Cameco to restart Cigar Lake uranium mine

Cigar Lake uranium mine. Source: Cameco

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Cameco Corp. [CCO-TSX, CCJ-NYSE] on Monday April 12 announced plans to restart its giant Cigar Lake uranium mine in Northern Saskatchewan over the coming weeks.

Production was suspended twice last year (most recently in December, 2020), due to the threat posed by the COVID-19 pandemic.

Cameco is one of the world’s leading uranium producers. The Cigar Lake operation is owned 50.025% by Cameco, 37.1% by Orano Canada Inc., 7.875% by Idemitsu Canada Resources Ltd. and 5.0% by TEPCO Resources Inc.

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. Cameco is the mine operator.

Cigar Lake can produce 18 million pounds of U3O8, but is only expected to produce around 9.0 million pounds this year.

The exact timing of the restart, along with the near-term sustainable production rate will be dependent on employee health conditions, and how quickly the mine can re-mobilize its workforce. Cameco has indicated in a press release that the mine will reopen before end of April.

When production was suspended in December, 2020, the company said it would continue to carefully monitor the provincial COVID-19 situation, especially in northern Saskatchewan, as well as the impacts on communities and the availability of employees and contractors to travel to Cigar Lake.

On Monday, Cameco shares eased 2.2% or 48 cents to $21.10 on volume of 574,090. The shares are trading in a 52-week range of $24.57 and $11.84.

“The safety of our workers, their families and communities is our top priority,” said Cameco President and CEO Tim Gitzel. Production was suspended after Cameco reported six positive COVID tests at its northern operations, including three at Cigar Lake.

“One of the most challenging trends we’ve had to navigate is the shrinking availability of workers in critical roles at Cigar Lake due to self-isolations, absenteeism and communities being on temporary pause for transporting workers due to the pandemic,” Gitzel said.

At the peak of production last fall, there were about 300 workers on site at Cigar Lake.

Due to the suspension, Cameco said it planned to increase its purchases in the market to secure uranium needed to meet its sales commitments. As of September 30, 2020, Cigar Lake had produced 2.3 million pounds (Cameco’s share) of uranium concentrates.

 


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