First production from restarted Canadian operations

Thursday, 10 November 2022

Persistent weakness in the global uranium market prompted the decision to suspend the two Saskatchewan operations in January 2018 as part of majority owner Cameco's supply discipline. In February this year, following a "notable" market improvement and an increase in long-term contracting activity, Cameco announced plans to restart both operations.

"McArthur River and Key Lake are among the best and most prolific uranium assets on the planet, and after building homes for these pounds in our long-term contract portfolio, we are delighted to have them back in production," Cameco President and CEO Tim Gitzel said. "Market conditions have continued to strengthen since we announced their planned restart, with growing geopolitical uncertainty adding to energy security concerns worldwide, and the ongoing global emphasis on decarbonisation and electrification only gaining momentum."

Critical automation upgrades, maintenance readiness checks, and restaffing, recruitment and training for key positions at both facilities have been undertaken. Some 730 employees and long-term contractors are now working at the mine and mill and further hiring is expected.

Final commissioning activities will continue to ensure target production rates can be met and normal operating conditions are being achieved, Cameco said, but added that the COVID-19 pandemic and related supply chain challenges have the potential to impact the availability of materials, reagents and labour. This could not only impact 2022 production, but could also introduce additional risk in 2023.

McArthur River commenced production in 1999. High-grade ore 600 metres underground is mined using methods including remote control raise boring. The ore is then trucked 80 km south to be milled at Key Lake, itself the site of a former uranium mine.

The restarted operations are expected to produce up to 2 million pounds U3O8 (769 tU) this year. Production of 15 million pounds U3O8 (100% basis) per year is planned from 2024 - 40% below annual licensed capacity.

The return to production is expected to lead to a "significant" improvement in Cameco's future financial performance, the company said: it will allow it to meet more of its sales commitments from lower cost "produced pounds" and it will no longer need to expense care and maintenance costs. However, until a "reasonable production rate" is achieved, the company expects to incur "between $15 million and $17 million per month" in "operational readiness costs", which will be expensed directly to cost of sales.

Cameco is the majority owner and operator of McArthur River (69.8%) and the Key Lake mill (Cameco 83%), with Orano Canada owning 30.2% of McArthur River and 16.7% of Key Lake.

Cameco's Tim Gitzel was a guest on the latest World Nuclear News podcast. You can listen to it below:

 

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