Thank you for standing by. This is the conference operator. Welcome to the Cameco Corporation Fourth Quarter 2022 Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Rachelle Girard, VP of Investor Relations, Treasury and Tax. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Cameco's fourth quarter conference call. I would like to acknowledge that we are speaking from our corporate office, which is on Treaty 6 territory, the traditional territory of Cree Peoples and the homeland of the Métis. With us today on the call are Tim Gitzel, President and CEO; Grant Isaac, Executive Vice President and CFO; Brian Reilly, Senior Vice President and Chief Operating Officer; Alice Wong, Senior Vice President and Chief Corporate Officer; and Sean Quinn, Senior Vice President, Chief Legal Officer and Corporate Secretary. I'm going to hand it over to Tim in just a moment to discuss how the improving growth outlook for nuclear power is translating into an improving growth outlook for Cameco. After, we will open it up for your questions. As always, our goal is to be open and transparent with our communications. Therefore, if you have detailed questions about our quarterly financial results or should your questions not be addressed on this call, we will be happy to follow up with you after the call. There are a few ways to contact us. You can reach out to the contacts provided in our news release. You can submit a question through the contact tab on our website or you can use the Ask a question form at the bottom of the webcast screen, and we will be happy to follow up after this call. If you join the conference call through our website event page, there are slides available, which will be displayed during the call. In addition, for your reference, our quarterly investor handout is available for download in a PDF file on our website at cameco.com. Today's conference call is open to all members of the investment community, including the media. During the Q&A session, please limit yourself to two questions and then return to the queue. Please note that this conference call will include forward-looking information, which is based on a number of assumptions, and actual results could differ materially. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we may make today, except as required by law. Please refer to our most recent annual information form and MD&A for more information about the factors that could cause these different results and the assumptions we have made. With that, I will turn it over to Tim.

Well, thank you, Rachelle, and welcome to everyone on the call today. We appreciate you taking the time to join us. I may be a bit late, but I want to wish all of you a Happy New Year, and I hope that you and your families are doing well. Over the holiday break, I spent some time reflecting on the past year at Cameco and of course, looking forward to the possibilities that lie ahead for 2023 and beyond. In terms of 2022, the one word that kept coming to mind was transformative. And as I think about 2023 and beyond the word that comes to mind is opportunity. In all my time leading Cameco and all my time in the industry, I'm not sure there has ever been a time when there has been more to be excited about. Starting at the company level. From returning to stable operations at Cigar Lake and in Port Hope after 2 long years of stops and starts due to the COVID-19 pandemic. Continuing with the acquisition of a greater share of Cigar Lake to the restart of production at McArthur River, Key Lake and the pending acquisition of a 49% interest in Westinghouse, 2022 was a busy and transformative year for Cameco. Also, let's not forget the 80 million pounds of long-term uranium contracts and the 17,000 tons of conversion services contracts added to the portfolio, making it one of the biggest contracting years we've ever had with a record number of contracts. This contracting success is expected to allow us to sustainably operate our assets and generate full cycle value for Cameco and therefore, provide our customers with access to the fuel they need to operate their reactors safely, cleanly, reliably and securely. And in 2023 and beyond, we expect…

Hi, good morning. And congratulations on the continuing momentum in the business. I am curious on your portfolio approach now to the asset base. You're obviously bringing back McArthur River quicker to full nameplate and not taking down Cigar. I'm just wondering, what would it take to push McArthur to the 25 million pound license capacity with respect to time line and capital?

Hi, Orest, good to talk to you. Thanks for the question. So yes, we - as we announced, we are not going to continue with our strict supply discipline. We indeed said that we had the contracts in place to increase production we would. So we're going to run it to 18 and 18, if you like, 18 at McArthur 18 at Cigar. You'll remember a few years ago, and it is a few years ago now, we were already at 20 million pounds in McArthur. They're over 20 million pounds in McArthur. So that's not a big stretch for us. We have licensed capacity, that license approval license approval to go up to 25 million pounds. That would require a small bit of capital and a bit of time to get the mill ready to go to that level, but it's certainly not anything that we couldn't manage. I don't have exact cost and time line for you. But Brian, do you want to comment on that?

Yes. Look, in terms of the mine, we would have to revisit the workforce and mobile equipment. So there would be additional resources required at the mine to increase capacity. The mill [ph] a little more work, particularly on the back end of the circuits. So we've got a number of studies underway now to look at engineering design. And out of that, we'll be able to determine capital cost. But still early days, but we'll be able to report back on that sometime into the future.

Grant, do you have a comment?

Yes. And maybe, Orest, let me just wrap it in a bit of a strategic comment. Remember, we do not plan production until we have the homes for it. So the most important narrative here is that we need to see continued market support in the form of long-term contracts. We remain in supply discipline even with this announced production increase. If you think about our Tier 1 asset base, even with what we're talking about today, we'll still be in about 75% supply discipline relative to the Tier 1 and 62% supply discipline relative to the Tier 2. So we are still in supply discipline mode because strategically, we need to see continued market improvement in the form of long-term contracts, we do not produce from these assets to dump into the spot market or to build an excess inventory, that does not create long-term value.

And just following up on that, Grant, if -- assuming continued contract momentum here, where is the next source of production likely to come from, if you want to crank that up, is it likely going higher on McArthu? Or is it somewhere else in the asset base?

First, we push our Tier 1 asset. So McArthur would be our first stop, obviously, you saw in our disclosure that we've got Rumainkai [ph] to move that forward as well. So those would be our first two stops. And we've got, as we say, a nice suite of Tier 2 projects that if someone is willing to look at those, Rabbit Lake ready to go and others. So - but we would definitely go with our Tier 1 assets.

And from a value point of view, Orest, it really is critical to emphasize to everybody that we're talking about a base of assets already licensed, already permitted, already constructed. They will attract some sustaining capital, some replacement capital, a little bit of growth capital, but we are not talking about greenfield. So this truly is an extraordinary amount of brownfield leverage at a turn in the market.

Thank you very much.

Our next question comes from Ralph Profiti of Eight Capital. Please go ahead.

Good morning, Tim. Thanks for taking my questions. Two of them, if I may. First one is just on the Ukrainian contract with Energoatom, can you discuss a little bit, because you said in your commentary that this has the potential to be the single largest supply contract. What percentage of the contract book does that represent now? And how fast can we think about the amount of excess contracting that is available to Cameco over, say, the next 10 to 12 years. Are you sort of 50% occupied in terms of your production capability of that 32 million pounds?

So I'll pass it over to Grant to talk about that. I'll tell you the cover is getting a little bit skinny for sure on our sales going forward. But I just want to say on that Energoatom, the Ukraine contract, that's a big deal for us. Big deal, obviously, in the delivery sense, financial sense, all of that stuff, but it's bigger than that. We've been working with them for - I think we went over there in 2018 and then 2020. And we met with them in - I remember in December 2021 and talk to them are getting close and then, of course, the events of 2022 February happened. And so it's more for us. It's almost more than just a financial or a supply transaction. We're standing shoulder to shoulder with them as they try to diversify their energy supply and their fuel sources and move away from the Russian. So this is a big ticket for us. You saw it's kind of two parts, the 9 reactors that they're operating now. We'll supply those over a 12-year period to '25. And AfrAsia [ph] units, we'll see what happens with those. I know the IAE is in there and working on that. So I just wanted to make that commentary. It's - this is a big piece for us. Grant, do you want to talk about what percentage it might work out to, I think you could do the math.

Yes, a couple of comments from a market point of view on the Energoatom contract as well. It's indicative of several things. It's indicative of what we've been saying. There's a security of supply trend going through the market. This is a security of supply contract at its very core. It's indicative of our pipeline. When we tell folks that our pipeline is robust, you really have to believe us, and this is evidence of it. It's indicative of our competitive advantages as a proven, reliable, independent and integrated commercial supplier of nuclear fuel. This is possible because we're also a converter. Being just a uranium company wouldn't have afforded us the full fleet opportunity that we're enjoying here. It's indicative of the improving tenors, volumes and time frames that we've been talking about through 2022. So it's indicative of that. And it's indicative of the type of price exposure that we look for at this point in the cycle. When we see a security of supply cycle underway, we want price exposure from both our portfolio, committed sales that are market related. And then what you're referring to, which is the pipeline, the pounds we haven't sold yet. So what I can say is we are far from sold out. If you look at our price sensitivity table, we have, on average, 21 million pounds per year over the next 5 years, more heavily weighted to the near term, of course, our guidance, 29 million to 31 million pounds of sales in 2023, so sales going back up. And just a reminder to folks, those are committed sales. Those are not sales we have to yet make in 2023. These are nondiscretionary requirement sales that we will deliver into in 2023. And as the years go out, obviously, less exposure. So really, for us, it will be less than 10% of the overall portfolio as the sales number grows as more customers come into long-term contracting. And yet as we look out, we have a lot of price exposure to come from pounds that are still in the ground that we have not yet committed.

Okay. Yes, that's helpful. I appreciate the context. As a follow-up, as the market has gradually gotten stronger and Chemical continues to maintain this disciplined approach, what's the risk that other players that are not as disciplined in holding back supply actually starts to impact the market. Are we insulated from those types of trends? Or is there still risks in the market that whether in existing entrants or new entrants can sort of suppress or elongate the time at which we actually have a price recovery in the term market.

Yes. That's a terrific question, Ralph. The way we look at it is, of course, we build a portfolio that we think offers the best of all worlds to investors. We take quick moves that can happen in so-called commodity spaces. But we turn those into a long-tail cash flows and revenues through long-term contracts. We don't just ride up a tight spot dynamic and then ride it back down like we've seen other uranium producers do. And probably the best way to illustrate this is a lot of people these days are looking at that uncovered requirements which. And I think it's slide 9 to accompany Tim's comments. And what we see is it gets misinterpreted often in two ways. First of all, some people look at the uncovered requirements wedge. And if you look at it for '23, 2024 and 2025, utilities have very little discretionary demand. And some people incorrectly conclude that, that means there's not going to be a lot of demand coming to the market. Well, that's not right. Utilities will, by definition, be very well covered in year and next year. But that doesn't mean demand 2025, 2026 and beyond can't create price pressure today. So that curve will always look that way. So to your point, when you -- when we're in 2030, for example, there are some folks out there that are advocating that they're going to bring production into uranium, and they say, we don't have to worry about a contract portfolio today because look, demand is going to be 200 million pounds in 2030. Well, demand will be 200 million pounds, could even be more by 2030. But that wedge will look exactly the same. The uncovered portion will be very, very small in 2030, 2031. And let me just…

Appreciate the color, Tim and Grant, and congratulations on the appointment. Thank you

Our next question comes from Greg Barnes of TD Securities. Please go ahead.

Thank you. Grant and Tim, you've said in the past that contracting begets contracting. So I know the forecast from some of the forecasters were 100 million pounds again of contracting in 2023. But with this Ukraine contracts, I think that's off to a huge start. Do you think this is going to encourage more utilities coming to the market perhaps faster than they previously anticipated?

Greg, thanks for the question. Grant's on a roll here, so I'll let him keep going on the market.

Well, yes, Greg, we - it kind of goes back to that that pipeline conversation we keep having, we were amused here at Cameco just a couple of weeks ago when one of the trade reporters kind of characterized the market activity as being slow. And we've got a marketing team who just kind of sat around and looked at each other and said, which market is slow, like we are not seeing it at all. So perhaps we just have more of a view and a better view into the market than some of the trade reporters do. I think people could forgive me for saying it might start feeling like the summer of 2010 again, a big new entrant stepping into the market, tying up Western capacity, while others have not moved to fill those requirements. It could feel like that kind of catalyst when the Chinese stepped into the market for the first time in the term market for the first time in a big way in the summer of 2010. So it's off to a great start. And I would say that that the type of contracting volumes will be noticed by others who have needs out in the exact same window for both uranium and for conversion.

Yes. And just a follow-up. On Cigar Lake, part of the rationale for curtailing production there was to give you more time to assess Phase 2 at Cigar Lake. So the fact that you're going to continue to run at 80 million pounds, I assume it means you're accelerating Phase 2 forward to some extent, given the limited life you have left at Phase 1?

Yes, Greg. So you're right. We are working hard on that now. We're pretty excited. We've seen some of the potential there for the extension to Phase 1, as we now call it. So yes, we're working on that, and we think Cigar's going to continue to produce, hopefully, seamlessly into the 2030s.

Okay. Thank you.

Thanks, Greg.

[Operator Instructions] Our next question comes from Lawson Winder of Bank of America Securities. Please go ahead.

Thank you, operator. Good morning, Tim and Grant, Nice to hear from you both. And thanks for the update. I wanted to ask about - well, first of all, the fuel contract pricing. So the revenue guidance for '23 implies fuel contract pricing around US$26. So with spot conversion pricing approaching $40 per kilogram in both the EU and North America. Would it be reasonable to expect that some of these higher prices would start flowing through in future years?

Yes, absolutely. You know that we have a trailing value capture approach to our on tracking. So as prices improve, in the spot market, we see that strengthening price, and we want to convert that into long-tail term contracts. So there is a bit of a lag effect. We don't match the spot market going up and then we don't go down with the spot market as we lock in that value over a longer period of time. So if you think about the uranium segment where more capacity is required, prices will have to go up to incent more supply. It is about price exposure. In the conversion side, where you have idle capacity that's going to come back, it is about price capture at this point. And then that gets baked into our contract portfolio and creates a longer tail of financial performance.

And Lawson, maybe just remember to that price that we put in there, that's a combined price for all the products in our fuel services, not just U.S. VI.

Absolutely. Thanks for both the comments. And then for my follow-up, I just wanted to ask about the latest expectations on the timing around the closing of the Westinghouse acquisition. And in particular, just your thoughts on the SAMR [ph] review. So the state administration for market regulation in China and whether or not you have any concerns about that particular review...

Yes. Thanks for that, Lawson. I'm going to pass it over to Sean Quinn, who is all over that question. So John.

Sure. Thanks, Lawson. I'll start with just a general overview of the regulatory approval process. To date, we haven't seen any showstoppers. We're working on our merger control, cost competition law approvals and various nuclear regulatory type control approval. And just for investment approvals, they all take time, of course, but we haven't seen any showstoppers, and we still think we're on track for the second half of this year. In terms of China itself, we have submitted what's called a simplified application. Don't have any feedback yet, but we are quite confident at this point that we'll be fine in China, but we don't have any feedback from the actual regulatory authorities there.

Probably fair to say, Sean, that with respect to China, nothing will really have changed from a competitive supply point of view. Recall, Lawson, that what the Chinese have always wanted from Cameco is yellow cake. They're interested in doing all the fuel processing themselves, and that's what they would continue to get from Cameco. From Westinghouse, obviously, there were some initial reactor builds, but now China has its own version of the AP1000, which they build. And so Westinghouse's Wave two business is really around reactor services and some fabrication. So really, there's no change from a supply point of view. Cameco will be doing what it did before. Westinghouse will be doing what it did before. And there isn't any overlap. So we feel pretty confident about our position there.

Got it. Thank you very much.

Thanks, Lawson.

Our next question comes from Alex MacPherson of allSaskatchewan. Please go ahead.

Hi, good morning, everyone. Thanks for taking for taking my question.

Alex, we saw your article already in allSaskatchewan this morning, well done. Thank you.

Thank you. I wanted to ask about the plans to increase the ramp-up at McArthur and sort of what that means on the ground in Saskatchewan in terms of workforce and capital both to get to 18 million pounds and then potentially to the full 25?

Well, we're in good shape now. We started our ramp up over a year ago now. And so we're still working on a few of the kinks at the mill. But at the mine, they're in good shape. I think they've got something like 120 million or 122 million pounds behind freeze curtain, which is important for us for our mining. We've - we've ramped up the team there. We've hired hundreds of people, as you know, over the last year. So it's really a question of first getting to 15 and McArthur and Key and then into '18 and 2024. And as Grant said earlier, if we see the business, if we see the contracts come, then we'll think about dialing it up a little further. And as I said earlier, there's a bit of capital that has to go in not a whole lot. And maybe a few more people here and there. But we're - it's incremental, if you like, Alex. It's not a big push for us.

Great. Thank you very much.

Yes. Nice to talk to you.

Our next question comes from Grace Sims of Energy Intelligence [ph] Please go ahead. Q – Unidentified Analyst: Hi. This is Grace of Energy Intelligence. Nice to talk to you guys. So my question is just about [indiscernible] in China. And if Chemical would consider opening account there as they're trying to make it into a trading hub or if they would move uranium, if can go move uranium to China via...

Yes. Thanks, Grace. We appreciate your question. Obviously, we're watching what's going on at [indiscernible] and whether that gets set up, and we are hearing it's moving. We have no intention at the moment of setting up an account there. We have our own facilities and accounts to look after. So we're watching it with great interest. But for now, we have our intention of opening an account at [indiscernible] Q – Unidentified Analyst: Okay. Thank you. And then a follow-up question, sorry, is just does Cameco plan to continue exporting material from Kazakhstan to a trans casein [ph] trade route? And to what extent would that impact cost, if that's the case?

Yes. We sure do. We were happy to get that first shipment through as we reported, and we're working on another one. And Sean, I know you've been - you were talking about it yesterday. So why don't you just give the latest update on the being route.

Our second shipment relating to our 2022 purchases is through to the port of Courtney [ph] already and might even be loaded on the boat to make the trip across. And we are working towards making applications for our '23 shipments at this time through the trans casein. Q – Unidentified Analyst: All right. Thank you.

Thanks, Grace.

Our next question comes from John Tumazos of John Tumazos Very Independent Research. Please go ahead.

Thank you and congratulations on all the progress. Concerning the Kazakh contract, which is so significant since it's the seventh largest nuclear power generator in the world. With the e Zaporizhzhya tranche, clawback your spot sales first, if that falls back into sovereign control? And then second have you planned for the contingency if the Ukrainian government can't pay you. They seem to have some funding deficits. Do you have any assurances from Ottawa that if Ukraine don't pay the Ottawa would pick up the tab or the EU would pick up the tab given that the country appears very bankrupt.

Thanks for the question, John. You're referring to the Ukraine contract. We - as you saw in our disclosure, we separated the two sets of units, the nine units that Ukraine is integral Energoatom is operating now and operating quite well. Listen, this isn't our first contract with Ukraine. We've been dealing with them for some years now, and they're one of our best customers and have paid every time. There's not an issue there. On the Zaporizhzhya units, yes, we're concerned about those. So is the IAEA, and they're over there with inspectors and others trying to get those under control and back under Ukraine control. And so that's why we separated the two tranches. We're very confident that Ukraine will indeed return to Zaporizhzhya and take control of those units, but we'll wait to see. So in the meantime, we've taken all of those contingencies and risks into consideration in this contract, and it's still just an outstanding contract, and we're proud to be partners with Energoatom.

So if they were to be late paying you for the uranium units, would you consider - would you continue shipping - or how long would you continue shipping? Or would you just roll over to the spot market or a different customer?

Well, John, we don't play on the spot market. That's not where our sales go. We've been absolutely crystal clear and consistent on that. We do not sell into an oversupplied spot market anytime. So we're very comfortable with the Ukraine. As I say, we've been dealing with them for years. We've had other contracts. They've always paid not a problem. If they have some issues, we'll deal with them then. But right now, that is not an issue for us. So as I say, we're proud to work with Energoatom.

Thank you.

Thanks, John.

Our next question comes from Fai Lee of Odlum Brown. Please go ahead.

Thank you. I think this question is probably for Grant. I'm just wondering if you could comment on where you see the effective tax rate in 2023 and maybe 2024, if these minimum tax rate get past?

We've been guiding towards an effective tax rate that approaches more statutory rates in Canada, more production from Canada, more sales through Canada is going to result in a statutory rate. But that is an income tax expense. It's not the same as cash tax because remember, we do have a very large deferred tax asset. So from a cash tax point of view, we do expect to chew through that asset over a period of time. But in general, yes, we do expect to approach more of a statutory rate with some efficiencies capable from our global structure.

And Fay, I would just point out, too, just keep in mind that the earnings from the equity accounted come in to our earnings on a net tax basis. So that has an impact as well when you think about that.

Okay. And just to clarify your getting closer. But for 2023, would it be somewhat still similar to 2022 on an effective basis for the income - net cash?

I'll have to get back to you on that one, Fai.I don't have a specific number here in front of us.

Okay. Thank you.

Thanks, Fai.

This concludes the question-and-answer session. I would like to turn the conference back over to Tim Gitzel for any closing remarks.

Well, thanks very much, operator, and thanks to everybody who joined us on the call today. We appreciate your support. Obviously, exciting - pretty exciting times for Cameco in the future of nuclear power. We're excited about the fundamentals in the nuclear fuel market. We're certainly excited about the prospects for our company as we continue to ramp up production to satisfy our long-term supply commitments and invest in opportunities across the fuel cycle. You've heard us say this before, I'll say it again, we're a responsible commercial supplier with a strong balance sheet, long-lived Tier 1 assets and a proven operating track record and line of sight to return to our Tier 1 cost structure. We at Cameco are well positioned to respond to changing market dynamics and benefit from the long-term growth we see coming, driven by the need for safe, reliable, secure, affordable and carbon-free baseload electricity. We will continue to do what we said we would do, executing on our strategy and consistent with our values. We'll do so in a manner that we believe will make our business sustainable over the long term. And we will continue to make the health and safety of our workers, their families and their communities, our top priority. So thanks, everybody. Stay safe and healthy, and we'll talk to you again soon.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.+