SecProbe.io

CORRESP
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corresp

    May 27, 2005

VIA
FACSIMILE AND COURIER (202) 772-9220

Mr. H. Roger Schwall

Assistant Director

Securities and Exchange Commission

Division of Corporate Finance

450 Fifth Street N.W.

Washington, D.C.

20549-0405

    O. KIM GOHEEN

Senior Vice-President,

and Chief Financial Officer

CAMECO CORPORATION

Corporate Office

2121 – 11th Street West

Saskatoon, Saskatchewan

Canada S7M 1J3

Tel: 306.956.6256

Fax: 206.956.6312

www.cameco.com

Dear Mr. Schwall:

Cameco Corporation

Form 40-F Filed March 15, 2005

Your File Number 001-14228

I am writing to provide Cameco’s response to your May 12, 2005 letter, which we received on May 13,
2005. Our response, attached as Schedule A, was prepared in consultation with KPMG LLP, Cameco’s
external auditors. Except in respect of Exhibits 99.1 and 99.2, we do not propose to amend our
filings. Other changes identified are not material and will be addressed in future filings. The
numbering and headings in Schedule A refer to the numbering and headings in your May 12, 2005
letter.

As requested, Cameco acknowledges that:

    •
    The company is responsible for the adequacy and accuracy of the disclosure in the
filings;

    •
    Staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any actions with respect to the filings; and

    •
    The company may not assert staff comments as a defence in any proceedings initiated by
the Commission or any person under the federal securities laws of the United States.

Please contact the undersigned at (306) 956-6256 to discuss any questions you may have regarding
the attached response.

Yours truly,

“O. Kim Goheen”

O. Kim Goheen

    c:
    Jill Davis, Securities and Exchange Commission

Yong Choi, Securities and Exchange Commission

Gerald W. Grandey, President and Chief Executive Officer, Cameco

KPMG LLP

SCHEDULE A

Long-Term Debt, Note 6, Page 8

    1.

We note that convertible loans have been segregated into their liability and equity
components measured at their respective fair values. Under US GAAP, the convertible loans
should be recorded entirely as debt with no portion segregated as an equity component. Please
refer APB Opinion No. 14 Accounting for Convertible Debt and Debt Issued with Stock Purchase
Warrants for further detail. Please explain why your reconciliation to US GAAP does not
reflect a difference resulting from the accounting for convertible loans.

Response

In preparing our reconciliation to US GAAP, we overlooked the reclassification of the equity
component of our convertible debentures to debt as required by APB Opinion No. 14. This was
an error on our part. This error was limited to the balance sheet and did not have any
impact on earnings or cash flows.

The convertible debentures were issued in September 2003. Since all interest is being
capitalized under both Canadian and US GAAP, the reconciling adjustment would impact only
the balance sheet.

Correcting entries required to reconcile our Canadian GAAP statements to US GAAP for the
years 2004 and 2003 are reflected in the table below (in thousands of Canadian dollars).

    Correcting entries (Dr/(Cr))

    2004

    2003

    Contributed surplus

    30,473

    30,473

    Long-term debt

    (27,630
    )

    (29,880
    )

    Property, plant & equipment

    (2,843
    )

    (593
    )

In our view, this error is not material and we will correct our accounting going forward.

1

Investment in Bruce Power L.P. (Bruce Power), Note 16, Page 16

    2.

Please tell us why no amounts were allocated to intangible assets as part of your purchase
price allocation process. Also, please tell us how you determined the fair value of the
property, plant and equipment, why the fair value of these assets significantly exceeded the
book value and why no amounts were allocated to goodwill.

Response

The purchase price allocation did include two intangible assets, the first being the Bruce
Power sales agreements and the second being an option granted to Cameco relating to future
uranium fuel sales to Bruce Power.

The power sales agreements were significantly “out of the money” at the time of acquisition,
which led us to allocate a negative value of approximately $69 million (Cdn), which we
disclosed in note 16 of our financial statements.

The option was valued at approximately $10 million (Cdn) and was not disclosed separately in
note 16 as it was not deemed to be a material amount and did not carry an amortization term
that was materially different from the remaining excess purchase price.

The most significant assets in Bruce Power are the lease and the restart costs relating to
two of the reactors. Determination of the fair value of the property, plant & equipment was
inseparable from the long-term lease of the Bruce site. The lease allows Bruce Power to
operate the reactors at the site for a finite term expiring in 2018. Therefore, the excess
price on the acquisition was properly assigned to the lease and amortized over the remaining
term, rather than being recorded as goodwill.

The reasonability of the allocation was supported using discounted cash flow measures, which
indicated expected rates of return in excess of Cameco’s cost of capital. Thus, we
concluded that no amount should be allocated to goodwill

2

Restructuring of the Gold Business, Note20, Page 24

    3.

We note that prior to acquiring an additional 66.7% interest in KGC, you accounted for Cameco
Gold Inc.’s 33.3% interest using the proportionate consolidation method. Please tell us
whether KGC qualified for the accommodation under Item 17 (c)(2)(vii) of Form 20-F that
permits issuers to omit differences in classification or display that result from using
proportionate consolidation in the reconciliation to US GAAP. If not, please tell us whether
any consideration was given to EITF 00-I Investor Balance Sheet and Income Statement Display
under the Equity Method for Investments in Certain Partnerships and Other Ventures when
preparing your reconciliation to US GAAP and whether you believe accounting for Cameco Gold
Inc.’s 33.3% interest using the proportionate consolidation method was appropriate under US
GAAP.

Response

The investment in KGC qualified for accommodation under Item 17(c)(2)(vii). Until June 2004,
KGC was an operating entity that was jointly controlled by the only two parties that held an
equity interest (Cameco Gold Inc. and Kyrgyzaltyn JSC).

3

Depreciation and Depletion, Summary of Significant Accounting Policies, Page 39

    4.

We note that you measure the amount of depreciation and depletion by the portion of the
mines’ economically recoverable proven and probable ore reserves. Please compare this
economically recoverable proven and probable ore reserves to reserves and resources calculated
in accordance with the National Instrument 43-101 of the Canadian securities regulatory
authorities and tell us whether any difference exists. Additionally compare the units used to
calculate your depreciation, depletion and amortization under Canadian GAAP to proven and
probable reserves, as defined in Industry Guide 7, which should be used for US GAAP. To the
extent that the reserve base used to measure your Canadian GAAP financial statements differs
from Industry Guide 7 reserves explain why your reconciliation to US GAAP does not reflect a
reconciling item. In this regard, we note that there appears to be different quantities for
estimated gold reserves which resulted from using different gold prices. Please refer to page
2 of the Form 40-F under Note Regarding Reserves and Resources.

Responses

We use economically recoverable proven and probable reserves to determine the amount of
depreciation and depletion charged to earnings. The “economically recoverable proven and
probable reserves” are equal to the amount of reserves calculated in accordance with
National Instrument 43-101 less an allowance for processing losses. Resources are not
included.

As disclosed at page 2 and footnote 3 to our uranium reserve table at page 25 of Cameco’s
annual information form dated March 15, 2005, Cameco’s uranium reserves estimated in
accordance with NI 43-101 and Industry Guide 7 are the same, other than the Ruth property in
Wyoming, which is not a reserve under Industry Guide 7. Differences in uranium reserve
estimates related to non-producing properties and therefore reconciling adjustments to our
financial statements were not required.

As disclosed in footnote 3 of Cameco’s March 15, 2005 annual information form (page 76),
Cameco’s gold reserves estimated in accordance with NI 43-101 and Industry Guide 7 are the
same, except as follows: on a 100% basis, Kumtor’s reserves decrease by 109,000 ounces (3%
of total reserves) and Boroo’s reserves decrease by 17,400 ounces (1% of total reserves).
Differences in gold reserve estimates did not cause a material impact on our financial
results and no reconciling adjustments were made to the financial statements.

4

    5.

In addition, we note that for the purpose of estimating uranium reserves in accordance with
National Instrument 43-101, a uranium price of $21.80 (US) was used. For the purpose of
estimating reserves in accordance with United States Securities and Exchange Commission’s
Industry Guide 7, a uranium price of $13.40 (US) was used. You stated that the estimated
uranium reserves are the same using either uranium price. Please explain why the estimated
uranium reserves are not different since you are using a different uranium price. Please
clarify your disclosure that the reserves would be the same using either uranium price.

Response

Other than the Ruth property, all of Cameco’s uranium reserves are economic above the price
of $13.40 (US), which was used to estimate reserves by Cameco for the purpose of Industry
Guide 7.

At page 2 of Cameco’s annual information form dated March 15, 2005, we stated:

“For the purpose of estimating uranium reserves in accordance with National Instrument
43-101 of the Canadian securities regulatory authorities, a uranium price of $21.80 (US) was
used. For the purpose of estimating reserves in accordance with United States Securities
and Exchange Commission’s Industry Guide 7 for US reporting purposes, a uranium price of
$13.40 (US) was used. Estimated uranium reserves are the same using either uranium
price, except for the Ruth uranium in situ leach project in Wyoming which, for US
reporting purposes, is classified as mineralized material.”

At footnote 3 to the uranium reserve table at page 25 of Cameco’s annual information form
dated March 15, 2005, we stated:

“For the purpose of estimating reserves in accordance with National Instrument 43-101, a
uranium price of $21.80 (US) was used. For the purpose of estimating reserves in accordance
with US Securities Commission Industry Guide 7 for US reporting purposes, a uranium price of
$13.40 (US) was used. Estimated uranium reserves are the same using either uranium
price except for the Ruth uranium in situ leach project in Wyoming which is classified
for US reporting purposes as mineralized material.”

5

Revenue Recognition, Summary of Significant Accounting Policies, Page 40

    6.

For each major type of revenue transaction described in your revenue recognition policy note,
please supplementally tell us in detail as to when and how you recognize revenue.
Additionally explain why your policies are appropriate and meet each of the criteria for
revenue recognition outlined under Staff Accounting Bulletins No. 104 Revenue Recognition in
Financial Statements (SAB 104).

Response

In responding to this question, we have provided a combined response for our uranium and
conversion services businesses (section A). We have addressed our gold business separately
(section B).

    A.

Uranium and Conversion Services

Cameco’s uranium and conversion services businesses represent two segments of the
nuclear fuel cycle. A description of the nuclear fuel cycle can be found in Appendix A –
The Nuclear Fuel Cycle. We believe this information will assist the reader in
understanding the nature of the uranium and conversion services businesses. We recommend
reviewing Appendix A before reading our responses to questions 6 and 7.

In its uranium and conversion services businesses, Cameco has three types of sales
arrangements with its customers: 1) uranium supply, 2) toll conversion services, and 3)
conversion supply (a combination of uranium supply and toll conversion services). In our
response to question 7(a), we describe our revenue recognition process for each of these
types arrangements.

An analysis of each of the revenue recognition criteria follows:

    1.

Persuasive evidence of an arrangement exists

    •

Uranium and conversion services are sold to customers under duly authorized
contracts, which contain descriptions of the specific terms of the arrangement.

    •

The terms of the contracts are explicit as to the nature of the product or
service to be provided, timing of delivery, price and payment terms.

    2.

Delivery has occurred or services have been rendered

    •

In the uranium and conversion services businesses, delivery of products and
services is typically effected via “book transfer” (This process is described
in detail in our response to question 7 (a) below).

6

    •

The nuclear fuel products are required to be stored at a licensed facility
until being shipped to another licensed facility for further processing (such
as conversion, enrichment or fabrication).

    •

Further details regarding delivery of uranium and conversion services are
provided in response to question 7.

    3.

Selling price is fixed or determinable.

    •

The selling price is included in the contract with the customer.

    •

In all cases, the price is known and fixed on the date book transfer occurs.

    4.

Collectibility is reasonably assured.

    •

Cameco requires that its customers have a credit rating of at least
investment grade before granting credit.

    •

If a customer’s credit rating falls below the minimum standard, Cameco
requires either payment in advance of book transfer or the issuance of an
irrevocable letter of credit in favour of Cameco prior to transfer. Advance
payment is not recognized as revenue until the transfer occurs.

    •

Cameco has had virtually no uncollectible accounts over the past 15 years.

    B.

Gold Business

In the gold business, Cameco’s subsidiaries recognize revenue from a sale when title has
been transferred to the purchaser, the selling price is determinable and collection of
the proceeds is reasonably assured. Cameco has an interest in two operating gold mines,
Kumtor and Boroo.

At the Kumtor mine, the purchaser, or its agent, takes possession of the gold dore at
the mine site. At this point, all risks and rewards associated with ownership of the
dore pass to the buyer and Kumtor recognizes revenue based on preliminary assay results.
Adjustments to revenue are booked upon receipt of final assay. At the Kumtor mine,
payment is received prior to the purchaser taking physical possession of the gold dore
and legal title passes when payment is received.

At the Boroo mine, the purchaser, or its agent, takes possession of the gold dore at the
mine site and delivers it to the purchaser’s refining facility. The selling price for
the gold is determined on the date the shipment arrives at the refinery and that is the
date on which legal title transfers and revenue is recorded. The purchaser remits 95% of
the preliminary estimated value within two days of receiving the shipment at its
refinery. The remainder is paid upon receipt of the final assay, which occurs within two
weeks of receiving the dore.

7

    7.

We note that you record revenue on the sale of nuclear products to utility customers when
title to the product transfers and delivery is affected through book transfer. We also note
that