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[cdn-nucl-l] Further on the Cameco + Bruce Energy MoU
Cameco Pursues Nuclear Growth
Saskatoon, Saskatchewan, Canada, October 12, 2000
Cameco Corporation announced today that it has signed a memorandum of
understanding (MoU) with British Energy PLC (BE) whereby Cameco will acquire
a 15% interest in the Bruce Power Partnership (Bruce Power) which has signed
an agreement to lease and operate the Bruce A and B nuclear power plants and
related facilities from Ontario Power Generation Inc. (OPG). The Bruce
plants consist of eight Candu nuclear reactors, four of which are operating
(Bruce B - 3,140 megawatts) and four of which are currently out of service
(Bruce A - 3,076 megawatts). The term of the lease between Bruce Power and
OPG is to run through to 2018 with Bruce Power having an option to extend
for another 25 years. OPG as the owner of these facilities retains
contractual responsibility for nuclear used fuel and waste management and
decommissioning for the Bruce facilities. The lease arrangement will become
effective when all of the conditions of the agreement between Bruce Power
and OPG become final which is expected in the summer of 2001.
The MoU outlines the terms under which Cameco will become a partner in Bruce
Power with the full responsibility to manage all of its fuel procurement
needs. In this role, Cameco will supply all uranium and uranium conversion
services and will contract all the fuel fabrication services required by the
Bruce reactors. The agreements contemplated under the MoU are expected to be
signed before the end of 2000.
Bruce Power is currently assessing the feasibility of bringing back into
service two Bruce A reactors. Assuming this occurs, the Bruce nuclear power
plants are expected to use 1.5 million pounds U3O8 and 600 tonnes of uranium
dioxide (UO2) conversion services per year.
To obtain its interest in Bruce Power, Cameco will invest up to $100 million
over two years and may be called upon to provide certain financial
guarantees. In addition, Cameco will purchase from Bruce Power, for
approximately $42 million, finished fuel inventory from OPG, for the Bruce
reactors. The inventory is expected to be mostly used during the first year
of the partnership.
Cameco's investment is expected to have a positive impact on cash flow from
operations and significantly increase earnings after two years. Initially, a
number of one-time costs will be incurred as business improvements at the
power plant operations are implemented.
"We see our investment in Bruce Power as an attractive opportunity to
leverage our expertise in the nuclear fuel business in co-operation with BE,
a recognized and successful leader in the generation of nuclear electricity.
We believe this partnership takes advantage of the respective strengths of
our organizations," said Bernard Michel, Cameco's chair and chief executive
officer. "This arrangement is an ideal fit with Cameco's strategy to grow
profitably in the nuclear industry. It also builds upon our strong position
as a multi-sourced fuel supplier able to draw on international marketing
arrangements and on our world-class production centres."
BE, which will hold an 80% interest in Bruce Power, operates 15 reactors in
the United Kingdom and is joint owner with PECO Energy of AmerGen which
operates three nuclear power plants in the United States. BE has a
successful track record in adapting nuclear plant operations to the
realities of deregulated electricity markets.
The two largest unions at the Bruce site, the Power Workers Union and The
Society of Energy Professionals have been invited to subscribe for up to a
total of 5% interest in Bruce Power. Cameco believes the potential
participation by the unions would underscore the dedication of the Bruce
workforce to the safe and efficient operation of the plants.
"Together with BE and the unions, we will deliver to Bruce Power's
electricity customers exactly what they expect: clean, reliable and
competitively priced electricity from a source which does not contribute to
greenhouse gas emissions," said Michel.
Cameco, with its head office in Saskatoon, Saskatchewan, is the world's
largest uranium supplier and the leading supplier of UO2 to Candu operators.
The company's uranium products are used to generate electricity in nuclear
energy plants around the world, providing one of the cleanest sources of
energy available today. Cameco's shares trade on the Toronto and New York
Certain statements in this news release constitute forward-looking
statements as defined in the United States Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of Cameco or of the nuclear or gold
business to be materially different from future results, performance or
achievements expressed or implied by those forward-looking statements. These
factors are discussed in greater detail in Cameco's most recent annual
information form and management's discussion and analysis on file with the
Canadian provincial securities regulatory authorities and the United States
Securities and Exchange Commission.
- End -
Bob Lillie Manager, Investor Relations Cameco Corporation Phone: (905)
956-6315 Fax: (905) 956-6318
Elaine Kergoat Manager, Media & Public Relations Cameco Corporation Phone:
(306) 956-6639 Fax: (306) 956-6318