Cameco moves on Cigar Lake solution

Vancouver — Cameco (CCO-T, CCJ-N) has started remediation work at its 50%-owned Cigar Lake uranium project in northern Saskatchewan’s Athabasca basin, where a major flooding event in late October filled the underground workings.

With assistance from international experts, the company is developing its plan and fall-back options. Revised capital cost estimates and timelines are expected to be tabled by February 2007.

Cameco is proceeding on what it describes as its “most conventional” option: to restore the underground workings at Cigar Lake. Phase one, recently started and expected to run around 60 days, sees oil-field drill rigs working from surface and a program of grouting to seal the water inflow.

Drilling will target a 465-metre-level access tunnel near the source of the inflow. Concrete will then be pumped into the tunnel in an attempt to plug the water flow “downstream” from the area of rock collapse. Once the concrete plug has hardened, grouting will be conducted by pumping cement under high pressure to fill and seal cracks in the rock and the plug. The area of the rock fall will also be filled with grout to help stabilize it.

The company has up to 50 workers on the drill crews currently operating around-the-clock.

Subsequent to a successful phase one, pumping of the water from the workings will be undertaken in addition to verifying the integrity of the concrete plug and underground workings. The company would then restore underground pumping and ventilation systems. Repairs would also be made on the bulkhead door that failed.

Further work would see ground freezing equipment sent to the area of the rock failure and water inflow. Mine development should resume once all of the work is finished.

Production at Cigar Lake was slated to start in early 2008. It is the world’s largest undeveloped high-grade uranium deposit, hosting proven and probable reserves of 551,000 tonnes grading 19.06% U3O8 (more than 232 million contained lbs. U3O8). At the current U3O8 spot price of over US$60 per lb., in situ ore value is about US$14 billion.

Cameco’s partners at Cigar Lake are Areva Resources Canada, a subsidiary of French energy giant Areva (ARVCF-Q), holding 37% interest, Idemitsu Uranium Exploration Canada (owned by Japan’s largest independent oil company Idemitsu Kosan) owning 8% and TEPCO Resources (owned by Tokyo Electric Power Co.) with 5% of the project.