Cameco Corporation: No Production in 2011 for Cigar Lake!
Monday, February 16, 2009 at 4:04PM
Uranium Stocks in Uranium Mining Stocks
Cigar Lake Diagram 17 feb 09

The ingress of water at Cigar Lake continues to be problematic as Cameco anticipates that production from this project is somewhere beyond 2011. How far beyond 2011 is not clear as this type of work presents engineers with an enormous and complex task.

From Cameco's February 13, 2009 Report entitled Record Annual Revenue and Earnings for 2008 an update on Cigar Lake is given as follows along with the above diagram

We have confirmed that the main source of the increased water inflow observed on August 12, 2008, is from a fissure located in the top of the tunnel on the 420 metre level.
Cameco has developed a remediation plan to seal the tunnel. The plan includes remotely installing bulkheads on either side of the inflow location and then injecting concrete and grout into the tunnel and ultimately into the rock through holes drilled from surface. The equipment necessary to accomplish this has been mobilized and some initial work both on surface and on the 420 metre level has started. The work on the 420 metre level involves removal of pipes, doors, ventilation ducting, loose sand and other miscellaneous items. This is being done using submersible, remotely operated vehicles (ROVs) that are commercially available for this type of work. We estimate that sealing of the August 12, 2008, inflow will take most of 2009.

During the fourth quarter, dewatering of shaft 2 commenced. The water level was pumped down to the 260 metre level and held there for several weeks. The inflow measured during this time was very low and stable, confirming that the sources of the inflow have been sealed. In preparation for further lowering the water level, the installation of ventilation and water pumping infrastructure began in the shaft. It is anticipated that the removal of all water in the shaft will be complete in the second quarter of 2009.

Cameco has incurred $359 million in capital costs to develop Cigar Lake to the end of 2008. We no longer anticipate production in 2011 and are assessing the impact of the August 2008 inflow on the planned production date and capital cost estimate. We will provide new estimates, after the mine has been dewatered, the condition of the underground has been evaluated, and the resulting information has been incorporated in a new mining plan.

In addition to capital costs, Cameco's share of remediation expenses is now expected to total $92 million, of which $46 million has been expensed to the end of 2008. In 2009, Cameco expects to spend $21 million on remediation expenses for Cigar Lake.

In order to keep our stakeholders informed on the progress of remediation activities, we will provide updates with each quarterly MD&A or more frequently if there are significant developments.

If you wish to read the report in full then please click here.

Other than informing us that the sealing of the August 12, 2008, inflow will take most of 2009 it appears to us that it is still too early in terms of assessing the problem to be able to compile a programme for the remedial works and thus we have no idea of what the end date is.

For the holders of Cameco stock this is a difficult time however once this problem and its solution is clearly identified with a doable schedule of the works in place this uranium stock could zoom. We will remain on the sidelines for now but keep a watching brief as the engineers and consultants tasked with this challenge may well pull a rabbit out of the bag in the form of a devilishly simple idea which accelerates the production date. No pressure, eh!

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Stay tuned folks..

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