacity	1.2 million kgU as UO2 as finished bundles
Estimated decommissioning cost	$18 million

Springfields Fuels Ltd. (SFL)

SFL is the newest conversion facility in the world. We contract almost all of its capacity through a toll-processing agreement to 2016.

Location	Lancashire, UK
Toll-processing agreement	annual conversion of 5 million kgU as UO3 to UF6
Licensed capacity	6.0 million kgU as UF6 per year

2010 Annual financial review   81

2010 update

Production

Fuel services production was 15.4 million kgU in 2010, in line with our target of 15 million to 16 million kgU. Production was 25% higher than in 2009 due to the routine operation of the Port Hope UF₆ plant, which did not operate for most of the first half of 2009.

Port Hope conversion facility cleanup and modernization (Vision 2010)

We submitted the draft environmental impact statement for review by the regulators in December.

Collective agreement

Unionized employees at the Port Hope conversion facility voted to accept a new, three-year collective agreement. The agreement expires June 30, 2013.

Community outreach

We continued to strengthen our community outreach program in Port Hope by:

• holding a series of community forums

• making presentations to municipal council

• reaching out using community newsletters, newspaper advertising, public displays, open houses and a website dedicated to the Port Hope community

Public opinion research shows we have a strong level of local support.

Planning for the future

Production
We expect total production to be between 15 million and 16 million kgU in 2011.

Port Hope conversion facility cleanup and modernization (Vision 2010)

In 2011, we expect to:

• continue with the environmental assessment process for this project

• finalize the environmental impact statement

Managing our risks

We manage the risks listed on pages 54 and 55.

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Electricity

Bruce Power Limited Partnership (BPLP)

BPLP leases and operates four Candu nuclear reactors that have the capacity to provide about 15% of Ontario’s electricity.

Location	Ontario, Canada
Ownership	31.6%
ISO certification	ISO 14001 certified
Expected reactor life	2018 to 2021
Term of lease	2018 — right to extend for up to 25 years
Generation capacity	3,260 MW

Background

We are the fuel procurement manager for BPLP’s four nuclear reactors and for Bruce A Limited Partnership’s (BALP) two operating reactors.

We provide 100% of BPLP’s uranium concentrates and have agreed to supply BALP with the majority of its future uranium concentrates. Sales to BPLP and BALP are also a substantial portion of our fuel manufacturing business and an important part of our UO₂ business.

2010 update

Output

BPLP’s capacity factor was 91%.

Collective agreements

The collective agreements with the Power Workers’ Union and the Society of Energy Professionals expired in December. BPLP has reached a tentative agreement with the Power Workers’ Union and discussions with the Society are underway.

Planning for the future

Output

We expect the capacity factor to be 89% in 2011 and actual output to be about 2% lower than 2010.

Managing our risks

BPLP manages the unique risks associated with operating Candu reactors. The amount of electricity generated, and the cost of that generation, could vary materially from forecast if planned outages are significantly longer than planned, or there are many unplanned outages, either for maintenance, regulatory requirements, equipment malfunction or due to other causes.

BPLP also manages the risks listed on pages 54 and 55.

2010 Annual financial review     83

Mineral reserves and resources

Our mineral reserves and resources are the foundation of our company and fundamental to our success.

We have interests in a number of uranium properties. The tables in this section show our estimates of the reserves, measured and indicated resources and inferred resources at those properties. However, only three of the properties listed in those tables are material uranium properties for us: McArthur River and Inkai, which are being mined, and Cigar Lake, which is being developed.

We estimate and disclose mineral reserves and resources in five categories, using the definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum, and in compliance with Canadian National Instrument 43-101 — Standards of Disclosure for Mineral Projects (NI 43-101), developed by the Canadian Securities Administrators. You can find out more about these categories at www.cim.org.

About mineral resources

Mineral resources do not have demonstrated economic viability, but have reasonable prospects for economic extraction. They fall into three categories: measured, indicated and inferred. Our reported mineral resources are exclusive of mineral reserves.

• Measured and indicated mineral resources are sufficiently well defined that we can estimate them with enough confidence to apply technical and economic parameters and evaluate the economic viability of the deposit.

• measured resources: we can confirm geological and grade continuity to carry out production planning.

• indicated resources: we can reasonably assume geological and grade continuity to carry out mine planning.

• Inferred mineral resources are estimated using limited information. We do not have enough confidence to evaluate their economic viability in a meaningful way. You should not assume that all or any part of an inferred mineral resource will be upgraded to an indicated or measured mineral resource as a result of continued exploration.

About mineral reserves

Mineral reserves are measured and indicated mineral resources that can be mined economically at the time of reporting. They fall into two categories:

• proven reserves: economic extraction of measured resources is demonstrated by at least a preliminary feasibility study

• probable reserves: economic extraction of measured and/or indicated resources is demonstrated by at least a preliminary feasibility study

We use current geological models, an average uranium price of $56.50 (US) per pound U₃O₈, and current or projected operating costs and mine plans to estimate our mineral reserves, allowing for dilution and mining losses. We apply our standard data verification process for every estimate.

Changes this year

Our share of proven and probable mineral reserves went from 479 million pounds U₃O₈ at the end of 2009 to 476 million pounds at the end of 2010. The change was mostly the result of:

• mining and milling activities, which used 24 million pounds

• conversion of mineral resources to reserves from drilling and mine design updates at McArthur River, Rabbit Lake and Smith Ranch-Highland

• conversion of mineral reserves to resources at Inkai due to the production ramp up schedule and increased leaching recovery applied to a limited annual production rate

Measured and indicated mineral resources increased from 140 million pounds U₃O₈ at the end of 2009 to 142 million pounds at the end of 2010. The change was mostly the result of:

• addition of mineral resources at the new Phoenix deposit

• conversion of mineral resources to reserves at McArthur River and Rabbit Lake

• conversion of mineral reserves to resources at Inkai

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At the end of 2010, our share of inferred mineral resources was nearly 357 million pounds U₃O₈ — a net gain of 3 million pounds, which came mostly from the new Powell zone at Rabbit Lake and drilling and new mining plans at McArthur River zone 4 south.

Qualified persons

The technical and scientific information discussed in this MD&A, including mineral reserve and resource estimates, for our material properties (McArthur River/Key Lake, Inkai and Cigar Lake) were prepared by, or under the supervision of, individuals who are qualified persons for the purposes of NI 43-101:

McArthur River/Key Lake

• Alain G. Mainville, director, mineral resources management, Cameco

• David Bronkhorst, vice-president, Saskatchewan mining south, Cameco

• Greg Murdock, technical superintendent, McArthur River, Cameco

• Les Yesnik, general manager, Key Lake, Cameco

• Lorne D. Schwartz, chief metallurgist, major projects —technical services, Cameco

Cigar Lake

• Alain G. Mainville, director, mineral resources management, Cameco

• C. Scott Bishop, principal mine engineer, major projects — technical services, Cameco

• Grant J.H. Goddard, vice-president, Saskatchewan mining north, Cameco

• Lorne D. Schwartz, chief metallurgist, major projects — technical services, Cameco

Inkai

• Alain G. Mainville, director, mineral resources management, Cameco

• Charles J. Foldenauer, operations director, JV Inkai

Important information about mineral reserve and resource estimates

Although we have carefully prepared and verified the mineral reserve and resource figures in this document, the figures are estimates, based in part on forward-looking information.

Estimates are based on our knowledge, mining experience, analysis of drilling results, the quality of available data and management’s best judgment. They are, however, imprecise by nature, may change over time, and include many variables and assumptions including:

• geological interpretation

• extraction plans

• commodity prices

• recovery rates

• operating and capital costs

There is no assurance that the indicated levels of uranium will be produced, and we may have to re-estimate our mineral reserves based on actual production experience. Changes in the price of uranium, production costs or recovery rates could make it unprofitable for us to operate or develop a particular site or sites for a period of time. See page 1 for information about forward-looking information.

Please see our mineral reserves and resources section of our annual information form for the specific assumptions, parameters and methods used for McArthur River, Inkai and Cigar Lake mineral reserve and resource estimates.

Important information for US investors

While the terms measured, indicated and inferred mineral resources are recognized and required by Canadian securities regulatory authorities, the US Securities and Exchange Commission (SEC) does not recognize them. Under US standards, mineralization may not be classified as a ‘reserve’ unless it has been determined at the time of reporting that the mineralization could be economically and legally produced or extracted. US investors should not assume that:

• any or all of a measured or indicated mineral resource will ever be converted into proven or probable mineral reserves

• any or all of an inferred mineral resource exists or is economically or legally mineable, or will ever be upgraded to a higher category. Under Canadian securities regulations, estimates of inferred resources may not form the basis of

2010 Annual financial review   85

feasibility or prefeasibility studies. Inferred resources have a great amount of uncertainty as to their existence and economic and legal feasibility.

The requirements of Canadian securities regulators for identification of ‘reserves’ are also not the same as those of the SEC, and mineral reserves reported by us in accordance with Canadian requirements may not qualify as reserves under SEC standards.

Other information concerning descriptions of mineralization, mineral reserves and resources may not be comparable to information made public by companies that comply with the SEC’s reporting and disclosure requirements for US domestic mining companies, including Industry Guide 7.

86   cameco corporation

Mineral reserves

As at December 31, 2010 (100% basis — only the second last column shows Cameco’s share)

Proven and probable (tonnes in thousands; pounds in millions)

				Proven						Probable						Total mineral reserves
																				Cameco’s
																				share of		Estimated
				Grade		Content				Grade		Content				Grade		Content		content		metallurgical
Property	Mining method	Tonnes		%U3O8		(lbs U3O8)		Tonnes		%U3O8		(lbs U3O8)		Tonnes		%U3O8		(lbs U3O8)		(lbs U3O8)		recovery (%)
McArthur River	underground		458.5		17.29		174.8		540.2		13.49		160.7		998.7		15.24		335.5		234.2		98.7
Cigar Lake	underground		130.5		25.62		73.7		426.8		14.41		135.6		557.3		17.04		209.3		104.7		98.5
Rabbit Lake	underground		39.6		0.62		0.5		1,478.1		0.77		25.0		1,517.7		0.76		25.5		25.5		96.7
Key Lake	open pit		61.9		0.52		0.7								61.9		0.52		0.7		0.6		98.7
Inkai	ISR		4,817.2		0.08		8.9		75,810.0		0.07		112.7		80,627.2		0.07		121.6		72.9		85.0
Gas Hills-Peach	ISR								6,403.8		0.13		19.0		6,403.8		0.13		19.0		19.0		72.0
North Butte-Brown Ranch	ISR								3,803.2		0.10		8.2		3,803.2		0.10		8.2		8.2		80.0
Smith Ranch-Highland	ISR		1,243.4		0.11		3.1		2,707.7		0.08		4.9		3,951.1		0.09		8.0		8.0		80.0
Crow Butte	ISR		922.2		0.11		2.3		282.2		0.13		0.8		1,204.4		0.12		3.1		3.1		85.0
Total			7,673.3		—		264.0		91,452.0		—		466.9		99,125.3		—		730.9		476.2

Notes

See page 60 for a discussion of the change in the average ore grade for mineral reserves at McArthur River.

ISR — in situ recovery

Estimates in the table above:

• use an average uranium price of $56.50 (US)/lb U₃O₈

• are based on the average exchange rate at December 31, 2010 ($1.00 US=$0.99 Cdn)

Totals may not add up due to rounding.

Except for the possible Inkai permitting issue referred to below, we do not expect these mineral reserve estimates to be materially affected by environmental, permitting, legal, taxation, socio-economic, political or marketing issues.

Metallurgical recovery

We report mineral reserves as the quantity of contained ore supporting our mining plans, and include an estimate of the metallurgical recovery for each uranium property. Metallurgical recovery is an estimate of the amount of valuable product that can be physically recovered by the metallurgical extraction process, and is calculated by multiplying quantity of contained metal (content) by the estimated metallurgical recovery percentage. Our share of uranium in the table above is before accounting for estimated metallurgical recovery.

Estimates for Inkai

In 2010, Inkai received approval in principle to produce 3.9 million pounds per year (100% basis) and is seeking final approval with an amendment to the resource use contract.

Our 2011 and future annual production targets and mineral reserve estimates assume Inkai receives the necessary government approvals and the support of our partner, Kazatomprom. More specifically, Inkai must:

• obtain final approval to produce at an annual rate of 3.9 million pounds (our share 2.3 million pounds)

• obtain the necessary permits and approvals to produce at an annual rate of 5.2 million pounds (our share 3.1 million pounds)

• ramp up production to an annual rate of 5.2 million pounds this year

2010 Annual financial review   87

We expect Inkai to receive all of the necessary permits and approvals to meet its 2011 and future annual production targets and we anticipate it will be able to ramp up production as noted above.

There is no certainty, however, Inkai will receive these permits or approvals or that it will be able to ramp up production this year. If Inkai does not, or if the permits and approvals are delayed, then Inkai may be unable to achieve its 2011 and future annual production targets and we may have to re-categorize some of Inkai’s mineral reserves as resources.

88   cameco corporation

Mineral resources

As at December 31, 2010 (100% — only the last column shows Cameco’s share)

Measured and indicated (tonnes in thousands; pounds in millions)

		Measured						Indicated						Total measured and indicated
																				Cameco’s
	Mining			Grade		Content				Grade		Content				Grade		Content		share
Property	method	Tonnes		% U3O8		(lbs U3O8)		Tonnes		% U3O8		(lbs U3O8)		Tonnes		% U3O8		(lbs U3O8)		(lbs U3O8)
McArthur River	underground		85.9		6.28		11.9		22.2		10.23		5.0		108.1		7.09		16.9		11.8
Cigar Lake	underground		8.4		2.07		0.4		15.6		2.35		0.8		24.0		2.27		1.2		0.6
Rabbit Lake	underground								348.0		0.52		4.0		348.0		0.52		4.0		4.0
Dawn Lake	open pit, underground								347.0		1.69		12.9		347.0		1.69		12.9		7.4
Millennium	underground								507.8		4.55		50.9		507.8		4.55		50.9		21.4
Phoenix	underground								89.9		17.98		35.6		89.9		17.98		35.6		10.7
Tamarack	underground								183.8		4.42		17.9		183.8		4.42		17.9		10.3
Inkai	ISR								18,386.3		0.08		30.5		18,386.3		0.08		30.5		18.3
Gas Hills-Peach	ISR		1,964.2		0.08		3.4		1,418.2		0.07		2.3		3,382.4		0.08		5.7		5.7
North Butte-Brown Ranch	ISR		762.1		0.08		1.4		4,012.0		0.07		6.0		4,774.1		0.07		7.4		7.4
Smith Ranch-Highland	ISR		2,079.1		0.11		4.9		13,906.5		0.06		17.6		15,985.6		0.06		22.5		22.5
Crow Butte	ISR								2,466.2		0.21		11.2		2,466.2		0.21		11.2		11.2
Ruby Ranch	ISR								2,215.3		0.08		4.1		2,215.3		0.08		4.1		4.1
Ruth	ISR								1,080.5		0.09		2.1		1,080.5		0.09		2.1		2.1
Shirley Basin	ISR		89.2		0.16		0.3		1,638.2		0.11		4.1		1,727.4		0.12		4.4		4.4
Total			4,988.9		—		22.3		46,637.5		—		205.0		51,626.4		—		227.3		141.9

Inferred (tonnes in thousands; pounds in millions)

								Cameco’s
	Mining			Grade		Content		share
Property	method	Tonnes		% U3O8		(lbs U3O8)		(lbs U3O8)
McArthur River	underground		506.1		13.46		150.2		104.8
Cigar Lake	underground		480.4		12.61		133.5		66.8
Rabbit Lake	underground		369.4		1.26		10.2		10.2
Millennium	underground		217.8		2.12		10.2		4.3
Phoenix	underground		23.8		7.27		3.8		1.1
Tamarack	underground		45.6		1.02		1.0		0.6
Inkai	ISR		254,696.0		0.05		255.1		153.0
Gas Hills-Peach	ISR		861.5		0.07		1.3		1.3
North Butte-Brown Ranch	ISR		640.6		0.06		0.9		0.9
Smith Ranch-Highland	ISR		6,370.1		0.05		6.6		6.6
Crow Butte	ISR		2,349.4		0.11		5.6		5.6
Ruby Ranch	ISR		56.2		0.14		0.2		0.2
Ruth	ISR		210.9		0.08		0.4		0.4
Shirley Basin	ISR		508.0		0.10		1.1		1.1
Total			267,335.8		—		580.1		356.9

Notes

ISR — in situ recovery

Mineral resources do not include amounts that have been identified as mineral reserves.

Mineral resources do not have demonstrated economic viability. Totals may not add up due to rounding.

2010 Annual Financial review    89

Additional information

Related party transactions

We buy significant amounts of goods and services for our Saskatchewan mining operations from northern Saskatchewan suppliers to support economic development in the region. One of these suppliers is Points Athabasca Contracting Ltd. (PACL). In 2010, we paid PACL $38 million for construction and contracting services (2009 — $30 million). These transactions were carried out in the normal course of business. A member of Cameco’s board of directors is the president of PACL.

Critical accounting estimates

Because of the nature of our business, we are required to make estimates that affect the amount of assets and liabilities, revenues and expenses, commitments and contingencies we report.

We base our estimates on our experience, our best judgment, guidelines established by the Canadian Institute of Mining, Metallurgy and Petroleum and on assumptions we believe are reasonable. We believe the following critical accounting estimates reflect the more significant judgments used in the preparation of our financial statements.

Decommissioning and reclamation

We are required to estimate the cost of decommissioning and reclamation for each operation, but we normally do not incur these costs until an asset is nearing the end of its useful life. Regulatory requirements and decommissioning methods could change during that time, making our actual costs different from our estimates. A significant change in these costs or in our mineral reserves could have a material impact on our net earnings and financial position.

Property, plant and equipment

We depreciate property, plant and equipment primarily using the unit of production method, where the carrying value is reduced as resources are depleted. A change in our mineral reserves would change our depreciation expenses, and such a change could have a material impact on amounts charged to earnings.

We assess the carrying values of property, plant and equipment and goodwill every year, or more often if necessary. If we determine that we cannot recover the carrying value of an asset or goodwill, we write off the unrecoverable amount against current earnings. We base our assessment of recoverability on assumptions and judgments we make about future prices, production costs, our requirements for sustaining capital and our ability to economically recover mineral reserves. A material change in any of these assumptions could have a significant impact on the potential impairment of these assets.

Taxes

When we are preparing our financial statements, we estimate taxes in each jurisdiction we operate in, taking into consideration different tax rates, non-deductible expenses, valuation allowances, changes in tax laws and our expectations for future results.

We base our estimates of future income taxes on temporary differences between the assets and liabilities we report in our financial statements, and the assets and liabilities determined by the tax laws in the various countries we operate in. We record future income taxes in our financial statements based on our estimated future cash flows, which includes estimates of non-deductible expenses. If these estimates are not accurate, there could be a material impact on our net earnings and financial position.

90    cameco corporation

Controls and procedures

We have evaluated the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of December 31, 2010, as required by the rules of the US Securities and Exchange Commission and the Canadian Securities Administrators.

Management, including our chief executive officer and our chief financial officer, supervised and participated in the evaluation, and concluded that our disclosure controls and procedures are effective to provide a reasonable level of assurance that the information we are required to disclose in reports we file or submit under securities laws is recorded, processed, summarized and reported accurately, and within the time periods specified. It should be noted that while the CEO and CFO believe that our disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect the disclosure controls and procedures or internal control over financial reporting to be capable of preventing all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Management, including our chief executive officer and our chief financial officer, is responsible for establishing and maintaining internal control over financial reporting and conducted an evaluation of the effectiveness of our internal control over financial reporting based on the Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2010. We have not made any change to our internal control over financial reporting during the 2010 fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

New accounting pronouncements

International Financial Reporting Standards (IFRS)

The Accounting Standards Board requires Canadian publicly accountable enterprises to adopt IFRS effective January 1, 2011. Although IFRS has a conceptual framework that is similar to Canadian GAAP, there are significant differences in recognition, measurement and disclosure.

We have developed a three-phase implementation plan in order to ensure compliance and a smooth transition.

Senior management and the board’s audit committee are actively involved in the process. A major public accounting firm has been engaged to provide technical accounting advice and project management guidance.

Phase 1: Preliminary study and diagnostic — complete

During this phase, we:

• completed a high-level impact assessment

• prioritized areas to evaluate in phase 2

• developed a detailed plan for convergence and implementation

• determined which information technology systems need to be modified to meet IFRS reporting requirements. We tested and implemented systems modifications by June 30, 2009.

Phase 2: Detailed component evaluation — complete

During this phase, we:

• assessed the impact of the adoption of IFRS on our results of operations, financial position and financial statement disclosures

• developed a detailed, systematic gap analysis of accounting and disclosure differences between Canadian GAAP and IFRS, which will help us make final decisions about accounting policies and our overall conversion strategy

• specified all changes we needed to make to existing business processes

Phase 3: Embedding — in progress

During this final phase, we will:

• carry out the changes to our business processes

• receive the audit committee’s approval of our accounting policy changes

• complete the training process for our audit committee, board members and staff

2010 Annual financial review    91

• communicate the impact of the IFRS transition to external stakeholders

• collect the financial information we need to create our 2010 and 2011 financial statements under IFRS

• receive the board’s approval of the new statements

Progress update

We evaluated key accounting policy alternatives and implementation throughout the year and have completed our analysis of the accounting effects of adopting IFRS. We have quantified the items in our January 1, 2010 opening balances and earnings for the three-month periods ended March 31, 2010, June 30, 2010 and September 30, 2010 under IFRS, subject to changes in IFRS standards or their interpretation. See Opening statement of financial position and interim period financial results under IFRS for more information about the most significant differences expected between our Canadian GAAP and IFRS balances.

Senior management and the audit committee have approved our IFRS accounting policies, but IFRS standards are evolving and are subject to change going forward. The International Accounting Standards Board (IASB) has several projects underway that could affect the differences between Canadian GAAP and IFRS. For example, we expect that the standards for consolidation, liabilities, discontinued operations, financial instruments, employee benefits and joint ventures could change in the near term, and that IFRS for income taxes may change at a later date. It is also possible that new guidance regarding accounting for borrowing costs may be issued. We have been monitoring and evaluating these changes and will continue to do so.

In the fourth quarter of 2010, we changed our choice in accounting policy relating to joint ventures. Previously, we had planned to use the equity method to account for our interests in jointly controlled enterprises. This choice was made based on the expectation that a new accounting standard requiring the use of the equity method for such joint venture interests would take effect in the near term. However, the anticipated standard has not been issued and we have opted to continue to proportionately account for all joint venture interests.

We currently expect IFRS will affect our consolidated financial statements in the following key areas:

Asset impairment

We use a two-step approach to test for impairment under Canadian GAAP:

• We compare the carrying value of the asset with undiscounted future cash flows to see whether there is an impairment.

• If there is an impairment, we measure it by comparing the carrying value of the asset with its fair value.

International Accounting Standard (IAS) 36, Impairment of Assets, takes a one-step approach:

• Compare the carrying value of the asset with the higher of its fair value less costs to sell or its value in use.

The difference in accounting for asset impairment could lead to greater volatility in reported earnings in future periods. The value-in-use test under IFRS uses discounted future cash flows, increasing the likelihood of asset impairment compared to the test under Canadian GAAP, which uses undiscounted cash flow. IFRS also requires companies to reverse impairment losses (for everything except goodwill) if an impairment is reduced due to a change in circumstances. Canadian GAAP does not allow companies to reverse impairment losses. As at January 1, 2011, we have not recorded any impairment charges under Canadian GAAP. We have, however, under IFRS reversed portions of impairment charges previously recorded under Canadian GAAP. See Opening statement of financial position and interim period financial results under IFRS for more information.

Employee benefits

We amortize past service costs on a straight-line basis over the expected average remaining service life of the plan participants under Canadian GAAP.

IAS 19, Employee Benefits, requires companies to expense the past service cost component of defined benefit plans on an accelerated basis. Vested past service costs must be expensed immediately. Unvested past service costs must be recognized on a straight-line basis until the benefits vest. Companies will also recognize actuarial gains and losses directly in equity rather than through profit or loss.

92    cameco corporation

IFRS 1, First-Time Adoption of International Financial Reporting Standards, also allows companies to recognize all cumulative actuarial gains and losses in retained earnings at the transition date and we have done so.

Share-based payments

We measure cash-settled, share-based payments to employees based on the intrinsic value of the award under Canadian GAAP. IFRS 2, Share-Based Payments, requires companies to measure payments at the award’s fair value, both initially and at each reporting date.

We expect no material impact on our financial results due to this difference.

Provisions (including asset retirement obligations)

IAS 37, Provisions, Contingent Liabilities and Contingent Assets, requires companies to recognize a provision when:

• there is a present obligation due to a past transaction or event

• it is probable (i.e. more likely than not) that an outflow of resources will be required to settle the obligation, and

• the obligation can be reliably estimated

Canadian GAAP uses the term ‘likely’ in its recognition criteria, which is a higher threshold than ‘probable’, so some contingent liabilities may be recognized under IFRS that were not recognized under Canadian GAAP.

IFRS also measures provisions differently. For example:

• When there is a range of equally possible outcomes, IFRS uses the midpoint of the range as the best estimate, while Canadian GAAP uses the low end of the range.

• Under IFRS, material provisions are discounted to their present value.

Joint ventures

We proportionately account for interests in jointly controlled enterprises, such as our interest in BPLP, under Canadian GAAP. The IASB has indicated that it expects to issue a new standard in 2011 that will replace IAS 31, Interests in Joint Ventures. It is considering Exposure Draft 9, Joint Arrangements (ED 9), which proposes that an entity recognize its interest in a joint controlled enterprise using the equity method. It is uncertain when the new standard will become effective. Until then, we have elected under the current IFRS standard to continue to use the proportionate consolidation method to account for our interests in jointly controlled enterprises.

Income taxes

Under Canadian GAAP, we cannot recognize deferred tax for a temporary difference that arises from intercompany transactions. We record the taxes we pay or recover in these transactions as an asset or liability, and then recognize them as a tax expense when the asset leaves the group or is otherwise used. IAS 12 requires entities to recognize deferred taxes for temporary differences that arise from intercompany transactions, and to recognize taxes paid or recovered in these transactions in the period incurred.

The IASB may address these differences in a fundamental review of income tax accounting at some time in the future, but this review is not likely to be soon.

Convertible debentures

Under Canadian GAAP, our convertible debentures, issued in 2003 and redeemed in 2008, were treated as a compound instrument with a debt and equity component. We measured the debt component at amortized cost using the effective interest rate method, and the equity component at the issue date using the residual method which does not recognize future changes in value.

We have concluded that under IFRS we cannot account for the convertible debentures as compound instruments under IAS 32. This does not change our accounting for the debt component, but we have concluded that the conversion feature is to be accounted for as a derivative. We are required to measure derivatives at fair value at each reporting date, recording changes in value in earnings. For purposes of our transition to IFRS, we have measured the fair value of the conversion feature as at the redemption date, and recorded an increase in share capital offset by a corresponding decrease in retained earnings.

Given the significant increase in value of the conversion option as a result of increases in the stock price of Cameco between the date of issuance and the date of redemption, we have recorded a $297 million reclassification between retained earnings and share capital.

2010 Annual financial review    93

Exploration expenses

Under Canadian GAAP, we charge expenditures for geological exploration programs to earnings as incurred. We begin capitalizing exploration and development expenditures related to the project once the decision has been made to proceed to development.

IFRS 6, Exploration for and Evaluation of Mineral Resources, requires companies to either capitalize or expense costs incurred during the exploration and evaluation phase. Geological activities are considered exploration and evaluation between the time of obtaining the legal rights to explore a specific area and the completion of a commercially viable technical feasibility study. IFRS 6 requires entities to choose which expenditures are capitalized and which are expensed, and to apply the approach consistently.

On transition to IFRS, we will maintain our current accounting policy of expensing all costs relating to exploration and evaluation as they are incurred. As we do under Canadian GAAP, we will capitalize costs once we have determined that a property has economically recoverable reserves. No adjustments are required on transition to IFRS.

First-time adoption of IFRS

IFRS 1 generally requires an entity to apply IFRS retrospectively at the end of its first IFRS reporting period, but there are some mandatory exceptions and some optional exemptions.

We have analyzed the options available to us and have used the exemptions described in the table below. This is a summary of the most significant decisions relating to the transition to IFRS and IFRS 1 elections — it is not a complete list of decisions we were required or elected to make. We have completed our analysis and have made decisions about the accounting policies that are available. We have quantified the impacts of these differences on our consolidated financial statements under IFRS.

Business combinations	There is an option to apply IFRS 3, Business Combinations, retrospectively or prospectively.
	We have elected to apply IFRS 3 prospectively to all business combinations that occurred before the transition date, except as required under IFRS 1.
Fair value as deemed cost	There is an option to choose to use the fair value of an item of property, plant and equipment as deemed cost at the transition date or a previous revaluation under Canadian GAAP as deemed cost under IFRS.
	We have elected not to use fair value as deemed cost on transition. Instead, these items are reported at cost as determined under IFRS.
Share-based payments	There is an option to apply IFRS 2, Share-Based Payments, to all equity instruments granted on or before November 7, 2002, and to those granted after November 7, 2002 only if they had not vested by the transition date.
	We have elected to apply IFRS 2 to all equity instruments granted after November 7, 2002 that had not vested as of January 1, 2010, and to all liabilities arising from share-based payment transactions that existed at January 1, 2010.
Borrowing costs	There is an option to apply IAS 23, Borrowing Costs, retrospectively, using a date we specify, or to capitalize borrowing costs for all qualifying assets when capitalization begins on or after January 1, 2010.
	We have elected to apply IAS 23 prospectively. For all qualifying assets, we will expense the borrowing costs we were capitalizing before January 1, 2010, and capitalize the borrowing costs that take effect on or after that date.
Employee benefits	IAS 19, Employee Benefits, requires entities to defer or amortize certain actuarial gains and losses, subject to certain provisions (corridor approach), or to immediately recognize them in equity.
	We have elected to recognize cumulative actuarial gains and losses on benefit plans in retained earnings at the transition date.

94    cameco corporation

Differences in currency translation	IAS 21, The Effects of Changes in Foreign Exchange Rates, requires the retrospective calculation of currency translation differences from the date a subsidiary or associate was formed or acquired.
	IFRS 1 provides the option of resetting cumulative translation gains and losses to zero at the transition date.
	We have elected to reset all cumulative translation gains and losses to zero in retained earnings at the transition date.
Decommissioning liabilities	There is an option to apply International Financial Reporting Interpretations Committee 1 (IFRIC 1), Changes in Existing Decommissioning, Restoration and Similar Liabilities, retrospectively or prospectively.
	IFRIC 1 will require us to add or deduct a change in our obligations to dismantle, remove and restore items of property, plant and equipment from the cost of the asset it relates to. The adjusted amount is then depreciated prospectively over the asset’s remaining useful life.
	We have elected to adopt IFRIC 1 prospectively at the transition date.

Opening statement of financial position and interim period financial results under IFRS

The following tables include our statement of financial position under IFRS as at January 1, 2010 and our estimates of the most significant differences between our Canadian GAAP and IFRS earnings for the three-month periods ended March 31, 2010, June 30, 2010 and September 30, 2010. This information is based on our current views, assumptions and expectations. However, circumstances may arise, such as changes in IFRS standards or interpretations of existing IFRS standards, which could alter the information presented below.

The notes referenced in the tables are explained by the corresponding notes at the end of the tables.

2010 Annual financial review    95

Opening statement of financial position

			Jan 1, 2010
			effect of
($ millions)	Cdn GAAP		transition			IFRS
Assets
Current assets
Cash and cash equivalents		1,101		—			1,101
Short-term investments		203		—			203
Accounts receivable		447		2			449
Inventories		453		(8	)		445
Supplies and prepaid expenses		169		—			169
Current portion of long-term receivables, investments and other		155		—			155
		2,528		(6	)		2,522
Property, plant and equipment (1, 2, 3, 10)		4,068		(351	)		3,717
Intangible assets		98		—			98
Long-term receivables, investments and other (4, 5, 6)		667		(291	)		376
Investments in equity-accounted investees (4)		—		222			222
Deferred tax assets (9)		33		(9	)		24
Total assets		7,394		(435	)		6,959
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities		503		2			505
Current tax liabilities		31		—			31
Short-term debt		77		—			77
Dividends payable		24		—			24
Current portion of long-term debt		12		—			12
Current portion of other liabilities		29		—			29
Deferred tax liabilities (9)		87		(1	)		86
		763		1			764
Long-term debt		953		—			953
Provision for reclamation		258		(258	)		—
Provisions (2)		—		315			315
Other liabilities (5, 6, 10)		245		72			317
Deferred tax liabilities (9)		167		(146	)		21
		2,386		(16	)		2,370
Minority interest		164		(164	)		—
Shareholders’ equity
Share capital (8)		1,512		297			1,809
Contributed surplus		132		—			132
Retained earnings		3,159		(767	)		2,392
Other components of equity (7)		41		51			92
Total shareholders’ equity attributable to equity holders		4,844		(419	)		4,425
Non-controlling interest		—		164			164
Total shareholders’ equity		4,844		(255	)		4,589
Total liabilities and shareholders’ equity		7,394		(435	)		6,959

96    cameco corporation

Interim period financial results

2010 changes in earnings	Three months ended
($ millions)	March 31			June 30			Sept 30
Net earnings — Canadian GAAP		142			68			98
Accounting differences
Borrowing costs1		(10	)		(11	)		(11	)
Decommissioning provision2		(2	)		(1	)		2
In-process research & development4		3			3			3
BPLP — pension and maintenance costs10		—			8			(2	)
Income taxes — tax effect on differences9		3			—			1
Income taxes — IFRS accounting difference9		6			—			8
All other		1			—			—
Total accounting differences		1			1			1
Net earnings — IFRS		143			69			99
Adjustments
Unrealized losses (gains) on financial instruments		(31	)		46			(18	)
Adjusted net earnings (non-GAAP measure)		112			115			81

1	We have elected under IFRS 1 not to apply IAS 23, Borrowing Costs, retrospectively to borrowing costs incurred on the construction of qualifying assets that commenced prior to January 1, 2010. Accordingly, we have expensed all borrowing costs that had been previously capitalized under Canadian GAAP. New guidance from the IASB is pending and it is possible that our accounting may change as a result. At January 1, 2010, the effect was a $330 million decrease in property, plant and equipment and a corresponding decrease in retained earnings.
2	We have elected under IFRS 1 to apply IFRIC 1, Changes in Existing Decommissioning, Restoration and Similar Liabilities, prospectively to changes in decommissioning liabilities that occurred prior to January 1, 2010. There are no new liabilities recognized as a result of the transition to IFRS. However, the measurement of existing liabilities according to the IFRS standards provides a different result. At January 1, 2010, the effect was a $55 million increase in provisions, a $55 million decrease in property, plant and equipment and a $110 million decrease in retained earnings.
	Canadian GAAP requires the unwinding of the discount (accretion) to be recorded as an operating cost and allocated to inventory whereas IFRS requires accretion to be reflected as a financing cost. The net result in the interim periods was an increase in reported expenses with a corresponding decrease in product inventories.
3	IFRS requires the reversal of any previously recorded impairment losses where circumstances have changed such that the impairments have been reduced. We reviewed our previously recorded impairment losses and reversed a portion of the charges relating to certain of our in situ recovery mine assets located in the United States. At January 1, 2010, the effect was a $35 million increase in property, plant and equipment with a corresponding increase in retained earnings.
4	Under IFRS, in-process research and development (IPR&D) that meets the definition of an intangible asset is capitalized with amortization commencing when the asset is ready for use (i.e. when development is complete). Under Canadian GAAP, we have been amortizing IPR&D related to the acquisition of our interest in GE-Hitachi Global Laser Enrichment LLC, a development stage entity. At January 1, 2010, the effect was a $20 million increase to investments in equity accounted investees and a corresponding increase in retained earnings.
	For the interim periods, we reversed the full amount amortized under Canadian GAAP.
5	We have elected under IFRS 1 to reclassify all cumulative actuarial gains and losses for all defined benefit plans existing at January 1, 2010 to retained earnings at that date. At January 1, 2010, the effect was a $15 million

2010 Annual Financial review    97

	decrease in long-term receivables, investments and other, other liabilities and a corresponding decrease in retained earnings.
6	As a result of BPLP also transitioning to IFRS, we have recorded our share of BPLP’s transition adjustments. The most significant of BPLP’s IFRS transition adjustments results from cumulative actuarial losses. BPLP reclassified cumulative actuarial gains and losses for all defined benefit plans existing at January 1, 2010 to retained earnings at that date. The effect was a $137 million decrease in long-term receivables, investments and other, other liabilities and a corresponding decrease in retained earnings.
7	We have elected under IFRS 1 to deem all foreign currency translation differences that exist at the date of transition to IFRS to be zero at the date of transition. At January 1, 2010, the effect was a $50 million adjustment to the cumulative translation adjustment account and a corresponding decrease in retained earnings.
8	Under IFRS, we have concluded that our convertible debentures issued in 2003 and settled in 2008 will be treated as a hybrid instrument with a debt component and a conversion feature to be accounted for as a derivative. A derivative is required to be measured at fair value at each reporting date with changes in value being recorded in earnings. For purposes of our IFRS transition, we have measured the fair value of the conversion feature as at the redemption date and recorded a $297 million increase in share capital offset by a corresponding decrease in retained earnings.
9	As a result of the changes in our opening balances on transition to IFRS, we have reduced our deferred tax liabilities by $138 million.
	For the interim periods, the adjustments relating to income tax expense reflect the tax effects of other adjustments as well as an IFRS accounting difference related to intra-group transactions. Under IFRS, deferred tax assets and liabilities are recognized for intra-group transactions whereas Canadian GAAP allows for the recognition of deferred tax assets and liabilities only when the transaction is with a third party.
10	On transition to IFRS all actuarial losses were reclassified to retained earnings. Under IFRS, future actuarial gains and losses will be recognized through other comprehensive income to equity. Under Canadian GAAP, we have been amortizing the actuarial losses related to our interest in BPLP. As well, under IFRS, the costs of major inspections are capitalized and amortized over the period to the next inspection. Under Canadian GAAP, we have been expensing the inspection costs related to our interest in BPLP.

Other updates

As we proceed with our transition, we are also assessing the impact on our internal controls over financial reporting, and on our disclosure controls and procedures. Changes in accounting policies or business processes require additional controls or procedures to ensure the integrity of our financial disclosures. We have substantially completed the design and implementation of the new controls and are testing them. The transition to IFRS has not, however, required any significant changes in our internal control over financial reporting or our disclosure controls and procedures.

We conducted several educational and training sessions for our audit committee and the board of directors in 2009 and 2010. During these sessions, management and external advisors provided the board with detailed background information on IFRS accounting standards (including IFRS 1 elections), the implications of policy choices on our financial reporting, and a preliminary view of the expected format and content of our financial statements and notes upon transition. Management gives the audit committee quarterly project status updates and presentations.

We began training management and accounting staff in 2008. Training is being delivered mainly by external advisors, and focusing on the accounting issues most relevant to us. Sessions will continue into 2011. As a result, we are confident there is sufficient expertise within the organization to allow us to effectively transition to IFRS.

Our transition plan includes the need to inform key external stakeholders about the anticipated impact of the IFRS transition on our financial reporting. In 2009, we provided an information update as part of our investor day presentations. In December of 2010, we hosted a special session with the investment community dedicated to addressing IFRS-related accounting changes specific to Cameco.

98    cameco corporation

We have also evaluated the impact of IFRS on our business activities in general. As a result, we believe the adoption of IFRS will not have a material effect on our risk management practices, hedging activities, capital requirements, compensation arrangements, compliance with debt covenants or other contractual commitments.

2010 Annual financial review    99

REPORT OF MANAGEMENT’S ACCOUNTABILITY

The accompanying consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. Management is responsible for ensuring that these statements, which include amounts based upon estimates and judgment, are consistent with other information and operating data contained in the annual financial review and reflect the corporation’s business transactions and financial position.

Management is also responsible for the information disclosed in the management’s discussion and analysis including responsibility for the existence of appropriate information systems, procedures and controls to ensure that the information used internally by management and disclosed externally is complete and reliable in all material respects.

In addition, management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. The internal control system includes an internal audit function and a code of conduct and ethics, which is communicated to all levels in the organization and requires all employees to maintain high standards in their conduct of the corporation’s affairs. Such systems are designed to provide reasonable assurance that the financial information is relevant, reliable and accurate and that the company’s assets are appropriately accounted for and adequately safeguarded. Management conducted an evaluation of the effectiveness of the system of internal control over financial reporting based on the criteria established in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the company’s system of internal control over financial reporting was effective as at December 31, 2010.

KPMG LLP has audited the consolidated financial statements in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).

The board of directors annually appoints an audit committee comprised of directors who are not employees of the corporation. This committee meets regularly with management, the internal auditor and the shareholders’ auditors to review significant accounting, reporting and internal control matters. Both the internal and shareholders’ auditors have unrestricted access to the audit committee. The audit committee reviews the financial statements, the report of the shareholders’ auditors, and management’s discussion and analysis and submits its report to the board of directors for formal approval.

Original signed by Gerald W. Grandey	Original signed by O. Kim Goheen
Chief Executive Officer	Senior Vice-President and Chief Financial Officer
February 11, 2011	February 11, 2011

100    cameco corporation

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of Cameco Corporation

We have audited the accompanying consolidated financial statements of Cameco Corporation (“the Corporation”), which comprise the consolidated balance sheets as at December 31, 2010 and 2009, the consolidated statements of earnings, shareholders’ equity, comprehensive income, accumulated other comprehensive income and cash flows for the years then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Corporation’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Cameco Corporation as at December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Original signed by KPMG LLP

Chartered Accountants
Saskatoon, Canada
February 11, 2011

2010 Annual Financial review    101

Consolidated Balance Sheets

As at December 31
($Cdn thousands)	2010			2009
Assets
Current assets
Cash and cash equivalents	$	376,621		$	1,101,229
Short-term investments [note 5]		883,032			202,836
Accounts receivable		447,404			446,722
Income taxes receivable		42,190			—
Inventories [note 6]		542,526			453,224
Supplies and prepaid expenses		190,079			169,005
Current portion of long-term receivables, investments and other [note 9]		91,447			154,725
		2,573,299			2,527,741
Property, plant and equipment [note 7]		4,337,809			4,068,103
Intangible assets [note 8]		94,270			97,713
Long-term receivables, investments and other [note 9]		628,824			667,287
Future income tax assets [note 18]		37,166			33,017
Total assets	$	7,671,368		$	7,393,861
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	399,035		$	503,521
Income taxes payable		35,042			31,143
Short-term debt [notes 10]		72,948			76,762
Dividends payable		27,605			23,570
Current portion of long-term debt [note 11]		13,177			11,629
Current portion of other liabilities [note 13]		28,228			29,297
Future income taxes [note 18]		28,674			87,135
		604,709			763,057
Long-term debt [note 11]		940,317			952,853
Provision for reclamation [note 12]		279,653			258,277
Other liabilities [note 13]		244,179			244,433
Future income taxes [note 18]		208,044			167,373
		2,276,902			2,385,993
Minority interest		178,139			164,040
Shareholders’ equity
Share capital [note 14]		1,535,857			1,512,461
Contributed surplus		142,376			131,577
Retained earnings		3,563,089			3,158,506
Accumulated other comprehensive income		(24,995	)		41,284
		5,216,327			4,843,828
Total liabilities and shareholders’ equity	$	7,671,368		$	7,393,861

Commitments and contingencies [notes 12,18,25]
Subsequent event [note 29]
See accompanying notes to consolidated financial statements.

Approved by the board of directors
Original signed by Gerald W. Grandey and John H. Clappison

102    cameco corporation

Consolidated Statements of Earnings

For the years ended December 31
($Cdn thousands, except per share amounts)	2010			2009
Revenue from
Products and services	$	2,123,655		$	2,314,985
Expenses
Products and services sold		1,127,879			1,324,278
Depreciation, depletion and reclamation		251,547			240,643
Administration		155,810			135,558
Exploration		95,796			49,061
Research and development		4,794			630
Interest and other [note 15]		3,474			(12,470	)
Gains on derivatives [note 26]		(75,183	)		(243,804	)
Cigar Lake remediation		16,633			17,884
Loss (gain) on sale of assets [note 16]		107			(566	)
		1,580,857			1,511,214
Earnings from continuing operations		542,798			803,771
Other expense [note 17]		(11,150	)		(36,912	)
Earnings before income taxes and minority interest		531,648			766,859
Income tax expense [note 18]		27,251			52,897
Minority interest		(10,352	)		(3,035	)
Earnings from continuing operations	$	514,749		$	716,997
Earnings from discontinued operations [note 24]		—			382,425
Net earnings	$	514,749		$	1,099,422
Net earnings per share [note 27]
Basic
Continuing operations	$	1.31		$	1.84
Discontinued operations		—			0.99
Total basic earnings per share	$	1.31		$	2.83
Diluted
Continuing operations	$	1.30		$	1.84
Discontinued operations		—			0.98
Total diluted earnings per share	$	1.30		$	2.82

See accompanying notes to consolidated financial statements.

2010 Annual Financial review     103

Consolidated Statements of Shareholders’ Equity

For the years ended December 31
($Cdn thousands)	2010			2009
Share capital
Balance at beginning of year	$	1,512,461		$	1,062,714
Stock option plan		23,396			4,215
Equity issuance [note 14]		—			445,532
Balance at end of year		1,535,857			1,512,461
Contributed surplus
Balance at beginning of year		131,577			131,858
Stock-based compensation		16,086			641
Options exercised		(5,287	)		(922	)
Balance at end of year		142,376			131,577
Retained earnings
Balance at beginning of year		3,158,506			2,153,315
Net earnings		514,749			1,099,422
Dividends on common shares		(110,166	)		(94,231	)
Balance at end of year		3,563,089			3,158,506
Accumulated other comprehensive income (loss)
Balance at beginning of year		41,284			165,736
Other comprehensive loss		(66,279	)		(124,452	)
Balance at end of year		(24,995	)		41,284
Total retained earnings and accumulated other comprehensive income (loss)		3,538,094			3,199,790
Shareholders’ equity at end of year	$	5,216,327		$	4,843,828

See accompanying notes to consolidated financial statements.

104    cameco corporation

Consolidated Statements of Comprehensive Income

For the years ended December 31
($Cdn thousands)	2010			2009
Net earnings	$	514,749		$	1,099,422
Other comprehensive income (loss), net of taxes [note 18]
Unrealized foreign currency translation losses		(6,696	)		(115,739	)
Gains on derivatives designated as cash flow hedges		12,035			101,162
Gains on derivatives designated as cash flow hedges transferred to net earnings		(71,186	)		(113,360	)
Unrealized gains on available-for-sale securities		2,125			3,011
(Gains) losses on available-for-sale securities transferred to net earnings		(2,557	)		474
Other comprehensive loss		(66,279	)		(124,452	)
Total comprehensive income	$	448,470		$	974,970

Consolidated Statement of Accumulated Other Comprehensive Income (Loss)

	Currency
	Translation			Cash Flow			Available-For-
($Cdn thousands)(net of related income taxes)[note 18]	Adjustment			Hedges			Sale Assets			Total
Balance at December 31, 2008	$	65,342		$	101,654		$	(1,260	)	$	165,736
Unrealized foreign currency translation losses		(115,739	)		—			—			(115,739	)
Gains on derivatives designated as cash flow hedges		—			101,162			—			101,162
Gains on derivatives designated as cash flow hedges transferred to net earnings		—			(113,360	)		—			(113,360	)
Unrealized gains on available-for-sale securities		—			—			3,011			3,011
Losses on available-for-sale securities transferred to net earnings		—			—			474			474
Balance at December 31, 2009	$	(50,397	)	$	89,456		$	2,225		$	41,284
Unrealized foreign currency translation losses		(6,696	)		—			—			(6,696	)
Gains on derivatives designated as cash flow hedges		—			12,035			—			12,035
Gains on derivatives designated as cash flow hedges transferred to net earnings		—			(71,186	)		—			(71,186	)
Unrealized gains on available-for-sale securities		—			—			2,125			2,125
Gains on available-for-sale securities transferred to net earnings		—			—			(2,557	)		(2,557	)
Balance at December 31, 2010	$	(57,093	)	$	30,305		$	1,793		$	(24,995	)

See accompanying notes to consolidated financial statements.

2010 Annual Financial review     105

Consolidated Statements of Cash Flows

For the years ended December 31
($Cdn thousands)	2010			2009
Operating activities
Net earnings	$	514,749		$	1,099,422
Items not requiring (providing) cash:
Depreciation, depletion and reclamation		251,547			240,643
Provision for future taxes [note 18]		612			2,237
Deferred gains		(33,369	)		(41,254	)
Unrealized (gains) losses on derivatives		25,561			(180,260	)
Stock-based compensation [note 22]		16,086			2,772
Loss (gain) on sale of assets [note 16]		107			(566	)
Equity in loss from associated companies [note 17]		16,413			29,811
Other expense (income) [note 17]		(5,263	)		7,101
Discontinued operations [note 24]		—			(382,425	)
Minority interest		(10,352	)		(3,035	)
Other operating items [note 19]		(268,993	)		(84,333	)
Cash provided by operations		507,098			690,113
Investing activities
Additions to property, plant and equipment		(470,277	)		(392,719	)
Purchase of short-term investments [note 5]		(680,346	)		(202,850	)
Decrease (increase) in long-term receivables, investments and other		9,453			(40,258	)
Proceeds on sale of property, plant and equipment		1,437			3,647
Cash used in investing (continuing operations)		(1,139,733	)		(632,180	)
Cash provided by investing (discontinued operations) [note 24]		—			871,300
Cash provided by (used in) investing		(1,139,733	)		239,120
Financing activities
Decrease in debt		(11,629	)		(726,460	)
Increase in debt		1,896			—
Issue of debentures, net of issue costs [note 11]		—			495,272
Issue of shares, net of issue costs [note 14]		—			440,150
Contributions from minority interests		9,811			—
Issue of shares, stock option plan		18,109			1,292
Dividends		(106,132	)		(92,603	)
Cash provided by (used in) financing		(87,945	)		117,651
Increase (decrease) in cash during the year		(720,580	)		1,046,884
Exchange rate changes on foreign currency cash balances		(4,028	)		(9,877	)
Cash and cash equivalents at beginning of year		1,101,229			64,222
Cash and cash equivalents at end of year	$	376,621		$	1,101,229
Cash and cash equivalents comprised of:
Cash	$	100,752		$	56,009
Cash equivalents		275,869			1,045,220
	$	376,621		$	1,101,229
Supplemental cash flow disclosure
Interest paid	$	53,859		$	35,267
Income taxes paid	$	63,226		$	57,093

See accompanying notes to consolidated financial statements.

106    cameco corporation

Notes to Consolidated Financial Statements

For the years ended December 31, 2010 and 2009

($Cdn thousands, except per share amounts and as noted)

1. Cameco Corporation

Cameco Corporation is incorporated under the Canada Business Corporations Act. Cameco Corporation and its subsidiaries (collectively, Cameco or the company) are primarily engaged in the exploration for and the development, mining, refining, conversion and fabrication of uranium for sale as fuel for generating electricity in nuclear power reactors in Canada and other countries. The company has a 31.6% interest in Bruce Power L.P. (BPLP), which operates the four Bruce B nuclear reactors in Ontario.

2. Significant Accounting Policies

(a)	Consolidation Principles
	The consolidated financial statements include the accounts of Cameco and its subsidiaries. Interests in joint ventures are accounted for by the proportionate consolidation method. Under this method, Cameco includes in its accounts its proportionate share of assets, liabilities, revenues and expenses.
	The consolidated financial statements are prepared by management in accordance with Canadian generally accepted accounting principles. Management makes various estimates and assumptions in determining the reported amounts of assets and liabilities, revenues and expenses for each year presented, and in the disclosure of commitments and contingencies. The most significant estimates are related to the lives and recoverability of mineral properties, provisions for decommissioning and reclamation of assets, future income taxes, financial instruments and mineral reserves. Actual results could differ from these estimates. This summary of significant accounting policies is a description of the accounting methods and practices that have been used in the preparation of these consolidated financial statements and is presented to assist the reader in interpreting the statements contained herein.
(b)	Cash and Cash Equivalents
	Cash and cash equivalents consist of balances with financial institutions and investments in money market instruments, which have a term to maturity of three months or less at time of purchase.
(c)	Short-Term Investments
	Short-term investments consist of short-term money market instruments with terms to maturity at the date of acquisition of between three and 12 months. The short-term investments are classified as available-for-sale and are carried at fair value in the consolidated balance sheets with unrealized gains and losses reported in other comprehensive income (OCI). Realized gains and losses, as well as other-than-temporary declines in value, are recorded in the consolidated statements of earnings.
(d)	Inventories
	Inventories of broken ore, uranium concentrates and refined and converted products are valued at the lower of average cost and net realizable value. Average cost includes direct materials, direct labour, operational overhead expenses and depreciation, depletion and reclamation. Net realizable value for finished products is considered to be the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
(e)	Supplies
	Consumable supplies and spares are valued at the lower of cost or replacement value.
(f)	Investments
	Investments in associated companies over which Cameco has the ability to exercise significant influence are accounted for by the equity method. Under this method, Cameco includes in earnings its share of earnings or losses of the associated company. Portfolio investments are classified as available-for-sale and are carried at fair value in the consolidated balance sheets with unrealized gains and losses reported in OCI. Realized gains and losses, as well as other-than-temporary declines in value, are recorded in the consolidated statements of earnings.

2010 Annual Financial review    107

(g)	Property, Plant and Equipment
	Assets are carried at cost. Costs of additions and improvements are capitalized. When assets are retired or sold, the resulting gains or losses are reflected in current earnings. Maintenance and repair expenditures are charged to cost of production.
	The decision to develop a mine property within a project area is based on an assessment of the commercial viability of the property, the availability of financing and the existence of markets for the product. Once the decision to proceed to development is made, development and other expenditures relating to the project area are deferred and carried at cost with the intention that these costs will be depleted over the proven and probable reserves using the units-of-production method. No depreciation or depletion is charged against the property until commercial production commences. After a mine property has been brought into commercial production, costs of any additional work on that property are expensed as incurred, except for large development programs, which will be deferred and depleted over the remaining lives of the related assets.
	The carrying values of non-producing properties are periodically assessed by management and if management determines that the carrying values cannot be recovered, the unrecoverable amounts are written off against current earnings.
	Cameco reviews the carrying values of its property, plant and equipment when changes in circumstances indicate that those carrying values may not be recoverable. Estimated future net cash flows are calculated using estimated recoverable reserves, estimated future commodity prices and the expected future operating and capital costs. An impairment loss is recognized when the carrying value of an asset held for use exceeds the sum of undiscounted future net cash flows. An impairment loss is measured as the amount by which the asset’s carrying amount exceeds its fair value.
	Interest is capitalized on expenditures related to development projects actively being prepared for their intended use. Capitalization is discontinued when the asset enters commercial operation or development ceases.
	Fuel services assets, mine buildings, equipment and mineral properties are depreciated or depleted according to the units-of-production method. This method allocates the costs of these assets to each accounting period. For fuel services, the amount of depreciation is measured by the portion of the facilities’ total estimated lifetime production that is produced in that period. For mining, the amount of depreciation or depletion is measured by the portion of the mines’ proven and probable reserves which are recovered during the period.
	Nuclear generating plants are depreciated according to the straight-line method based on the lower of useful life and remaining lease term.
	Other assets are depreciated according to the straight-line method based on estimated useful lives, which generally range from three to 10 years.
(h)	Intangible Assets
	Intangible assets acquired in a business combination are recorded at their fair values. Finite-lived intangible assets are amortized over the estimated production profile of the business unit to which they relate. The carrying values of intangible assets are periodically assessed by management and if management determines that the carrying values cannot be recovered, the unrecoverable amount is charged to earnings in the current period.
(i)	Future Income Taxes
	Future income taxes are recognized for the future income tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases. Future income tax assets and liabilities are measured using enacted or substantively enacted income tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on future income tax assets and liabilities of a change in rates is included in earnings in the period, which includes the enactment date. Future income tax assets are recorded in the financial statements and a valuation allowance is provided, if necessary, to reduce the future income tax asset to an amount that is more likely than not to be realized. Accrued interest and penalties for uncertain tax positions are recognized in the period in which uncertainties are identified.

108     cameco corporation

(j)	Research and Development and Exploration Costs
	Expenditures for research and technology related to the products and processes are charged against earnings as incurred. Exploration expenditures including drilling and related costs are charged against earnings as incurred up until the point at which it is determined that the costs are economically recoverable. Any further exploration expenditures are capitalized once economic recoverability has been established.
(k)	Environmental Protection and Asset Retirement Obligations
	The fair value of the liability for an asset retirement obligation is recognized in the period incurred. The fair value, discounted using the company’s credit adjusted risk-free rate, is added to the carrying amount of the associated asset and depreciated over the asset’s useful life. The liability is accreted over time, using the company’s credit adjusted risk-free rate, through periodic charges to earnings, and it is reduced by actual costs of decommissioning and reclamation. Cameco’s estimates of reclamation costs could change as a result of changes in regulatory requirements, reclamation plans, cost estimates and timing of estimated expenditures. Costs related to ongoing environmental programs are charged against earnings as incurred.
(l)	Employee Future Benefits
	Cameco accrues its obligations under employee benefit plans. The cost of pensions and other retirement benefits earned by employees is actuarially determined using the projected benefit method pro-rated on service and management’s best estimate of expected plan investment performance, salary escalation, retirement ages of employees and expected health care costs. For the purpose of calculating the expected return on plan assets, those assets are measured at fair value. Cameco measures the plan assets and the accrued benefit obligations on December 31 each year.
	On both the Cameco-specific and BPLP-specific defined benefit pension plans, past service costs arising from plan amendments are amortized on a straight-line basis over the expected average remaining service life of the plan participants. Net actuarial gains, which exceed 10% of the greater of the accrued benefit obligation and the fair value of plan assets, are amortized on a straight-line basis over the expected average remaining service life of the plan participants.
	On the Cameco-specific retirement benefit plans that do not vest or accumulate, past service costs arising from plan amendments, and net actuarial gains and losses, are recognized in the period they arise. Conversely, the BPLP-specific amounts are amortized on a straight-line basis over the expected average remaining service life of the plan participants.
(m)	Stock-Based Compensation
	Cameco has five stock-based compensation plans that are described in note 22. These encompass a stock option plan, an employee share ownership plan, a performance share unit plan, a deferred share unit plan and a phantom stock option plan. In calculating compensation expense, Cameco includes an estimate for forfeitures that is based on historic trends.
	Options granted under the stock option and performance share unit plans for which the holder cannot elect cash settlement are accounted for using the fair value method. Under this method, the compensation cost of options granted is measured at estimated fair value at the grant date and recognized over the shorter of the period to eligible retirement or the vesting period. Options that may be settled in cash are accounted for as liabilities and are carried at their intrinsic value. The intrinsic value of the liability is marked-to-market each period and is amortized to expense over the shorter of the period to eligible retirement or the vesting period.
	Deferred share units and phantom stock options are amortized over the shorter of the period to eligible retirement or the vesting period and re-measured at each reporting period, until settlement, using the quoted market value. Cameco’s contributions under the employee share ownership plan are expensed during the year of contribution. Shares purchased with company contributions and with dividends paid on such shares become unrestricted on January 1 of the second plan year following the date on which such shares were purchased.

2010 Annual Financial review    109

(n)	Revenue Recognition
	Cameco supplies uranium concentrates and uranium conversion services to utility customers.
	Cameco recognizes revenue on the sale of its nuclear products when evidenced by a contract that indicates the product, pricing and delivery terms, when delivery occurs, the related revenue is fixed or determinable and collection is reasonably assured.
	Cameco has three types of sales arrangements with its customers in its uranium and fuel services businesses. These arrangements include uranium supply, toll conversion services and conversion supply (converted uranium), which is a combination of uranium supply and toll conversion services.
	Uranium Supply
	In a uranium supply arrangement, Cameco is contractually obligated to provide uranium concentrates to its customers. Cameco-owned uranium is physically delivered to conversion facilities (Converters) where the Converter will credit Cameco’s account for the volume of accepted uranium. Based on delivery terms in a sales contract with its customer, Cameco instructs the Converter to transfer title of a contractually specified quantity of uranium to the customer’s account at the Converter’s facility. At this point, Cameco invoices the customer and recognizes revenue for the uranium supply.
	Toll Conversion Services
	In a toll conversion arrangement, Cameco is contractually obligated to convert customer-owned uranium to a chemical state suitable for enrichment. The customer delivers uranium to Cameco’s conversion facilities. Once conversion is complete, Cameco physically delivers converted uranium to enrichment facilities (Enrichers) where the Enricher will credit Cameco’s account for the volume of accepted processed uranium. Based on delivery terms in a sales contract with its customer, Cameco instructs the Enricher to transfer title of a contractually specified quantity of converted uranium to the customer’s account at the Enricher’s facility. At this point, Cameco invoices the customer and recognizes revenue for the toll conversion services.
	Conversion Supply
	In a conversion supply arrangement, Cameco is contractually obligated to provide uranium concentrates and conversion services to its customers. Cameco-owned uranium is converted and physically delivered to an Enricher as described in the toll conversion services arrangement. Based on delivery terms in a sales contract with its customer, Cameco instructs the Enricher to transfer title of a contractually specified quantity of converted uranium to the customer’s account at the Enricher’s facility. At this point, Cameco invoices the customer and recognizes revenue for both the uranium supplied and the conversion service provided. It is rare for Cameco to enter into back-to-back arrangements for uranium supply and toll conversion services. However, in the event that a customer requires such an arrangement, revenue from uranium supply is deferred until the toll conversion service has been rendered.
	Revenue from deliveries to counterparties with whom Cameco has arranged a standby product loan facility (up to the limit of the loan facilities) and the related cost of sales are deferred until the loan arrangements have been terminated, or if drawn upon, when the loans are repaid and that portion of the facility is terminated.
	Electricity sales are recognized at the time of generation, and delivery to the purchasing utility is metered at the point of interconnection with the transmission system. Revenues are recognized on an accrual basis, which includes an estimate of the value of electricity produced during the period but not yet billed.
(o)	Amortization of Financing Costs
	For financial instruments that are measured at amortized cost, the effective interest method of amortization is used for any debt discounts and issue expenses. Unamortized costs are classified with their related financial liability.
(p)	Foreign Currency Translation
	Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at year-end rates of exchange. Revenue and expense transactions denominated in foreign currencies are translated into Canadian dollars at rates in effect at the time of the transactions. The applicable exchange gains and losses arising on these transactions are reflected in earnings.
	The United States (US) dollar is considered the functional currency of most of Cameco’s operations outside of Canada. The financial statements of these operations are translated into Canadian dollars using the current rate method whereby all assets and liabilities are translated at the year-end rate of exchange, and all revenue and

110     cameco corporation

	expense items are translated at the average rate of exchange prevailing during the year. Exchange gains and losses arising from this translation, representing the net unrealized foreign currency translation gain (loss) on Cameco’s net investment in these foreign operations, are recorded in the foreign currency translation adjustments component of accumulated other comprehensive income (AOCI). Exchange gains or losses arising from the translation of foreign debt designated as hedges of a net investment in foreign operations are also recorded in the foreign currency translation adjustments component of AOCI. These adjustments are not included in earnings until realized through a reduction in Cameco’s net investment in such operations.
(q)	Derivative Financial Instruments and Hedging Transactions
	Financial Assets and Financial Liabilities
	All financial assets and liabilities are carried at fair value in the consolidated balance sheets, except for items classified in the following categories, which are carried at amortized cost: loans and receivables, held-to-maturity securities and financial liabilities not held-for-trading. Realized and unrealized gains and losses on financial assets and liabilities that are held-for-trading are recorded in the consolidated statements of earnings. Unrealized gains and losses on financial assets that are available-for-sale are reported in OCI until realized, at which time they are recorded in the consolidated statements of earnings.
	Hedge Accounting and Derivatives
	Derivative financial and commodity instruments are employed by Cameco to reduce exposure to fluctuations in foreign currency exchange rates, interest rates and commodity prices. All derivative instruments are recorded at fair value in the consolidated balance sheets, except for those designated as hedging instruments.
	The purpose of hedging transactions is to modify Cameco’s exposure to one or more risks by creating an offset between changes in the fair value of, or the cash inflows attributable to, the hedged item and the hedging item. Hedge accounting ensures that the offsetting gains, losses, revenues and expenses are recognized to net earnings in the same period or periods. When hedge accounting is appropriate, the hedging relationship is designated as a fair value hedge, a cash flow hedge, or a foreign currency risk hedge related to a net investment in a self-sustaining foreign operation.
	At the inception of a hedging relationship, Cameco formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The process includes linking all derivatives to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. Cameco also formally assesses, both at the inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
	For fair value hedges, changes in the fair value of the derivatives and corresponding changes in fair value of the hedged items attributed to the risk being hedged are recognized in the consolidated statements of earnings. For cash flow hedges, the effective portion of the changes in the fair values of the derivative instruments are recorded in OCI until the hedged items are recognized in the consolidated statements of earnings. Derivative instruments that do not qualify for hedge accounting, or are not designated as hedging instruments, are marked-to-market and the resulting net gains or losses are recognized on the consolidated statements of earnings.
	Derivatives may be embedded in other financial instruments (the “host instrument”). Embedded derivatives are treated as separate derivatives when their economic characteristics and risks are not clearly and closely related to those of the host instrument, the terms of the embedded derivative are the same as those of a stand-alone derivative, and the combined contract is not held-for-trading or designated at fair value. These embedded derivatives are measured at fair value with subsequent changes recognized in gains or losses on derivatives on the consolidated statements of earnings.
(r)	Earnings Per Share
	Earnings per share are calculated using the weighted average number of common shares outstanding.
	The calculation of diluted earnings per share assumes that outstanding options and warrants which are dilutive to earnings per share are exercised and the proceeds are used to repurchase shares of the company at the average market price of the shares for the period. The effect is to increase the number of shares used to calculate diluted earnings per share.

2010 Annual Financial review    111

3. Accounting Standards

(a)	Future Changes in Accounting Policies
	International Financial Reporting Standards (IFRS)
	In February 2008, the Accounting Standards Board announced that Canadian publicly accountable enterprises will be required to adopt IFRS effective January 1, 2011. As a result, Cameco will publish its first consolidated financial statements, prepared in accordance with IFRS, for the quarter ending March 31, 2011. We will also provide comparative data on an IFRS basis, including an opening balance sheet as at January 1, 2010.

4.	Financial Risk Management
	This note presents information about various risks that Cameco is exposed to from its use of financial instruments, its objectives, policies and processes for measuring and managing risk, and the company’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.
	Risk Management Overview
	Cameco is exposed in varying degrees to a variety of financial instrument related risks. Management and the board of directors, both separately and together, discuss the principal risks of our businesses. The board sets policies for the implementation of systems to manage, monitor and mitigate identifiable risks. Cameco’s risk management objective in relation to these instruments is to protect and minimize volatility in cash flow.
	Market Risk
	Cameco engages in various business activities which expose the company to market risk from changes in commodity prices and foreign currency exchange rates. As part of its overall risk management strategy, Cameco uses derivatives to manage some of its exposures to market risk that result from these activities.
	Derivative instruments may include financial and physical forward contracts. Such contracts may be used to establish a fixed price for a commodity, an interest-bearing obligation or a cash flow denominated in a foreign currency. Market risks are monitored regularly against defined risk limits and tolerances.
	Cameco’s actual exposure to these market risks is constantly changing as the company’s portfolios of foreign currency and commodity contracts change. Changes in fair value or cash flows based on market variable fluctuations cannot be extrapolated as the relationship between the change in the market variable and the change in fair value or cash flow may not be linear.
	The types of risk exposure and the way in which such exposure is managed are as follows:

(a)	Commodity Price Risk
	As a significant producer and supplier of uranium, nuclear fuel processing and electricity, Cameco bears significant exposure to changes in prices for these products. A substantial change in prices will affect the company’s net earnings and operating cash flows. Prices for Cameco’s products are volatile and are influenced by numerous factors beyond the company’s control, such as supply and demand fundamentals, geopolitical events and, in the case of electricity prices, weather.
	Cameco’s sales contracting strategy focuses on reducing the volatility in future earnings and cash flow, while providing both protection against decreases in market price and retention of exposure to future market price increases. To mitigate the risks associated with the fluctuations in the market price for uranium products, Cameco seeks to maintain a portfolio of uranium product sales contracts with a variety of delivery dates and pricing mechanisms that provide a degree of protection from pricing volatility. To mitigate risks associated with fluctuations in the market price for electricity, BPLP enters into various energy and sales related contracts that qualify as cash flow hedges. At December 31, 2010, the effect of a $1/MWh increase in the market price for electricity would be a decrease of $175,000 in net earnings, and a decrease in other comprehensive income of $850,000 for 2010.

112     cameco corporation

(b)	Foreign Exchange Risk
	The relationship between the Canadian and US dollars affects financial results of the uranium business as well as the fuel services business.
	Sales of uranium and fuel services are routinely denominated in US dollars while production costs are largely denominated in Canadian dollars. Cameco attempts to provide some protection against exchange rate fluctuations by planned hedging activity designed to smooth volatility. Cameco also has a natural hedge against US currency fluctuations because a portion of its annual cash outlays, including purchases of uranium and fuel services, is denominated in US dollars. At December 31, 2010, the effect of a $0.01 increase in the US to Canadian dollar exchange rate on our portfolio of currency hedges and other US denominated exposures would have been a decrease of $9,200,000 in net earnings for 2010.
(c)	Counterparty Credit Risk
	Cameco’s sales of uranium product, conversion and fuel manufacturing services expose the company to the risk of non-payment. Counterparty credit risk is associated with the ability of counterparties to satisfy their contractual obligations to Cameco, including both payment and performance.
	Cameco manages this risk by monitoring the credit worthiness of our customers and seeking pre-payment or other forms of payment security from customers with an unacceptable level of credit risk.
	Cameco’s maximum counterparty credit exposure at the balance sheet date consists primarily of the carrying amount of financial assets such as accounts receivable and short-term investments. At December 31, 2010, there were no significant concentrations of credit risk and no amounts were held as collateral.
(d)	Liquidity Risk
	Financial liquidity represents Cameco’s ability to fund future operating activities and investments. Cameco ensures that there is sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and the company’s holdings of cash and cash equivalents. The company believes that these sources will be sufficient to cover the likely short-term and long-term cash requirements.
	The tables below outline the maturity dates for Cameco’s non-derivative financial liabilities including, principal and interest, as at December 31, 2010:

			Due in less		Due in		Due in		Due after
(Millions)	Total		than 1 year		1-3 years		3-5 years		5 years
Long-term debt	$	794	$	—	$	—	$	298	$	496
BPLP lease		159		13		31		39		76
Short-term debt		73		73		—		—		—
Total contractual repayments	$	1,026	$	86	$	31	$	337	$	572

			Due in less		Due in		Due in		Due after
(Millions)	Total		than 1 year		1-3 years		3-5 years		5 years
Interest on long-term debt	$	312	$	42	$	85	$	81	$	104
Interest on BPLP lease		55		11		20		15		9
Interest on short-term debt		2		2		—		—		—
Total interest payments	$	369	$	55	$	105	$	96	$	113

2010 Annual Financial review    113

(e)	Interest Rate Risk
	During the year, Cameco entered into interest rate swap arrangements whereby fixed rate payments in relation to part of the $300,000,000 Series C debenture were swapped for variable rate payments. The notional amount under the swap arrangements is $135,000,000. Concurrently, Cameco has entered into interest rate cap arrangements at a notional amount of $135,000,000 million that are effective March 18, 2013 and terminate on March 16, 2015. These interest rate cap arrangements, when effective, will limit Cameco’s interest rate exposure to 5% plus an average margin of 1.81%.
	At December 31, 2010, the effect of a 1% increase in the three-month bankers acceptance rate would be a decrease in net earnings of $3,570,000.

Capital Management

Cameco’s capital structure reflects our vision and the environment in which we operate. We seek growth through development and expansion of existing assets and by acquisition. Our capital resources are managed to support achievement of our goals. The overall objectives for managing capital remained unchanged in 2010 from the prior comparative period.

Cameco’s management considers its capital structure to consist of long-term debt, short-term debt (net of cash and cash equivalents), minority interest and shareholders’ equity.

The capital structure at December 31, 2010 was as follows:

(Thousands)	2010			2009
Long-term debt	$	953,494		$	964,482
Short-term debt		72,948			76,762
Cash and cash equivalents		(376,621	)		(1,101,229	)
Short-term investments		(883,032	)		(202,836	)
Net debt		(233,211	)		(262,821	)
Minority interest		178,139			164,040
Shareholders’ equity		5,216,327			4,843,828
Total equity		5,394,466			5,007,868
Total capital	$	5,161,255		$	4,745,047

Cameco is bound by certain covenants in its general credit facilities. These covenants place restrictions on total debt, including guarantees, and set minimum levels for net worth. As of December 31, 2010, Cameco met these requirements.

5. Short-Term Investments

In 2010, Cameco purchased money market instruments with terms to maturity between three and 12 months. The fair values of marketable securities held at December 31, 2010 were $883,032,000 (2009 — $202,836,000).

6. Inventories

	2010		2009
Uranium
Concentrate	$	392,613	$	310,893
Broken ore		12,264		18,125
		404,877		329,018
Fuel Services		137,649		124,206
Total	$	542,526	$	453,224

114     cameco corporation

7. Property, Plant and Equipment

			Accumulated
			Depreciation
			and
	Cost		Depletion		2010 Net		2009 Net
Uranium
Mining	$	3,562,849	$	1,657,227	$	1,905,622	$	1,801,379
Non-producing		1,674,131		—		1,674,131		1,476,409
Fuel Services		507,221		233,973		273,248		279,313
Electricity
Assets under capital lease		164,288		89,744		74,544		83,866
Other		610,826		257,945		352,881		361,377
Other		125,178		67,795		57,383		65,759
Total	$	6,644,493	$	2,306,684	$	4,337,809	$	4,068,103

8. Intangible Assets

			Accumulated
	Cost		Depreciation		2010 Net		2009 Net
Intangible assets	$	118,819	$	24,549	$	94,270	$	97,713

The intangible asset value relates to intellectual property associated with Cameco Fuel Manufacturing and is being amortized on a units-of-production basis.

2010 Annual Financial review    115

9. Long-Term Receivables, Investments and Other

	2010			2009
Bruce B L.P. (BPLP) [note 21]
Capital lease receivable from Bruce A L.P. (BALP) (i)	$	91,608		$	94,895
Derivatives [note 26]		77,831			141,949
Accrued pension benefit asset [note 23]		88,268			54,864
Equity accounted investments
Global Laser Enrichment LLC (Cameco’s interest 24%) (privately held)		162,718			185,716
UNOR Inc.		—			935
UEX Corporation (market value $103,186)		9,998			6,052
Huron Wind (privately held)		3,913			4,002
Minergia S.A.C. (privately held)		8,337			4,551
UFP Investments Inc. (privately held)		6,784			2,617
Available-for-sale securities
Western Uranium Corporation (market value $6,033)		6,033			4,637
GoviEx Uranium (privately held)		23,017			25,214
Derivatives [note 26]		50,011			68,432
Deferred charges
Cost of sales [note 13]		—			14,415
Advances receivable from Inkai JV LLP (ii)		125,072			141,149
Accrued pension benefit asset [note 23]		6,142			8,264
Other		60,539			64,320
		720,271			822,012
Less current portion		(91,447	)		(154,725	)
Net	$	628,824		$	667,287

(i)	BPLP leases the Bruce A nuclear generating plants and other property, plant and equipment to BALP under a sublease agreement. Future minimum base rent sublease payments under the capital lease receivable are imputed using a 7.5% discount rate.
(ii)	Through an unsecured shareholder loan, Cameco has agreed to fund the development of the Inkai project. The limit of the loan facility is $370,000,000 (US) and advances under the facility bear interest at a rate of LIBOR plus 2%. At December 31, 2010, $314,000,000 (US) of principal and interest was outstanding (2009 - $337,000,000 (US)), of which 40% represents the joint venture partner’s share.

10. Short-Term Debt

In 2008, a promissory note in the amount of $73,344,000 (US) was issued to finance the acquisition of GE-Hitachi Global Laser Enrichment LLC (GLE). The promissory note is payable on demand and bears interest at a market rate of 2.72%.

In February 2009, Cameco concluded an arrangement for a $100,000,000 unsecured revolving credit facility. The original maturity date of the facility was February 5, 2010, however, in November 2010, upon mutual agreement with the lender, this facility was further extended to February 4, 2012. There are no longer any extensions available under this facility and there is no amount outstanding.

116     cameco corporation

11. Long-Term Debt

	2010			2009
Debentures	$	794,483		$	793,842
Capital lease obligation — BPLP		159,011			170,640
		953,494			964,482
Less current portion		(13,177	)		(11,629	)
Net	$	940,317		$	952,853

Cameco has $300,000,000 outstanding in senior unsecured debentures (Series C). These debentures bear interest at a rate of 4.7% per annum (effective interest rate of 4.79%) and mature September 16, 2015.

On September 2, 2009, Cameco issued debentures in the amount of $500,000,000. The debentures bear interest at 5.67% per annum (effective interest rate of 5.80%) and mature on September 2, 2019. The proceeds of the issue after deducting expenses were $495,300,000.

Cameco has a $500,000,000 unsecured revolving credit facility that is available until November 30, 2012. In addition to direct borrowings under the facility, up to $100,000,000 can be used for the issuance of letters of credit and, to the extent necessary, up to $400,000,000 may be allocated to provide liquidity support for the company’s commercial paper program. The facility ranks equally with all of Cameco’s other senior debt. At December 31, 2010, there were no amounts outstanding under this credit facility (2009 — nil). Cameco may also borrow directly in the commercial paper market. There was no commercial paper outstanding at December 31, 2010 (2009 — nil). These amounts, when drawn, are classified as long-term debt.

Cameco is bound by certain covenants in its revolving credit facilities. The significant financial covenants require a funded debt to tangible net worth ratio equal to or less than 1:1 and a tangible net worth greater than $1,250,000,000. Non-compliance with any of these covenants could result in accelerated payment and termination of the revolving credit facility. At December 31, 2010, Cameco was in compliance with covenants and does not expect its operating and investing activities in 2011 to be constrained by them.

Cameco has $554,934,000 ($400,882,000 and $154,889,000 (US)) in letter of credit facilities. The majority of the outstanding letters of credit at December 31, 2010 relate to future decommissioning and reclamation liabilities [note 12] and amounted to $549,533,000 ($395,818,000 and $153,987,000 (US)) (2009 — $592,215,000 ($396,427,000 and $187,071,000 (US)).

BPLP holds a long-term lease with OPG to operate the Bruce nuclear power facility. The term of the lease, which expires in 2018, is 18 years with an option to extend the lease for up to an additional 25 years. The interest rate associated with the lease is 7.5%.

BPLP has a $200,000,000 (Cameco’s share $63,200,000) revolving credit facility that is available until July 30, 2013, as well as $270,000,000 (Cameco’s share $83,320,000) in letter of credit facilities. As at December 31, 2010, BPLP had $45,000,000 (Cameco’s share $14,220,000) outstanding under the revolving credit facility (2009 — $35,000,000 (Cameco’s share $11,060,000)) and $270,000,000 (Cameco’s share $85,320,000) outstanding under the letter of credit facilities (2009 — $184,000,000 (Cameco’s share $58,144,000)).

2010 Annual Financial review   117

The table below represents currently scheduled maturities of long-term debt and capital lease obligations over the next five years.

2011	$	13,177
2012		14,852
2013		16,337
2014		18,233
2015		319,040
Thereafter		571,855
Total	$	953,494

Standby Product Loan Facilities

Cameco had arranged for a standby product loan facility with one of its customers. The arrangement, which was finalized in 2008, allowed Cameco to borrow up to 2,400,000 pounds U₃O₈ equivalent over the period 2008 to 2011 with repayment during 2012 to 2014. Under the loan facility, standby fees of 2% were payable based on the market value of the facility, and interest was payable on the market value of any amounts drawn at a rate of 5%. Any borrowings were repayable in kind.

On September 13, 2010, Cameco gave notice of termination to the counterparty of the product loan agreement. The loan facility was terminated on October 15, 2010.

12. Provision for Reclamation

Cameco’s estimates of future asset retirement obligations are based on reclamation standards that satisfy regulatory requirements. Elements of uncertainty in estimating these amounts include potential changes in regulatory requirements, decommissioning and reclamation alternatives and amounts to be recovered from other parties.

Cameco estimates total future decommissioning and reclamation costs for its operating assets to be $465,709,000. These estimates are reviewed by Cameco technical personnel as required by regulatory agencies or more frequently as circumstances warrant. In connection with future decommissioning and reclamation costs, Cameco has provided financial assurances of $548,933,000 in the form of letters of credit to satisfy current regulatory requirements.

Under the BPLP lease agreement, OPG, as the owner of the Bruce nuclear plants, is responsible to decommission the Bruce facility and to provide funding and meet other requirements that the Canadian Nuclear Safety Commission (CNSC) may require of BPLP as licensed operator of the Bruce facility. OPG is also responsible to manage radioactive waste associated with decommissioning of the Bruce nuclear plants.

Following is a reconciliation of the total liability for asset retirement obligations:

	2010			2009
Balance, beginning of year	$	258,277		$	276,431
Changes in estimates		20,201			(17,125	)
Liabilities settled		(12,542	)		(4,599	)
Accretion expense		17,208			17,828
Impact of foreign exchange		(3,491	)		(14,258	)
Balance, end of year	$	279,653		$	258,277

118   cameco corporation

Following is a summary of the key assumptions on which the carrying amount of the asset retirement obligations is based:

(i)	Total undiscounted amount of the estimated cash flows — $465,709,000.
(ii)	Expected timing of payment of the cash flows — timing is based on life of mine plans. The majority of expenditures are expected to occur after 2016.
(iii)	Discount rates — 5.00% to 7.50%.

The asset retirement obligations liability relates to the following segments:

	2010		2009
Uranium	$	211,927	$	192,544
Fuel Services		67,726		65,733
Total	$	279,653	$	258,277

13. Other Liabilities

	2010			2009
Deferred sales [note 9]	$	17,004		$	24,982
Derivatives [note 26]		5,273			4,137
Accrued post-retirement benefit liability [note 23]		13,355			12,019
Pensions [note 23]		659			491
BPLP
Accrued post-retirement benefit liability [note 23]		138,533			125,402
Pensions [note 23]		20,699			18,251
Derivatives [note 26]		29,954			36,820
Provision for waste disposal		37,660			38,619
Other		9,270			13,009
		272,407			273,730
Less current portion		(28,228	)		(29,297	)
Net	$	244,179		$	244,433

14. Share Capital

Authorized share capital:

Unlimited number of first preferred shares

Unlimited number of second preferred shares

Unlimited number of voting common shares, and

One Class B share

(a) Common Shares

Number Issued (Number of Shares)	2010		2009
Beginning of year		392,838,733		365,718,923
Issued:
Equity issuance		—		26,666,400
Stock option plan [note 22]		1,512,310		453,410
Issued share capital		394,351,043		392,838,733

(b) Class B Share

One Class B share issued during 1988 and assigned $1 of share capital entitles the shareholder to vote separately as a class in respect of any proposal to locate the head office of Cameco to a place not in the province of Saskatchewan.

2010 Annual financial Review   119

(c) Share Issuance

On March 5, 2009, Cameco issued 26,666,400 common shares pursuant to a public offering for a total consideration of $459,995,000. The proceeds of the issue after deducting expenses were $445,532,000. Excluding the deferred tax recoveries, our net cash proceeds amounted to $440,150,000 in 2009.

15. Interest and Other

	2010			2009
Interest on long-term debt	$	47,877		$	38,377
Interest on short-term debt		2,005			2,366
Foreign exchange (gains) losses		6,626			(21,086	)
Other charges		8,597			11,302
Interest income		(13,910	)		(6,614	)
Capitalized interest		(47,721	)		(36,815	)
Net	$	3,474		$	(12,470	)

16. Loss (Gain) on Sale of Assets

	2010			2009
Sale of geological data	$	(1,107	)	$	(3,674	)
Other		1,214			3,108
Net	$	107		$	(566	)

17. Other Expense

	2010			2009
Equity in loss of associated companies	$	(16,413	)	$	(29,811	)
Other		5,263			(7,101	)
Net	$	(11,150	)	$	(36,912	)

In 2010, the equity in loss of associated companies includes a charge of $11,363,000 for the amortization of in-process research and development associated with the investment in GLE (2009 — $18,295,000).

120   cameco corporation

18. Income Taxes

The significant components of future income tax assets and liabilities at December 31 are as follows:

	2010			2009
Assets
Provision for reclamation	$	92,198		$	89,996
Foreign exploration and development		47,230			40,221
Income tax losses carried forward		41,625			100,783
Other		46,617			31,185
Future income tax assets before valuation allowance		227,670			262,185
Valuation allowance		(63,843	)		(57,398	)
Future income tax assets, net of valuation allowance	$	163,827		$	204,787
Liabilities
Property, plant and equipment	$	292,631		$	338,645
Inventories		24,264			5,618
Long-term investments and other		46,484			82,015
Future income tax liabilities	$	363,379		$	426,278
Net future income tax liabilities	$	199,552		$	221,491

The provision for income taxes differs from the amount computed by applying the combined expected federal and provincial income tax rate to earnings before income taxes. The reasons for these differences are as follows:

	2010			2009
Earnings before income taxes and minority interest	$	531,648		$	766,859
Combined federal and provincial tax rate		30.2	%		31.4	%
Computed income tax expense		160,558			240,794
Increase (decrease) in taxes resulting from:
Reduction in income tax rates		(29,508	)		(10,983	)
Manufacturing and processing deduction		(3,846	)		(3,211	)
Difference between Canadian rate and rates applicable to subsidiaries in other countries		(126,222	)		(175,969	)
Change in valuation allowance		13,499			18,125
Capital and other taxes		1,409			1,824
Stock-based compensation plans		2,696			1,371
Other permanent differences		8,665			(19,054	)
Income tax expense	$	27,251		$	52,897

2010 Annual Financial review   121

In 2008, as part of the ongoing annual audits of Cameco’s Canadian tax returns, Canada Revenue Agency (CRA) disputed the transfer pricing methodology used by Cameco and its wholly owned Swiss subsidiary, Cameco Europe Ltd. (CEL), in respect of sale and purchase agreements for uranium products. In December 2008, CRA issued a notice of reassessment, which increased Cameco’s 2003 income for Canadian income tax purposes by approximately $43,000,000. Additional reassessments for 2003 were issued by CRA in 2009 and 2010, both to similar effect. In December 2009, CRA issued a notice of reassessment for the 2004 taxation year, which increased Cameco’s 2004 income by approximately $108,000,000. Another reassessment for 2004 was issued by CRA on May 13, 2010 to similar effect. In December 2010, CRA issued a notice of reassessment for the 2005 taxation year, which increased Cameco’s 2005 taxable income by approximately $197,000,000. No reassessment received to date has resulted in more than a nominal amount of cash taxes becoming payable due to the availability of elective deductions and tax loss carrybacks. Cameco believes it is likely that CRA will reassess Cameco’s tax returns for the years 2006 through 2010 on a similar basis.

CRA’s Transfer Pricing Review Committee is scheduled to meet in late February, 2011, to decide whether to impose a penalty for 2005. Given that the Transfer Pricing Review Committee did not impose a transfer pricing penalty for 2003 or 2004, we do not expect that a penalty will be imposed for 2005.

Having regard to advice from its external advisors, Cameco’s opinion is that CRA’s position is incorrect, and Cameco is contesting CRA’s position. However, to reflect the uncertainties of CRA’s appeals process and litigation, Cameco has recorded a cumulative tax provision related to this matter for the years 2003 through 2010 in the amount of $27,000,000. No provisions for penalties or interest have been recorded. We do not expect more than a nominal amount of cash taxes to be payable due to availability of elective deductions and tax loss carryovers. While the resolution of this matter may result in liabilities that are higher or lower than the reserve, management believes that the ultimate resolution will not be material to Cameco’s financial position, results of operations or liquidity over the period. However, an unfavourable outcome for the years 2003 to 2010 could be material to Cameco’s financial position, results of operations or cash flows in the year(s) of resolution.

Further to Cameco’s decision to contest CRA’s reassessments, a Notice of Appeal for the 2003 taxation year was filed with the Tax Court of Canada on July 22, 2009, and amended on January 26, 2011, and the litigation process is proceeding. In connection with CRA’s 2004 reassessment, Cameco is contesting the reassessment and pursuing its appeal rights under the Income Tax Act. A Notice of Appeal for the 2004 taxation year was filed with the Tax Court of Canada on November 10, 2010. Cameco intends to object to the 2005 reassessment and pursue its appeal rights under the Income Tax Act.

	2010			2009
Earnings (loss) before income taxes and minority interest
Canada	$	(27,641	)	$	109,534
Foreign		559,289			657,325
	$	531,648		$	766,859
Current income taxes (recovery)
Canada	$	(12,280	)	$	17,109
Foreign		38,919			33,551
	$	26,639		$	50,660
Future income taxes (recovery)
Canada	$	7,105		$	3,885
Foreign		(6,493	)		(1,648	)
	$	612		$	2,237
Income tax expense	$	27,251		$	52,897

For 2010, earnings from discontinued operations [note 24] included a net income tax expense of nil, (2009 — recovery of $94,600,000).

122   cameco corporation

At December 31, 2010, loss carry forwards of $136,000,000 (2009 — $380,000,000) are available to reduce taxable income. These losses expire as follows:

Date of expiry	Canada		US		Other		Total
2011		—	$	158		—	$	158
2013		—		1,722		—		1,722
2019		—		—		7,255		7,255
2029		—		17,463		—		17,463
2030		441		10,546		—		10,987
no expiry		—		—		98,657		98,657
	$	441	$	29,889	$	105,912	$	136,242

Included in the table above is $101,000,000 (2009 — $94,000,000) of temporary differences related to loss carry forwards where no future benefit is realized.

Other comprehensive income included on the consolidated statements of shareholders’ equity and the consolidated statements of comprehensive income is presented net of income taxes. The following income tax amounts are included in each component of other comprehensive income:

	2010			2009
Gains on derivatives designated as cash flow hedges	$	2,977		$	48,368
Gains on derivatives designated as cash flow hedges transferred to net earnings		(29,400	)		(48,121	)
Unrealized gains on assets available-for-sale		330			466
(Gains) losses on assets available-for-sale transferred to net earnings		(399	)		80
Total income tax expense (recovery) included in OCI	$	(26,492	)	$	793

Accumulated other comprehensive income included on the consolidated statements of shareholders’ equity and the consolidated statement of accumulated other comprehensive income is presented net of income taxes. The following income tax amounts are included in each component of accumulated other comprehensive income:

	2010		2009
Gains on derivatives designated as cash flow hedges	$	10,564	$	36,987
Gains on assets available-for-sale		277		346
Total income tax expense included in AOCI	$	10,841	$	37,333

2010 Annual financial review   123

19. Statements of Cash Flows

Other Operating Items

	2010			2009
Changes in non-cash working capital:
Accounts receivable	$	(1,566	)	$	34,556
Inventories		(74,899	)		(74,938	)
Supplies and prepaid expenses		(21,229	)		(27,838	)
Accounts payable and accrued liabilities		(141,748	)		30,784
Other		(29,551	)		(46,897	)
Total	$	(268,993	)	$	(84,333	)

20. Uranium Joint Ventures

Cameco conducts a portion of its exploration, development, mining and milling activities through joint ventures. Cameco proportionately consolidates its ownership interest in these assets. The McArthur River, Key Lake and Cigar Lake joint ventures allocate uranium production to each joint venture participant and the joint venture participant derives revenue directly from the sale of such product. Mining and milling expenses incurred by the joint venture are included in the cost of inventory.

The participants in the Inkai joint venture purchase uranium from Inkai and, in turn, derive revenue directly from the sale of such product to third party customers. On proportionate consolidation of Inkai, Cameco eliminates revenues and cost of sales recorded by Inkai related to sales by Inkai directly to Cameco. After elimination of these related party sales for the period, there are no revenues and expenses resulting from proportionate consolidation of Inkai and accordingly, a statement showing revenues and expenses from Inkai has not been provided.

The following table outlines Cameco’s proportionate interest of the assets and liabilities of each joint venture:

	Ownership			2010		2009
Total Assets
McArthur River		69.81	%	$	963,510	$	923,786
Key Lake		83.33	%		469,156		401,604
Cigar Lake		50.03	%		1,022,770		874,661
Inkai		60.00	%		233,884		255,932
				$	2,689,320	$	2,455,983
Total Liabilities
McArthur River		69.81	%	$	31,960	$	25,183
Key Lake		83.33	%		73,345		65,706
Cigar Lake		50.03	%		22,208		14,076
Inkai		60.00	%		11,341		8,627
				$	138,854	$	113,592

124   cameco corporation

21. Investment in BPLP

Cameco holds a 31.6% interest in BPLP, which is governed by an agreement that provides for joint control of the strategic operating, investing and financing activities among the three major partners. Cameco proportionately consolidates its 31.6% interest in BPLP.

Fuel Supply Agreements

Cameco has entered into fuel supply agreements with BPLP for the procurement of fabricated fuel. Under these agreements, Cameco will supply uranium, conversion services and fabrication services. Contract terms are at market rates and on normal trade terms. During 2010, sales of uranium and conversion services to BPLP amounted to $80,211,000 (2009 — $84,909,000), approximately 3.8% (2009 — 3.7%) of Cameco’s total revenue. At December 31, 2010, amounts receivable under these agreements totaled $19,667,000 (2009 — $11,505,000).

The following schedules reflect Cameco’s 31.6% proportionate interest in the balance sheets, statements of earnings and statements of cash flows of BPLP.

Balance Sheets

(Millions)	2010		2009
Current assets	$	207	$	252
Property, plant and equipment		373		390
Long-term receivables and investments		213		207
	$	793	$	849
Current liabilities	$	125	$	129
Long-term liabilities		314		320
		439		449
Equity		354		400
	$	793	$	849

Statements of Earnings

(Millions)	2010		2009
Revenue	$	477	$	518
Operating costs		294		286
Earnings before interest and taxes		183		232
Interest		11		1
Earnings before taxes	$	172	$	231

Statements of Cash Flows

(Millions)	2010			2009
Cash provided by operations	$	203		$	238
Cash used in investing		(32	)		(36	)
Cash used in financing		(172	)		(200	)

2010 Annual financial review   125

22. Stock-Based Compensation Plans

Stock Option Plan

Cameco has established a stock option plan under which options to purchase common shares may be granted to officers and other employees of Cameco. Options granted under the stock option plan have an exercise price of not less than the closing price quoted on the TSX for the common shares of Cameco on the trading day prior to the date on which the option is granted. The options vest over three years and expire eight years from the date granted. Options have not been awarded to directors since 2003 and the plan has been amended to preclude the issue of options to directors.

The aggregate number of common shares that may be issued pursuant to the Cameco stock option plan shall not exceed 43,017,198, of which 26,092,439 shares have been issued.

Stock option transactions for the respective years were as follows:

(Number of Options)	2010			2009
Beginning of year		7,939,833			7,120,555
Options granted		1,515,945			1,381,039
Options exercised [note 14]		(1,512,310	)		(453,410	)
Options forfeited		(391,089	)		(108,351	)
End of year		7,552,379			7,939,833
Exercisable		4,814,761			5,550,148

Weighted average exercise prices were as follows:

	2010		2009
Beginning of year	$	27.42	$	27.98
Options granted		28.90		19.41
Options exercised		12.75		9.79
Options forfeited		35.05		35.68
End of year	$	30.26	$	27.42
Exercisable	$	32.02	$	26.84

Total options outstanding and exercisable at December 31, 2010 were as follows:

2010			Options Outstanding				Options Exercisable
			Weighted		Weighted				Weighted
			Average		Average				Average
			Remaining		Exercisable				Exercisable
Option Price Per Share	Number		Life		Price		Number		Price
$5.75 — 13.49		788,200		2	$	9.72		788,200	$	9.72
13.50 — 32.99		3,755,092		6		25.33		1,381,999		25.25
33.00 — 55.00		3,009,087		5		41.78		2,644,562		42.19
		7,552,379						4,814,761

126   cameco corporation

Non-vested stock option transactions for the respective years were as follows:

(Number of Options)	2010			2009
Beginning of year		2,389,685			2,163,426
Options granted		1,515,945			1,381,039
Options forfeited		(91,439	)		(75,039	)
Options vested		(1,076,573	)		(1,079,741	)
End of year		2,737,618			2,389,685

For the year ended December 31, 2010, Cameco has recorded a net expense of $8,931,000 (2009 - $4,372,000), related to options that vested during the year.

The fair value of the options granted each year was determined using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2010			2009
Number of options granted		1,515,945			1,381,039
Average strike price	$	28.90		$	19.41
Expected dividend	$	0.28		$	0.24
Expected volatility		36	%		36	%
Risk-free interest rate		2.1	%		1.6	%
Expected life of option	4.0 years			4.0 years
Expected forfeitures		15	%		15	%
Weighted average grant date fair values	$	8.46		$	5.23

Executive Performance Share Unit (PSU), Deferred Share Unit (DSU), and Other Plans Commencing in 2005, Cameco provides each plan participant an annual grant of PSUs in an amount determined by the board. Each PSU represents one phantom common share that entitles the participant to a payment of one Cameco common share purchased on the open market, or cash at the board’s discretion, at the end of each three-year period if certain performance and vesting criteria have been met. The final value of the PSUs will be based on the value of Cameco common shares at the end of the three-year period and the number of PSUs that ultimately vest. Vesting of PSUs at the end of the three-year period will be based on total shareholder return over the three years, Cameco’s ability to meet its annual cash flow from operations targets and whether the participating executive remains employed by Cameco at the end of the three-year vesting period. As of December 31, 2010, the total PSUs held by the participants was 395,360 (2009 — 233,710). In 2010, Cameco recognized an expense of $3,679,000 in relation to PSUs (2009 - $3,347,000).

Cameco offers a deferred share unit plan to non-employee directors. A DSU is a notional unit that reflects the market value of a single common share of Cameco. 60% of each director’s annual retainer is paid in DSUs. In addition, on an annual basis, directors can elect to receive 25%, 50%, 75% or 100% of the remaining 40% of their annual retainer and any additional fees in the form of DSUs. If a director meets their ownership requirements, the director may elect to take 25%, 50%, 75% or 100% of their annual retainer and any fees in cash, with the balance, if any, to be paid in DSUs. Each DSU fully vests upon award. The DSUs will be redeemed for cash upon a director leaving the board. The redemption amount will be based upon the weighted average of the closing prices of the common shares of Cameco on the TSX for the last 20 trading days prior to the redemption date multiplied by the number of DSUs held by the director. As of December 31, 2010, the total DSUs held by participating directors was 354,276 (2009 — 373,921).

2010 Annual financial review   127

Cameco makes annual grants of bonuses to eligible non-North American employees in the form of phantom stock options. Employees receive the equivalent value of shares in cash when exercised. Options granted under the phantom stock option plan have an award value equal to the closing price quoted on the TSX for the common shares of Cameco on the trading day prior to the date on which the option is granted. The options vest over three years and expire eight years from the date granted. As of December 31, 2010, the number of options held by participating employees was 242,051 (2009 —267,148) with exercise prices ranging from $5.88 to $46.88 per share (2009 - $5.88 to $46.88) and a weighted average exercise price of $30.00 (2009 — $30.61).

Commencing in 2007, Cameco created an employee share ownership plan whereby both employee and company contributions are used to purchase shares on the open market for employees. The company’s contributions are expensed during the year of contribution. Under the plan, all employees have the opportunity to participate in the program to a maximum of 6% of eligible earnings each year with Cameco matching the first 3% of employee-paid shares by 50%. Cameco contributes $1,000 of shares annually to each employee that is enrolled in the plan. At December 31, 2010, there were 3,496 participants in the plan (2009 — 3,306). The total number of shares purchased in 2010 on behalf of participants, including the company contribution, was 214,795 shares (2009 — 281,207). In 2010, the company’s contributions totaled $6,608,000 (2009 — $5,166,000).

Cameco has recognized the following expenses under these plans:

	2010		2009
Deferred share units		1,971		4,930
Phantom stock options		979		1,531
Employee share ownership plan		6,608		5,166

At December 31, 2010, a liability of $16,798,000 (2009 — $14,962,000) was included in the balance sheet to recognize accrued but unpaid expenses for these plans.

128   cameco corporation

23.	Pension and Other Post-Retirement Benefits
	Cameco maintains both defined benefit and defined contribution plans providing pension and post-retirement benefits to substantially all of its employees.
	Under the defined pension benefit plans, Cameco provides benefits to retirees based on their length of service and final average earnings. The non-pension post-retirement plan covers such benefits as group life and supplemental health insurance to eligible employees and their dependants. The costs related to the non-pension post-retirement plans are charged to earnings in the period during which the employment services are rendered. However, these future obligations are not funded.
	The effective date for the most recent valuations for funding purposes on the pension benefit plans is January 1, 2009. The next planned effective date for valuation for funding purposes of the pension benefit plans is set to be January 1, 2012. The status of the defined plans is as follows:

(a) Accrued Benefit Obligation

	Pension Benefit Plans						Other Benefit Plans
	2010			2009			2010			2009
Balance at beginning of year	$	30,840		$	23,580		$	12,019		$	11,842
Current service cost		1,330			915			553			435
Interest cost		1,905			1,683			664			730
Actuarial loss (gain)		3,535			5,647			720			(442	)
Foreign exchange		(81	)		(238	)		—			—
Benefits paid		(2,011	)		(747	)		(601	)		(546	)
	$	35,518		$	30,840		$	13,355		$	12,019

(b) Plan Assets

	Pension Benefit Plans
	2010			2009
Fair value at beginning of year	$	24,209		$	20,289
Actual return on plan assets		3,739			(708	)
Employer contributions		1,158			5,335
Benefits paid		(1,971	)		(707	)
Fair value at end of year	$	27,135		$	24,209

2010 Annual Financial Review   129

Plan assets consist of:

	Pension Benefit Plans
	2010			2009
Asset Category (i)
Equity securities		26	%		28	%
Fixed income		22	%		23	%
Other (ii)		52	%		49	%
Total		100	%		100	%

(i)	The defined benefit plan assets contain no material amounts of related party assets at December 31, 2010 and 2009 respectively.
(ii)	Relates to the value of the refundable tax account held by the Canada Revenue Agency. The refundable total is approximately equal to half of the sum of the realized investment income plus employer contributions less half of the benefits paid by the plan.

(c) Funded Status Reconciliation

	Pension Benefit Plans						Other Benefit Plans
	2010			2009			2010			2009
Fair value of plan assets	$	27,135		$	24,209		$	—		$	—
Accrued benefit obligation		35,518			30,840			13,355			12,019
Funded status of plans — deficit		(8,383	)		(6,631	)		(13,355	)		(12,019	)
Unamortized net actuarial loss		13,866			14,404			—			—
Accrued benefit asset (liability)	$	5,483		$	7,773		$	(13,355	)	$	(12,019	)
Amounts included in:
Long-term receivables, investments and
other [note 9]		6,142			8,264			—			—
Other liabilities [note 13]		(659	)		(491	)		(13,355	)		(12,019	)
Accrued benefit asset (liability)	$	5,483		$	7,773		$	(13,355	)	$	(12,019	)

(d) Net Pension Expense

	2010			2009
Current service cost	$	1,330		$	915
Interest cost		1,905			1,683
Actual return on plan assets		(3,739	)		708
Actuarial loss		3,535			5,647
Balance prior to adjustments to recognize the long-term nature of employee future benefit costs		3,031			8,953
Difference between actual and expected return on plan assets		2,961			(1,494	)
Difference between actuarial loss recognized for year and actual
actuarial loss on accrued benefit obligation for year		(2,472	)		(4,974	)
Defined benefit pension expense		3,520			2,485
Defined contribution pension expense		14,649			13,506
Net pension expense	$	18,169		$	15,991

130   cameco corporation

	2010			2009
Significant assumptions at December 31
Discount rate		5.5	%		6.0	%
Rate of compensation increase		4.5	%		4.5	%
Long-term rate of return on assets		5.9	%		5.9	%

(e) Other Post-Retirement Benefit Expense

	2010		2009
Current service cost	$	553	$	435
Interest cost		664		730
Actuarial loss (gain)		720		(442	)
Other post-retirement benefit expense	$	1,937	$	723

	2010			2009
Significant assumptions at December 31
Discount rate		5.5	%		6.0	%
Health care cost trend rate		9.0	%		9.0	%

(f) Pension and Other Post-Retirement Benefits Cash Payments

	2010		2009
Employer contributions to funded pension plans	$	1,158	$	5,335
Benefits paid for unfunded benefit plans		640		585
Cash contributions to defined contribution plans		14,649		13,506
Total cash payments for employee future benefits	$	16,447	$	19,426

Benefits paid by the funded pension plan were $1,971,000 for 2010 (2009 — $707,000). Cameco’s expected contributions for the year ended December 31, 2011 are approximately $252,044 for the pension benefit plans.

The following are estimated future benefit payments, which reflect expected future service:

	Pension Benefit Plans		Other Benefit Plans
2011	$	8,376	$	699
2012		1,421		736
2013		1,471		815
2014		1,546		822
2015		1,854		806
2016 to 2020		10,683		4,294

2010 Annual Financial review    131

BPLP

BPLP has a funded registered pension plan and an unfunded supplemental pension plan. The funded plan is a contributory, defined benefit plan covering all employees up to the limits imposed by the Income Tax Act. The supplemental pension plan is a non-contributory, defined benefit plan covering all employees with respect to benefits that exceed the limits under the Income Tax Act. These plans are based on years of service and final average salary.

BPLP also has other post-retirement benefit and other post-employment benefit plans that provide for group life insurance, health care and long-term disability benefits. These plans are non-contributory.

The effective date for the most recent valuations for funding purposes on the pension benefit plans is January 1, 2010. The next planned effective date for valuation for funding purposes of the pension benefit plans is set to be January 1, 2011. The status of Cameco’s proportionate share (31.6%) of the defined plans is as follows:

(a) Accrued Benefit Obligation

	Pension Benefit Plans						Other Benefit Plans
	2010			2009			2010			2009
Balance at beginning of year	$	711,636		$	617,259		$	151,826		$	112,355
Current service cost		18,329			14,944			7,422			4,910
Interest cost		42,478			41,061			8,960			7,284
Actuarial loss		139,143			65,018			17,291			31,127
Plan participants’ contributions		6,630			6,244			—			—
Benefits paid		(30,797	)		(32,890	)		(4,488	)		(3,850	)
	$	887,419		$	711,636		$	181,011		$	151,826

(b) Plan Assets

	Pension Benefit Plans
	2010			2009
Fair value at beginning of year	$	635,293		$	546,755
Actual return on plan assets		55,288			65,486
Employer contributions		50,906			49,698
Plan participants’ contributions		6,630			6,244
Benefits paid		(30,797	)		(32,890	)
Fair value at end of year	$	717,320		$	635,293

Plan assets consist of:

	Asset Allocation						Target Allocation
	2010			2009			2010			2009
Asset Category (i)
Equity securities		59	%		60	%		60	%		60	%
Fixed income		39	%		38	%		40	%		40	%
Cash		2	%		2	%		—			—
Total		100	%		100	%		100	%		100	%

132   cameco corporation

The assets of the pension plan are managed on a going concern basis subject to legislative restrictions. The plan’s investment policy is to maximize returns within an acceptable risk tolerance. Pension assets are invested in a diversified manner with consideration given to the demographics of the plan participants. Rebalancing will take place on a monthly basis if outside of 3% of the target asset allocation.

⁽ⁱ⁾ The defined benefit plan assets contain no material amounts of related party assets at December 31, 2010.

(c) Funded Status Reconciliation

	Pension Benefit Plans						Other Benefit Plans
	2010			2009			2010			2009
Fair value of plan assets	$	717,320		$	635,293		$	—		$	—
Accrued benefit obligation		887,419			711,636			181,011			151,826
Funded status of plans — deficit		(170,099	)		(76,343	)		(181,011	)		(151,826	)
Unrecognized prior service cost		—			—			1,981			2,431
Unamortized net actuarial loss		237,668			112,956			40,497			23,993
Accrued benefit asset (liability)	$	67,569		$	36,613		$	(138,533	)	$	(125,402	)
Amounts included in:
Long-term receivables, investments and other [note 9]		88,268			54,864			—			—
Other liabilities [note 13]		(20,699	)		(18,251	)		(138,533	)		(125,402	)
Accrued benefit asset (liability)	$	67,569		$	36,613		$	(138,533	)	$	(125,402	)

(d) Net Pension Expense

	2010			2009
Current service cost	$	18,329		$	14,944
Interest cost		42,478			41,061
Actual return on plan assets		(55,288	)		(65,486	)
Actuarial loss		139,143			65,018
Balance prior to adjustments to recognize the long-term nature of employee future benefit costs		144,662			55,537
Difference between actual and expected return on plan assets		10,798			27,286
Difference between actuarial loss recognized and actual actuarial loss on accrued benefit obligation for year		(135,509	)		(63,678	)
Net pension expense	$	19,951		$	19,145

	2010			2009
Significant assumptions at December 31
Discount rate		5.3	%		6.0	%
Rate of compensation increase		3.5	%		5.5	%
Long-term rate of return on assets		7.0	%		7.0	%

2010 Annual Financial review    133

(e) Other Benefit Plans Expense

	2010			2009
Current service cost	$	7,422		$	4,910
Interest cost		8,960			7,284
Actuarial loss		17,291			31,127
Balance prior to adjustments to recognize the long-term nature of employee future benefit costs		33,673			43,321
Difference between amortization of past service costs and actual plan amendments for year		450			450
Difference between actuarial loss (gain) recognized and actual actuarial
loss on accrued benefit obligation for year		(16,504	)		(31,556	)
Other benefit plans expense	$	17,619		$	12,215

	2010			2009
Significant assumptions at December 31
Discount rate		5.1	%		5.8	%
Rate of compensation increase		3.5	%		3.5	%
Initial health care cost trend rate		9.5	%		10.0	%
Cost trend rate declines to		5.0	%		5.0	%
Year the rate reaches its final level		2019			2019

	2010		2009
Employer contributions to funded pension plans	$	49,938	$	45,890
Benefits paid for unfunded benefit plans		4,814		4,209
Total cash payments for employee future benefits	$	54,752	$	50,099

(f)	Pension and Other Post-Retirement Benefits Cash Payments
	Benefits paid by the funded pension plan were $30,472,000 for 2010 (2009 — $32,531,000). BPLP’s expected contributions for the year ended December 31, 2011 are approximately $86,148,000 for the pension benefit plans.
	The following are estimated future benefit payments, which reflect expected future service:

	Pension Benefit Plans		Other Benefit Plans
2011	$	39,637	$	5,473
2012		43,334		6,013
2013		47,201		6,575
2014		51,134		7,117
2015		54,858		7,613
2016 to 2020		330,163		46,407

134   cameco corporation

24.	Restructuring of the Gold Business
	The assets and liabilities related to discontinued operations have been reclassified as assets or liabilities of discontinued operations on the consolidated balance sheets. Operating results related to the discontinued operations have been included in earnings from discontinued operations on the consolidated statements of earnings. Comparative period balances have been restated.

(a)	Sale of Centerra Gold Inc. (Centerra)
	On December 30, 2009, Cameco completed a public offering of 88,618,472 common shares of Centerra for net proceeds of approximately $871,000,000 and recorded a net gain of $374,000,000. Concurrent with this offering, Cameco transferred an additional 25,300,000 common shares of Centerra to Kyrgyzaltyn pursuant to the agreement that Cameco entered into with the Government of the Kyrgyz Republic on April 24, 2009. As a result of the closing of the public offering, and the transfer of the Centerra common shares to Kyrgyzaltyn, Cameco has disposed of its entire interest in Centerra.
(b)	Kyrgyz Share Transfer
	In 2007, the Parliament of the Kyrgyz Republic challenged the legal validity of Kumtor Gold Company (Kumtor) agreements with the Kyrgyz Republic. As a result, Cameco and Centerra entered into discussions with Kyrgyzaltyn, culminating in the signing of two agreements in August 2007 providing for the transfer of a certain number of Centerra shares to Kyrgyzaltyn, subject to certain conditions. These agreements, however, were never ratified by the Kyrgyz parliament.
	On April 24, 2009, Cameco, Centerra, the Kyrgyz government and other parties signed a new agreement to resolve all the issues related to the Kumtor mine. On April 30, 2009, the Kyrgyz parliament ratified the agreement and enacted legislation authorizing implementation of the agreement. On June 11, 2009, closing occurred and Centerra issued 18,232,615 treasury shares to Kyrgyzaltyn and Cameco transferred 25,300,000 shares of its 113,918,000 Centerra common shares to a custodian, to be held in escrow, for ultimate release to Kyrgyzaltyn, subject to certain conditions. Cameco retained its voting rights over these shares while they were held in escrow. As a result of the public offering concluded on December 30, 2009, Cameco released the shares held in escrow to Kyrgyzaltyn.
	The total amount of the after-tax loss related to this agreement is $179,000,000, of which an expense of $46,000,000 was recorded in 2009, a recovery of $20,000,000 in 2008 and an expense of $153,000,000 in 2007.
(c)	Financial Results of Discontinued Operations
	The results of the operations of Centerra are presented under “discontinued operations” on the consolidated statements of earnings. The following table presents the components of the discontinued operations amounts, net of future income tax expenses [note 18]:

(Millions)	2010		2009
Sale of Centerra		—	$	374.2
Kyrgyz share transfer		—		(45.9	)
Operating earnings		—		54.1
Earnings from discontinued operations	—		$	382.4

2010 Annual Financial review    135

The following table presents the components of the operating results of Centerra:

(Millions)	2010		2009
Revenue		—	$	770.2
Expenses
Products and services sold		—		440.4
Depreciation, depletion and reclamation		—		122.4
Exploration		—		28.5
Other		—		37.3
Earnings before income taxes and minority interest		—		141.6
Income tax expense		—		33.4
Minority interest		—		54.1
Operating earnings		—	$	54.1

25. Commitments and Contingencies

(a)	On February 12, 2004, Cameco, Cameco Bruce Holdings II Inc., BPC Generation Infrastructure Trust and TransCanada Pipelines Limited (collectively, the “Consortium”) sent a notice of claim to British Energy Limited and British Energy International Holdings Limited (collectively, BE) requesting, amongst other things, indemnification for breach of a representation and warranty contained in the February 14, 2003, Amended and Restated Master Purchase Agreement. The alleged breach is that the Unit 8 steam generators were not “in good condition, repair and proper working order, having regard to their use and age.” This defect was discovered during a planned outage conducted just after closing. As a result of this defect, the planned outage had to be significantly extended. The Consortium has claimed damages in the amount of $64,558,200 being 79.8% of the $80,900,000 of damages actually incurred, plus an unspecified amount to take into account the reduced operating life of the steam generators. By agreement of the parties, an arbitrator has been appointed to arbitrate the claims and a schedule has been set for the next steps in the proceeding.
	The Consortium served its claim on October 21, 2008, and has amended it as required, most recently on August 7, 2009. BE served its answer and counter-statement on December 22, 2008, most recently amended on March 25, 2010, and the Consortium served its reply and answer to counter-statement on January 22, 2009, most recently amended on August 7, 2009.
	The Unit 8 steam generators require on-going monitoring and maintenance as a result of the defect. In addition to the $64,558,200 in damages sought in the notice of claim, the claim seeks an additional $4,900,000 spent on inspection, monitoring and maintenance of Unit 8, and $31,900,000 in costs for future monitoring and maintenance, as well as repair costs and lost revenue due to anticipated unplanned outages as a consequence of the defect in Unit 8. The initial claim had also sought damages for the early replacement of the Unit 8 steam generators due to the defect shortening their useful operating lives. However, recent inspection data and analysis of the condition of the Unit 8 steam generators now indicates that they will continue to function until the end of the Consortium’s lease of the Bruce Power facility in 2018, as was expected at the time the MPA was entered into. The claim for early replacement was thus abandoned via an amendment to the claim on August 7, 2009. The arbitration hearing was completed on November 23, 2010 and final oral arguments are scheduled for June 1, 2011.
	In anticipation of this claim, BE issued on February 10, 2006, and then served on Ontario Power Generation Inc. (OPG) and Bruce Power LP a Statement of Claim. This Statement of Claim seeks damages for any amounts that BE is found liable to pay to the Consortium in connection with the Unit 8 steam generator arbitration described above, damages in the amount of $500,000,000, costs and pre and post judgment interest amongst other things. Further proceedings in this action are on hold pending completion of the arbitration hearing.
(b)	Annual supplemental rents of $30,000,000 (subject to CPI) per operating reactor are payable by BPLP to OPG. Should the hourly annual average price of electricity in Ontario fall below $30 per megawatt hour, the supplemental rent reduces to $12,000,000 per operating reactor. In accordance with the Sublease Agreement, Bruce A L.P. will participate in its share of any adjustments to the supplemental rent.

136   cameco corporation

(c) Cameco, TransCanada and BPC have assumed the obligations to provide financial guarantees on behalf of BPLP. Cameco has provided the following financial assurances, with varying terms that range from 2011 to 2018:

i)	Guarantees to customers under power sales agreements of up to $35,300,000. At December 31, 2010, Cameco’s actual exposure under these guarantees was $24,000,000.
ii)	Termination payments to OPG pursuant to the lease agreement of $58,300,000. The fair value of these guarantees is nominal.

(d)	Under a supply contract with the Ontario Power Authority (OPA), BPLP is entitled to receive payments from the OPA during periods when the market price for electricity in Ontario is lower than the floor price defined under the agreement during a calendar year. On July 6, 2009, BPLP and the OPA amended the supply contract such that beginning in 2009, the annual payments received will not be subject to repayment in future years. Previously, the payments received under the agreement were subject to repayment during the entire term of the contract, dependent on the spot price in future periods. BPLP’s entitlement to receive these payments remains in effect until December 31, 2019 but the generation that is subject to these payments starts to decrease in 2016, reflecting the original estimated lives for the Bruce B units. During 2010, BPLP recorded $339,000,000 under this agreement which was recognized as revenue with Cameco’s share being $107,000,000. Of the amount recorded, BPLP currently expects to repay $4,000,000.
(e)	Cameco’s North American workforce includes about 3,300 employees, of which approximately 900 (27%) belong to three separate labour unions.
(f)	At December 31, 2010, Cameco’s purchase commitments, the majority of which are fixed price uranium and conversion purchase arrangements, were as follows:

	(Millions (US))
2011	$	267
2012		226
2013		397
2014		114
2015		60
Thereafter		6
Total	$	1,070

26.	Financial Instruments
	The majority of revenues at Cameco are derived from the sale of uranium products, and electricity through its investment in BPLP. Cameco’s uranium product financial results are closely related to the long and short-term market price of uranium sales and conversion services. Prices fluctuate and can be affected by demand for nuclear power, worldwide production and uranium levels, and political and economic conditions in uranium producing and consuming countries. BPLP’s revenue from electricity is affected by changes in electricity prices associated with an open spot market for electricity in Ontario. Financial results for Cameco are also impacted by changes in foreign currency exchange rates and other operating risks. Finally, certain financial assets are subject to credit risks, including cash and securities, accounts receivable, and commodity and currency instruments.
	To mitigate risks associated with certain financial assets, Cameco will hold positions with a variety of large creditworthy institutions. Sales of uranium products, with short payment terms, are made to customers that management believes are creditworthy.
	To mitigate risks associated with foreign currency on its sale of uranium products, Cameco enters into forward sales contracts to establish a price for future delivery of the foreign currency.

2010 Annual Financial review   137

Cameco is exposed to interest rate risk through its interest rate swap contracts whereby fixed rate payments on a notional amount of $135,000,000 of the Series C senior unsecured debentures were swapped for variable rate payments. The swaps terminate on March 16, 2015. Under the terms of the swaps, Cameco makes interest payments based on three-month bankers acceptance rate plus an average margin of 1.81% and receives fixed interest payments of 4.7%. To mitigate this risk, Cameco entered into interest rate cap arrangements, effective March 18, 2013, whereby the three-month bankers acceptance rate was capped at 5.0% such that total variable payments will not exceed, on average 6.81%. At December 31, 2010, the mark-to-market gain on Cameco’s interest rate swaps and caps less premiums paid was $1,458,000.

To mitigate risks associated with the fluctuations in the market price for uranium products, Cameco seeks to maintain a portfolio of uranium product sales contracts with a variety of delivery dates and pricing mechanisms that provide a degree of protection from price volatility. To mitigate risks associated with the fluctuations in the market price for electricity, BPLP enters into various energy and sales related contracts that qualify as cash flow hedges. These instruments have terms ranging from 2011 to 2016. At December 31, 2010, the mark-to-market gain on BPLP’s sales contracts was $29,000,000.

All financial instruments measured at fair value are categorized into one of three hierarchy levels, described below, for disclosure purposes. Each level is based on the transparency of the inputs used to measure the fair values of assets and liabilities:

Level 1 — Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 — Values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.

Level 3 — Values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

When the inputs used to measure fair value fall within more than one level of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measure in its entirety.

Except as otherwise disclosed, the fair market value of Cameco’s financial assets and liabilities approximates the carrying amount as a result of the short-term nature of the instruments, or the variable interest rate associated with the instruments, or the fixed interest rate of the instruments being similar to market rates.

The fair values of Cameco’s privately held available-for-sale securities, as described in note 9, have not been disclosed because of the unavailability of a quoted market price in an active market. Cameco does not currently have plans to dispose of any of these investments.

138   cameco corporation

The following tables present Cameco’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis.

As at December 31, 2010

Description	Total			Level 1		Level 2			Level 3
Derivative instrument assets	$	127,842		$	—	$	122,786		$	5,056
Available-for-sale securities [notes 5, 9]		889,065			889,065		—			—
Derivative instrument liabilities		(35,227	)		—		(35,227	)		—
Net	$	981,680		$	889,065	$	87,559		$	5,056

As at December 31, 2009

Description	Total			Level 1		Level 2			Level 3
Derivative instrument assets	$	210,381		$	—	$	197,381		$	13,000
Available-for-sale securities [notes 5, 9]		207,473			207,473		—			—
Derivative instrument liabilities		(40,957	)		—		(39,957	)		(1,000	)
Net	$	376,897		$	207,473	$	157,424		$	12,000

The fair value of a financial instrument is the amount at which the financial instrument could be exchanged in an arm’s-length transaction between knowledgeable and willing parties under no compulsion to act. Fair values of identical instruments traded in active markets are determined by reference to last quoted prices, in the most advantageous active market for that instrument. In the absence of an active market, we determine fair values based on quoted prices for instruments with similar characteristics and risk profiles. Fair values of financial instruments determined using valuation models require the use of inputs. In determining those inputs, we look primarily to external, readily observable market inputs, when available, including factors such as interest rate yield curves, currency rates, and price and rate volatilities, as applicable. In some circumstances, we use input parameters that are not based on observable market data. In these cases, we may adjust model values to reflect the valuation uncertainty in order to determine what the fair value would be based on the assumptions that market participants would use in pricing the financial instrument. These adjustments are made in order to determine the fair value of the instruments.

We make valuation adjustments for the credit risk of our derivative portfolios in order to arrive at their fair values. These adjustments take into account the creditworthiness of our counterparties.

Equity-accounted investments and financial instruments classified as available-for-sale comprise actively traded debt and equity securities and are carried at fair value based on available quoted prices.

There were no significant transfers between level 1 and level 2 of the fair value hierarchy. Transfers into level 3 are comprised of BPLP derivative financial instruments with contract terms extending beyond 36 months. Due to the decline in electricity prices as a result of the recession, the liquidity in the market has been significantly reduced, resulting in a lack of an active market and observable market inputs beyond 36 months.

2010 Annual Financial review   139

Derivatives

The following tables summarize the fair value of derivatives and classification on the balance sheet:

As at December 31, 2010

	Cameco			BPLP			Total
Non-hedge derivatives:
Embedded derivatives — sales contracts	$	(3,864	)	$	18,877		$	15,013
Foreign currency contracts		47,144			—			47,144
Interest rate contracts		1,458			—			1,458
Cash flow hedges:
Energy and sales contracts		—			29,000			29,000
Net	$	44,738		$	47,877		$	92,615
Classification:
Current portion of long-term receivables, investments and other [note 9]	$	46,629		$	44,505		$	91,134
Long-term receivables, investments and other [note 9]		3,382			33,326			36,708
Current portion of other liabilities [note 13]		(377	)		(20,662	)		(21,039	)
Other liabilities [note 13]		(4,896	)		(9,292	)		(14,188	)
Net	$	44,738		$	47,877		$	92,615

As at December 31, 2009

	Cameco			BPLP			Total
Non-hedge derivatives:
Embedded derivatives — sales contracts	$	(2,736	)	$	9,082		$	6,346
Foreign currency contracts		67,031			—			67,031
Cash flow hedges:
Energy and sales contracts		—			96,047			96,047
Net	$	64,295		$	105,129		$	169,424
Classification:
Current portion of long-term receivables, investments and other [note 9]	$	66,972		$	87,439		$	154,411
Long-term receivables, investments and other [note 9]		1,460			54,510			55,970
Current portion of other liabilities [note 13]		(445	)		(19,595	)		(20,040	)
Other liabilities [note 13]		(3,692	)		(17,225	)		(20,917	)
Net	$	64,295		$	105,129		$	169,424

140   cameco corporation

The following tables summarize different components of the (gains) and losses on derivatives:

For the year ended December 31, 2010

	Cameco			BPLP		Total
Non-hedge derivatives:
Embedded derivatives — sales contracts	$	1,623		$	2,785	$	4,408
Foreign currency contracts		(80,107	)		—		(80,107	)
Interest rate contracts		(2,482	)		—		(2,482	)
Cash flow hedges:
Energy and sales contracts		—			2,998		2,998
Net	$	(80,966	)	$	5,783	$	(75,183	)

For the year ended December 31, 2009

	Cameco			BPLP			Total
Non-hedge derivatives:
Embedded derivatives — sales contracts	$	(4,764	)	$	(4,737	)	$	(9,501	)
Foreign currency contracts		(234,066	)		—			(234,066	)
Interest rate contracts		401			—			401
Cash flow hedges:
Energy and sales contracts		—			(638	)		(638	)
Net	$	(238,429	)	$	(5,375	)	$	(243,804	)

Over the next 12 months, based on current exchange rates, Cameco expects an estimated $5,573,000 of pre-tax gains from the foreign currency cash flow hedges to be reclassified through other comprehensive income to net earnings. The maximum length of time Cameco hedges its exposure to the variability in future cash flows related to foreign currency on anticipated transactions is five years.

Over the next 12 months, based on current prices, Cameco expects an estimated $18,012,000 of pre-tax gains from BPLP’s various energy and sales related cash flow hedges to be reclassified through other comprehensive income to net earnings. The maximum length of time BPLP is hedging its exposure to the variability in future cash flows related to electricity prices on anticipated transactions is six years.

Currency

At December 31, 2010, Cameco had $1,317,500,000 (US) in forward contracts at an average exchange rate of $1.03 and €93,000,000 at an average exchange rate of $1.35. The foreign currency contracts are scheduled for use as follows:

(Millions)	US		Rate		Cdn		Euro		Rate		US
2011	$	890		1.03	$	917	€	45		1.35	$	61
2012		363		1.04		378		46		1.35		62
2013		65		1.03		67		—		—		—
Thereafter		—		—		—		2		1.34		3
Total	$	1,318		1.03	$	1,362	€	93		1.35	$	126

These positions consist entirely of forward sales contracts. The average exchange rate reflects the current forward contract price. Of these amounts, $1,252,500,000 of the US-denominated contracts and $93,000,000 of the Euro-denominated contracts mature in 2011. The remaining $65,000,000 in US-denominated contracts matures in 2012.

2010 Annual Financial review   141

27.	Per Share Amounts
	Per share amounts have been calculated based on the weighted average number of common shares outstanding during the year. The weighted average number of paid shares outstanding in 2010 was 393,168,523 (2009 — 387,955,503).

	2010		2009
Basic earnings per share computation
Net earnings	$	514,749	$	1,099,422
Weighted average common shares outstanding		393,169		387,956
Basic earnings per common share	$	1.31	$	2.83
Diluted earnings per share computation
Net earnings	$	514,749	$	1,099,422
Weighted average common shares outstanding		393,169		387,956
Dilutive effect of stock options		1,850		1,977
Weighted average common shares outstanding, assuming dilution		395,019		389,933
Diluted earnings per common share	$	1.30	$	2.82

28.	Segmented Information
	Cameco has three reportable segments: uranium, fuel services and electricity. The uranium segment involves the exploration for, mining, milling, purchase and sale of uranium concentrate. The fuel services segment involves the refining, conversion and fabrication of uranium concentrate and the purchase and sale of conversion services. The electricity segment involves the generation and sale of electricity.
	Cameco’s reportable segments are strategic business units with different products, processes and marketing strategies.
	Accounting policies used in each segment are consistent with the policies outlined in the summary of significant accounting policies.

142   cameco corporation

(a) Business Segments

2010

				Fuel				Inter-
(Millions)	Uranium			Services		Electricity		Segment			Total
Revenue	$	1,373.7		$	300.6	$	476.7	$	(27.3	)	$	2,123.7
Expenses
Products and services sold		698.5			213.6		246.4		(30.6	)		1,127.9
Depreciation, depletion and reclamation		171.8			26.9		52.5		0.3			251.5
Exploration		95.8			—		—		—			95.8
Other		(2.8	)		14.3		—		—			11.5
Cigar Lake remediation		16.6			—		—		—			16.6
Loss on sale of assets		0.1			—		—		—			0.1
Non-segmented expenses												88.7
Earnings before income taxes and minority interest		393.7			45.8		177.8		3.0			531.6
Income tax expense												27.3
Minority interest												(10.4	)
Net earnings											$	514.7
Assets	$	6,317.4		$	395.9	$	863.8	$	—		$	7,577.1
Intangibles	$	—		$	94.3	$	—	$	—		$	94.3
Capital expenditures for the year	$	415.2		$	20.2	$	34.9	$	—		$	470.3

2009

				Fuel				Inter-
(Millions)	Uranium			Services		Electricity		Segment			Total
Revenue	$	1,551.3		$	276.3	$	518.3	$	(30.9	)	$	2,315.0
Expenses
Products and services sold		901.4			203.9		243.5		(24.5	)		1,324.3
Depreciation, depletion and reclamation		161.9			22.8		55.6		0.3			240.6
Exploration		49.1			—		—		—			49.1
Other		15.9			21.3		—		—			37.2
Cigar Lake remediation		17.9			—		—		—			17.9
Gain on sale of assets		(0.6	)		—		—		—			(0.6	)
Non-segmented expenses												(120.4	)
Earnings (loss) before income taxes and minority interest		405.7			28.3		219.2		(6.7	)		766.9
Income tax expense												52.9
Minority interest												(3.0	)
Net earnings from continuing operations											$	717.0
Assets	$	5,989.7		$	383.9	$	922.6	$	—		$	7,296.2
Intangibles	$	—		$	97.7	$	—	$	—		$	97.7
Capital expenditures for the year	$	333.3		$	20.7	$	38.7	$	—		$	392.7

2010 Annual Financial review   143

(b) Geographic Segments

(Millions)	2010		2009
Revenue from products and services
Canada — domestic	$	689.0	$	739.2
— export		102.9		194.9
United States		1,331.8		1,380.9
	$	2,123.7	$	2,315.0
Assets
Canada	$	5,819.8	$	5,774.5
United States		670.77		695.9
Australia		607.9		553.1
Europe		342.8		139.0
Kazakhstan		230.1		231.4
	$	7,671.4	$	7,393.9

(c)	Major Customers
	Cameco relies on a small number of customers to purchase a significant portion of its uranium concentrates and uranium conversion services. During 2010, revenues from one customer of Cameco’s uranium and fuel services segments represented approximately $125,657,000 (2009 — $252,699,000), about 8% (2009 — 14%) of Cameco’s total revenues from these segments. As customers are relatively few in number, accounts receivable from any individual customer may periodically exceed 10% of accounts receivable depending on delivery schedules.
	During 2010, electricity revenues from one customer of BPLP represented approximately 7% (2009 — 5%) of BPLP’s total revenues.

29.	Talvivaara Agreement
	On February 7, 2011, Cameco signed two agreements with Talvivaara Mining Company Plc. to buy uranium produced at the Sotkamo nickel-zinc mine in Finland. Under the first agreement with Talvivaara, Cameco will provide an up-front payment, to a maximum of $60,000,000 (US) to cover certain construction costs. This amount will be repaid through deliveries of uranium concentrate. Once the full amount has been repaid, Cameco will continue to purchase the uranium concentrates produced at the Sotkamo mine through a second agreement which provides for the purchase of uranium using a pricing formula that references market prices at the time of delivery. The second agreement expires on December 31, 2027.
30.	Related Party Transactions
	Cameco purchases a significant amount of goods and services for its Saskatchewan mining operations from northern Saskatchewan suppliers to support economic development in the region. One such supplier is Points Athabasca Contracting Ltd. and the president of the company became a member of the board of directors of Cameco during 2009. In 2010, Cameco paid Points Athabasca Contracting Ltd. $38,000,000 (2009 — $30,800,000) for construction and contracting services. The transactions were conducted in the normal course of business and were accounted for at the exchange amount. Accounts payable include a balance of $2,290,000 (2009 — $230,000) resulting from these transactions.
31.	Comparative Figures
	Certain prior year balances have been reclassified to conform to the current financial statement presentation.

144   cameco corporation

Common Shares
Toronto (CCO) | New York (CCJ)

Transfer Agents and Registrars
For information on common share holdings, dividend cheques,
lost share certificates and address changes, contact:

In Canada:	In the United States:
CIBC Mellon Trust Company	BNY Mellon Shareowner Services
P.O. Box 7010	480 Washington Blvd.
Adelaide Street Postal Station	Jersey City, New Jersey 07310
Toronto, Ontario M5C 2W9	U.S.A.
Canada

Telephone:
1-800-387-0825 (toll-free within Canada and the United States)
OR
1-416-643-5500 (from any country other than Canada
and the United States)

Fax:
1-416-643-5501 (all countries)

cibcmellon.com/investorinquiry

Annual Meeting
The annual meeting of shareholders of Cameco Corporation is scheduled
to be held on Tuesday, May 17, 2011 at 1:30 p.m. at Cameco’s head office
in Saskatoon, Saskatchewan.

Dividend Policy
The board of directors has established a policy of paying a quarterly dividend of
$0.10 ($0.40 per year) per common share for 2011. This policy will be reviewed
from time to time in light of the company’s cash flow, earnings, financial position
and other relevant factors.

Inquiries
Cameco Corporation
2121 — 11th Street West
Saskatoon, Saskatchewan S7M 1J3
Phone: 306-956-6200
Fax: 306-956-6201

With 476 million pounds of proven and probable U3O3 reserves, Cameco has the potential to “Double U” by 20118.