Q4 & Annual Results Conference Call

Transcription

1 Q4 & Annual Results Conference Call Q4 & Annual, 2016 February 10, 2017 cameco.com

2 Forward-Looking Information Caution This presentation includes forward-looking information or forward-looking statements under Canadian and U.S. securities laws, which we refer to as forward-looking formation. Forwardlooking information is based upon our current views, which can change significantly, and actual results and events may be significantly different from what we currently expect. Examples of forward-looking information include our financial objective, consolidated outlook for 2017, the expected impact of our cost-cutting measures in 2017 and our expectations for uranium deliveries in Material risks that could lead to different results include: unexpected changes in demand for uranium, our production, our costs, our mineral reserve estimates, and government regulations or policies; our estimates prove to be inaccurate; the risk of litigation or arbitration claims that have an adverse outcome; the risk that our contract counterparties may not satisfy their commitments; and the risk that our cost reduction strategies are unsuccessful, or have unanticipated consequences. In presenting the forward-looking information, we have made material assumptions which may prove incorrect about: uranium demand; our costs; our production; the accuracy of our mineral reserve and other estimates; the absence of new and adverse government regulations or policies; the successful outcome of any litigation or arbitration claims; our ability to complete contracts on the agreed-upon terms; and that our cost reduction strategies will successfully achieve their objectives. Please also review the discussion in our 2016 annual MD&A and our most recent annual information form of other material risks that could cause actual results to differ significantly from our current expectations, and other material assumptions we have made. Forward-looking information is designed to help you understand management s current views of our near and longer term 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. 2

3 US $/lb U 3 O 8 A Challenging Market Prices not rational or sustainable Future and existing supply at risk Dec spot price a 12-year low $140 $120 $100 $80 $60 $40 $20 $0 spot long-term 3

4 Performance vs Outlook Production Sales volume Consolidated Uranium Fuel services NUKEM Actual Plan Actual Plan Actual Plan Actual Plan 27.0 M lbs 31.5 M lbs 25.8 M lbs M lbs 8.4 M kgu 8-9 M kgu 7% 0-5% 7.1 M lbs 7-8 M lbs Revenue* 12% 10-15% 8% 5-10% 1% 0-5% 29% 20-25% Avg unit cost of sales 4% 0-5% 8% 5-10% Gross profit (7)% 1-2% Direct Admin 13% 10-15% Exploration 8% 15-20% Tax rate 4 >200% recovery >200% recovery *Excludes revenue between segments Capital Expenditures $217 M $245 M All dollar amounts in Canadian dollars

5 Financial objective Maximize cash flow while maintaining our investment grade rating Manage risks like: Lower for longer market conditions Litigation risk related to CRA and TEPCO disputes Refinancing risks 5

6 2017 Outlook Remaining cautiously optimistic on market Expect: Uranium segment to contribute 84% total gross profit for year Uranium deliveries of 30 million to 32 million lbs Contracted to deliver an average 24 million lbs/yr to end of average realized price $49.00/lb 2,3* Average unit cost of sales $36.00 to $38.00/lb Capital expenditures of $190 million Switzerland 6 *Footnotes/assumptions provided at end of slide deck

7 Nuclear growth 2016 reactor startups China 5 Russia 1 India 1 South Korea USA 1 1 Pakistan 1 7

8 Focusing on what we can control Streamlining and efficiencies Managing our production responsibly Controlling costs Protecting and extending value of contract portfolio Maintaining investment grade rating Positioning the company for future growth 8

9 Expected impact of cost-cutting measures 9

10 Changes to outlook table for 2017* Focus on uranium segment Removed percentage ranges 2017 FINANCIAL OUTLOOK CONSOLIDATED URANIUM FUEL SERVICES NUKEM EXPECTED CONTRIBUTION TO GROSS PROFIT 100% 84% 15% 1% Production - Sales volume million lbs 8 to 9 million kgu 30 to to 12 million lbs 2 million kgu - 5 to 6 million lbs U 3 O 8 Revenue ($ million) 1 1,950 to 2,080 1,470 to 1, to Average realized price 3 - $49.00/lb Average unit cost of sales (including D&A) - $ /lb 4 $ /kgU - Gross profit % to 4% Direct administration costs 5 $ million Exploration costs - $30 million - - Expected loss on derivatives - ANE basis 3 $45-50 million Tax recovery - ANE basis 6 $10-20 million Capital expenditures $190 million *Footnotes/assumptions provided at end of slide deck

11 Changes to outlook table for 2017* Average realized price (based on assumptions) Eliminates one variable 2017 FINANCIAL OUTLOOK CONSOLIDATED URANIUM FUEL SERVICES NUKEM EXPECTED CONTRIBUTION TO GROSS PROFIT 100% 84% 15% 1% Production to 9 million lbs million kgu - Sales volume 1-30 to to 12 5 to 6 million lbs 2 million kgu million lbs U 3 O 8 Revenue ($ million) 1 1,950 to 2,080 1,470 to 1, to Average realized price 3 - $49.00/lb Average unit cost of sales (including D&A) - $ /lb 4 $ /kgU - Gross profit % to 4% Direct administration costs 5 $ million Exploration costs - $30 million - - Expected loss on derivatives - ANE basis 3 $45-50 million Tax recovery - ANE basis 6 $10-20 million Capital expenditures $190 million *Footnotes/assumptions provided at end of slide deck

12 Delivery distribution expectations 12

13 Changes to outlook table for 2017* Average unit cost of sales Dollar ranges 2017 FINANCIAL OUTLOOK CONSOLIDATED URANIUM FUEL SERVICES NUKEM EXPECTED CONTRIBUTION TO GROSS PROFIT 100% 84% 15% 1% Production to 9 million lbs million kgu - Sales volume 1-30 to to 12 5 to 6 million lbs 2 million kgu million lbs U 3 O 8 Revenue ($ million) 1 1,950 to 2,080 1,470 to 1, to Average realized price 3 - $49.00/lb Average unit cost of sales (including D&A) 13 - $ $ /lb /kgU Gross profit % to 4% Direct administration costs 5 $ million Exploration costs - $30 million - - Expected loss on derivatives - ANE basis 3 $45-50 million Tax recovery - ANE basis 6 $10-20 million Capital expenditures $190 million *Footnotes/assumptions provided at end of slide deck -

14 Changes to FX disclosure Net earnings impact vs. ANE impact explained Breakdown of designations in portfolio Average effective rate range on designated contracts can estimate expected gain or loss on derivatives ANE basis Hedge ratio provided can estimate remaining net exposure subject to changes in exchange rate DECEMBER 31, 2016 AFTER ($ MILLIONS) TOTAL US dollar forward contacts ($ millions) Average contract rate 1 (US/Cdn dollar) US dollar option contacts ($ millions) Average contract rate range 1 (US/Cdn dollar) 1.30 to to to to 1.35 Total US dollar hedge contracts ($ millions) Effective Hedge Rate range 2 (US/Cdn dollar) 1.19 to to to to 1.21 Hedge ratio 3 50% 32% 11% 0% 21% 1 The average contract rate is the average of the rates stipulated in the outstanding contracts. 2 The effective hedge rate is the exchange rate on the original hedge contract at the time it was established and designated for use. Therefore the effective hedge rate range shown reflects an average of contract exchange rates at the time of designation. 3 Hedge ratio is calculated by dividing the amount (in foreign currency) of outstanding derivative contracts by estimated future net exposures. 14

15 Changes to outlook table for 2017* Expected loss on derivatives ANE basis Based on new disclosure in FX section 2017 FINANCIAL OUTLOOK CONSOLIDATED URANIUM FUEL SERVICES NUKEM EXPECTED CONTRIBUTION TO GROSS PROFIT 100% 84% 15% 1% Production to 9 million lbs million kgu - Sales volume 1-30 to to 12 5 to 6 million lbs 2 million kgu million lbs U 3 O 8 Revenue ($ million) 1 1,950 to 2,080 1,470 to 1, to Average realized price 3 - $49.00/lb Average unit cost of sales (including D&A) - $ /lb 4 $ /kgU - Gross profit % to 4% Direct administration costs 5 $ million Exploration costs - $30 million - - Expected loss on derivatives - ANE basis 3 $45-50 million Tax recovery - ANE basis 6 $10-20 million Capital expenditures $190 million *Footnotes/assumptions provided at end of slide deck

16 Changes to outlook table for 2017* Tax recovery ANE basis Dollar range, reassess when tax rate more stable 2017 FINANCIAL OUTLOOK CONSOLIDATED URANIUM FUEL SERVICES NUKEM EXPECTED CONTRIBUTION TO GROSS PROFIT 100% 84% 15% 1% Production to 9 million lbs million kgu - Sales volume 1-30 to to 12 5 to 6 million lbs 2 million kgu million lbs U 3 O 8 Revenue ($ million) 1 1,950 to 2,080 1,470 to 1, to Average realized price 3 - $49.00/lb Average unit cost of sales (including D&A) - $ /lb 4 $ /kgU - Gross profit % to 4% Direct administration costs 5 $ million Exploration costs - $30 million - - Expected loss on derivatives - ANE basis 3 $45-50 million Tax recovery - ANE basis 6 $10-20 million Capital expenditures $190 million *Footnotes/assumptions provided at end of slide deck

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18 *Footnotes/assumptions pertaining to outlook table slides 1 Our 2017 outlook for sales volume and revenue does not include sales between our uranium, fuel services and NUKEM segments. 2 Our uranium sales volume is based on the volumes we currently have commitments to deliver under contract in Based on a uranium spot price of $26.00 (US) per pound (the Ux spot price as of February 6, 2017), a long-term price indicator of $30.00 (US) per pound (the Ux long-term indicator on January 30, 2017) and an exchange rate of $1.00 (US) for $1.30 (Cdn). 4 Based on the expected unit cost of sales for produced material and committed long-term purchases. If we make discretionary purchases in 2017, then we expect the overall unit cost of sales may be affected. 5 Direct administration costs do not include stock-based compensation expenses. 6 Our outlook for the tax recovery is based on adjusted net earnings and the other assumptions listed in the table. If other assumptions change then the expected recovery may be affected 18