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One of the planet’s richest uranium mines has officially declared production, putting an end to 34 years of delay for the project, majority-owned by Cameco Corporation (TSX, NYSE: CCO).
Last week Cameco and Areva senior management including Cameco president and CEO Tim Gitzel cut the ribbon on the mine, located in the uranium-rich Athabasca Basin of northern Saskatchewan. They also led dignitaries including Saskatchewan Economy Minister Bill Boyd and community leaders from northern Saskatchewan on a tour of the underground workings.
“We are happy to celebrate these two major uranium mining assets in Saskatchewan, the Cigar Lake mine and the McClean Lake mill,” said Olivier Wantz, member of the executive committee and senior executive vice-president, mining and front end business group for Areva Resources Canada Inc, which owns 37 percent of the project. “Their successful operation demonstrates the determination and expertise of our employees to ensure the safe start-up and continued production.”
The Cigar Lake uranium deposit is the second largest high-grade undeveloped uranium deposit in the world, with concentrations of uranium 100 times the world average (the largest is the nearby McArthur River mine). However, the deposit, which according to Cameco has 117.5 million pounds U3O8 at an average grade of 17.84 percent, is also considered one of the most technically challenging to mine.
Construction started in 2005 but it was soon hit by catastrophic floods in 2006 and 2008. Costs also ballooned from nearly half a billion dollars to $2.6 billion, as Cameco and partners struggled to figure out how to mine the deposit which lies almost half a kilometre underground.
Mining at Cigar Lake began in March 2014, but was suspended last July to allow the ore body to freeze more thoroughly. The freezing was done to improve ground conditions, prevent water inflow and improve radiation protection. Commercial production at Cigar Lake was declared on May 1, 2015.
The high-grade ore is removed using custom-made machines that inject water at high pressure to cut away the rock. The resulting ore slurry is then collected through pipes, run through underground grinding and thickening circuits and then pumped to surface. At the surface, the ore is loaded in special containers for truck transport to Areva’s McClean Lake mill located 70 kilometres away, where it is processed into uranium concentrate.
Cameco says it produced between 6 and 8 million packaged pounds for Cigar Lake and McClean Lake in 2015. The production target is 18 million pounds by 2018. Once the expansion at McLean Lake mill is complete, the mill will have capacity to produce 24 million pounds of uranium per year. The mine currently employs over 600 people, the majority from northern Saskatchewan, while the mill has a payroll of around 350.
Operator Cameco owns 50% of the mine, followed by Areva (37%), Idemitsu Canada (7.9%) and TEPCO Resources Inc. (5%). The McClean Lake mill is owned by Areva Resources Canada Inc. (70%), Denison Mines Inc. (22.5%) and OURD Canada Co. Ltd. (7.5%).
