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Cameco close, but no Cigar Lake production until Q1 2014

by Greg Klein | September 9, 2013

By no means its first delay, Cameco Corp’s TSX:CCO Cigar Lake mine has had production postponed from Q4 this year to Q1 next. Modifications to the McClean Lake mill, meanwhile, will stall Cigar Lake processing until the second quarter.

Although the eastside Athabasca Basin project is 97% complete and in commissioning, Cameco president/CEO Tim Gitzel told a September 9 conference call that leaking run-of-mine tanks caused the delay. Two underground caverns, each five metres wide, 20 metres long and 12 metres deep, will separate a mixture of water and ore produced by the mine’s jet-boring system. “While the volume of [leaking] water is small, once we start production it would be radon-bearing because of contact with the ore,” Gitzel explained.

Cameco close, but no Cigar Lake production until Q1 2014

Steel plates are now being installed in Cigar Lake’s run-of-mine tanks.

The company is now sealing both tanks with welded steel liners.

Milling has been postponed a bit further. Jim Corman, VP of operations and projects for AREVA Resources Canada, told the conference that recent metallurgical results differ from previous tests, calling for modifications to the mill’s leaching circuit. As a result, McClean Lake won’t be ready for Cigar Lake ore until the end of Q2 2014. Nevertheless the mill remains on track to double capacity to 24 million pounds of concentrate a year by 2015, he said.

Gitzel emphasized that neither mine nor mill modifications will materially affect capital costs. But the mine will not meet its 2013 target of 300,000 pounds uranium oxide (U3O8).

“While we’re not happy with these delays, we need to keep in mind Cigar Lake is a long-term project that we expect to last for many, many years,” he said. “It is an important source of what will be low-cost production for Cameco and a key component of our strategy to increase annual production to 36 million pounds by 2018.”

Cigar Lake construction began in 2005 but flooding in 2006 and 2008 delayed its start-up. The project’s current reserves give it a 15-year lifespan. Gitzel described it as “one of the technically most sophisticated mines in the world.”

Mine operator Cameco holds 50.025% of Cigar Lake in a joint venture with AREVA (37.1%), Idemitsu Canada Resources (7.875%) and TEPCO Resources (5%). Mill operator AREVA holds 70% of McClean Lake in a JV with Denison Mines TSX:DML (22.5%) and OURD Canada (7.5%).

Read more about Cigar Lake.

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