March 16, 2005 17:00 ET

Cameco Signs Agreement Adding Uranium Conversion Capacity




MARCH 16, 2005 - 17:00 ET

Cameco Signs Agreement Adding Uranium Conversion

SASKATOON, SASKATCHEWAN--(CCNMatthews - March 16, 2005) - Cameco
Corporation (TSX:CCO) (NYSE:CCJ) announced today that it has signed a
toll-conversion agreement with British Nuclear Fuels plc (BNFL) to
acquire uranium conversion services (UF6) from BNFL's Springfields plant
in Lancashire, United Kingdom. Under the 10-year agreement, BNFL will
annually convert a base quantity of 5 million kilograms of uranium (kgU)
as UO3 to UF6 for Cameco.

In 2001, BNFL announced that the Springfields facility would close in
2006. This new agreement will keep the plant operating for the duration
of the agreement.

Cameco currently refines uranium concentrates to UO3 at the Blind River
refinery and ships this material to the Port Hope conversion facility.
Both facilities are located in Ontario. Under the agreement with BNFL,
Cameco will also ship UO3 from its Blind River refinery to BNFL's
conversion plant where it will be toll converted to UF6. Cameco will
then deliver the UF6 to its utility customers who ultimately use it for
fuel in nuclear reactors after further processing. Cameco currently has
more than a quarter of the western world's UF6 conversion capacity from
its Port Hope plant.

Cameco will invest about $6 million to expand production and
drum-filling facilities at its Blind River refinery and $4 million to
construct drum tipping and washing facilities at BNFL's Springfields
plant. UO3 shipments from Blind River are expected to begin later this
year with UF6 conversion shipments from BNFL starting in mid-2006.
Cameco expects this agreement will be accretive to operating cash flow
and earnings beginning in 2006.

"This agreement allows us to effectively achieve a significant increase
in UF6 production capacity, sales and market share by investing a small
amount of capital," said Jerry Grandey, Cameco's president and CEO. "At
the same time, it preserves Springfields' production capacity at a
critical time in the industry and enables us to lower our unit costs by
utilizing Blind River's unused capacity."

Historically, the Blind River refinery has not operated anywhere near
full capacity since it has been limited by the capacity of Cameco's
conversion facility at Port Hope which receives essentially all of Blind
River's UO3 production.

Cameco has already secured long-term commitments for a significant
volume of contracts for conversion services with utility customers to
baseload this new agreement.

"Today Cameco has taken another step toward its vision to be a dominant
nuclear energy company producing uranium fuel and generating clean
electricity," Grandey said.

BNFL is an international nuclear energy company based in the United
Kingdom. In April 2005, ownership of the Springfields plant is scheduled
to be transferred to Britain's Nuclear Decommissioning Authority (NDA),
a government agency established to take responsibility for the majority
of the United Kingdom's civil nuclear assets and liabilities.

Cameco, with its head office in Saskatoon, Saskatchewan, is the world's
largest uranium producer. 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 stock exchanges.

Statements contained in this news release which are not historical facts
are forward-looking statements that involve risks, uncertainties and
other factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements. Factors
that could cause such differences, without limiting the generality of
the following, include: volatility and sensitivity to market prices for
uranium, electricity in Ontario and gold; the impact of the sales volume
of uranium, conversion services, electricity generated and gold;
competition; the impact of change in foreign currency exchange rates and
interest rates; imprecision in reserve estimates; environmental and
safety risks including increased regulatory burdens; unexpected
geological or hydrological conditions; political risks arising from
operating in certain developing countries; a possible deterioration in
political support for nuclear energy; changes in government regulations
and policies, including trade laws and policies; demand for nuclear
power; replacement of production and failure to obtain necessary permits
and approvals from government authorities; legislative and regulatory
initiatives regarding deregulation, regulation or restructuring of the
electric utility industry in Ontario; Ontario electricity rate
regulations; weather and other natural phenomena; ability to maintain
and further improve positive labour relations; operating performance of
the facilities; success of planned development projects; and other
development and operating risks.

Although Cameco believes that the assumptions inherent in the
forward-looking statements are reasonable, undue reliance should not be
placed on these statements, which only apply as of the date of this
report. Cameco disclaims any intention or obligation to update or revise
any forward-looking statement, whether as a result of new information,
future events or otherwise.

Additional information on this agreement is available in a backgrounder
that is posted on Cameco's Web site at


Contact Information

    Cameco Corporation
    Investor & media inquiries
    Alice Wong
    (306) 956-6337
    Investor inquiries
    Bob Lillie
    (306) 956-6639
    Media inquiries
    Lyle Krahn
    (306) 956-6316