SASKATOON, Saskatchewan, Can., Oct. 12, 2000 (International Teledata Group) 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 stock exchanges.
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.
A backgrounder on this subject is available on Cameco's web site at www.cameco.com or it can be obtained by calling Cameco's fax service at 1 (877) 556-1566 or contact the investor and corporate relations department at (306) 956-6400.
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