Cameco cuts Saskatchewan uranium production targets
Cameco Corp. [CCO-TSX, CCJ-NYSE] has released a market update regarding challenges it faces at the Cigar Lake uranium mine and Key Lake mill in Saskatchewan that are expected to impact its 2023 production forecast.
Cigar Lake is the globe’s largest operating uranium mine, accounting for 13% of the world’s mine supply and 10% of total supply, including secondary material. Cigar Lake can produce 18 million pounds of U308 annually.
Cigar Lake is a joint venture held 54.547% by Cameco, 40.453% by Orano Canada Inc. and 5.0% by TEPCO Resources Inc.
Cameco has been the operator a Cigar Lake since 2002. Cigar Lake ore is processed 70 kilometres northeast at the McClean Lake mill, which is operated by Orano.
At the Cigar Lake mine, the company expects to produce up to 16.3 million pounds of uranium concentrate (U308) (100% basis) this year, a reduction from the previous forecast of 18 million pounds U308.
Production from the McArthur River/Key Lake operations for 2023 is anticipated to be 14 million pounds U308 (100% basis), down from an earlier forecast of 15 million pounds.
Cameco shares eased slightly on the news, falling 1.47% or 75 cents to $50.05 on volume of 645,280. The shares are currently trading in a 52-week range of $51.49 and $28.98.
As previously reported, mining activities at Cigar Lake operations were initiated from a new zone in the orebody (west pod) in the second quarter of this year, which impacted productivity. As mining activities continued to the west pod during the third quarter, equipment reliability issues emerged, which further affected performance, the company said.
The mine is scheduled to enter its planned annual maintenance shutdown that will run through most of September.
Meanwhile, at the Key Lake mill, ramp-up activities remain in progress.
After remaining on care and maintenance since 2018, the operation returned to production in November, 2022.
However, the company said there is continued uncertainty regarding the planned production in 2023 at Key Lake due to the length of time the facility was in care and maintenance, the operational changes that were implemented, availability of personnel and the necessary skills and experience, and the impact of supply chain challenges on the availability of materials and reagents.
These factors have combined to impact production at Key Lake, leading to the reduced forecast. However, the company said the McArthur River mine continues to operate well and is expected to achieve its planned production for the year.
Any ore from McArthur River that is not immediately processed at Key Lake mill will be stored in inventory for future milling.
The McArthur River mine, also located in Saskatchewan, is owned 69.8% by Cameco, 30.2% by Orano. The Key Lake mill is owned 83.3% by Cameco and 16.667% by Orano. Orano is a subsidiary of the French nuclear energy company Orano Group.