Cameco Corp is delaying the start-up of the high-grade uranium mine at Cigar Lake, Sask. until the first quarter of 2014. Construction of the mine is now 97 percent complete.
Canada’s largest uranium producer also said more mill modifications were needed before the ore can be processed at the nearby McClean Lake mill, which is operated by Areva SA, the French nuclear company that also holds a major stake in the Cigar Lake project. Cameco now expects processing to start in the second quarter of 2014. The capital cost of the project is $1.1 B.
Due to the flooding risk, the ore body must be frozen before mining, with the ore removed by a jet boring process. Cameco said it identified additional work during the commissioning process that will delay jet boring of the ore.
The Cigar Lake project is owned by Cameco (50.025%), AREVA (37.1%), Idemitsu Canada Resources Ltd. (7.875%) and TEPCO Resources Inc. (5.0%) and is operated by Cameco. Ore from Cigar Lake will be processed at the McClean Lake mill, which is majority owned and operated by AREVA Resources Canada Inc. (AREVA). The Cigar Lake deposit is extraordinarily high grade (100 times the world average) and must be mined by robots. Further, flooding is a problem and the mine operators must freeze the proximity of the ore to prevent flooding.
Cameco’s share of the deposit’s proven and probable reserves is 108.4 million pounds U3O8 at an average grade of 18.3%. The Cigar Lake project will employ up 250 employees during operation.
Cameco (ticker CCO on TSX) trades for $20.25 and has a market cap of $8B.
This year the remaining 20 M lbs of left-over U3O8 from nuclear arsenals from Russia should be consumed by the world nuclear energy producers. Cigar Lake production will be coming on stream in 2014 at a time when world-wide uranium production is tightening.