Idemitsu exits Cigar Lake joint venture

Wednesday, 11 May 2022

The Cigar Lake operation is currently owned by Cameco (50.025%), Orano Canada Inc (37.1%), Idemitsu Canada Resources Limited (7.875%) and Tepco Resources Inc (5.0%) and is operated by Cameco.

Under their agreement with Idemitsu, Cameco will pay about CAD107 million (USD83 million) for 4.522% of Cigar Lake held by Idemitsu, while Orano will pay about CAD80 million for the remaining 3.353% stake. The transaction - subject to certain regulatory approvals and other standard closing conditions - is expected to close in the second quarter of 2022.

Upon closing, Cameco's ownership stake in Cigar Lake will increase to 54.547%, while Orano's share will rise by to 40.453%. Tepco Resources Inc will retain the remaining 5% interest in the property.

"As the world's largest high-grade uranium mine, Cigar Lake is quite simply one of the best and most prolific uranium producing assets on the planet," said Cameco president and CEO Tim Gitzel. "Cameco is very pleased to increase our ownership stake in this outstanding tier-one operation. As the operator of Cigar Lake since 2002, it's an asset we know incredibly well. It's a proven, permitted and fully licensed mine in a safe and stable jurisdiction that operates with the tremendous participation and support of our neighbouring Indigenous partner communities."

"Orano is pleased to increase its resource base in Canada where it has been present for more than 50 years through exploration and operation of industrial facilities," said Orano Mining President Nicolas Maes. "Canada is an essential asset in our strategy to diversify our production which is even more important today to guarantee to our customers a security of supply in the long term."

Cameco noted the 2022 production outlook for the Cigar Lake mine is 15 million pounds U3O8 (5770 tU) on a 100% basis, which would make it the largest uranium producing operation in the world this year.

The Cigar Lake reserve and resource base includes proven and probable reserves estimated at 152.4 million pounds U3O8 (58,617 tU), measured and indicated resources of approximately 103.7 million pounds (39,890 tU), and inferred resources of 22.9 million pounds (8809 tU).

Cameco said its increased share in the operation will therefore provide it with access to an additional 6.9 million pounds (2654 tU) of proven and probable reserves, 4.7 million pounds (1808 tU) of measured and indicated resources, and 1 million pounds (385 tU) of inferred resources.

Ore from Cigar Lake is ground up and thickened in underground processing circuits before being pumped to the surface as a slurry, which is then transported by truck the 80 kilometres to McClean Lake for processing. The McClean Lake projects, which include the mill and uranium deposits, are owned by Orano Canada (70.0%), Denison (22.5%) and OURD (7.5%). McClean Lake currently receives all the ore it processes from Cigar Lake. Mining at Cigar Lake began in March 2014 and the first uranium concentrate was packaged at McClean Lake in October 2014.

Cameco intends to reduce annual production at Cigar Lake to 13.5 million pounds of U3O8 (100% basis), 25% below licensed capacity, starting in 2024. "Extending the mine life at Cigar Lake by aligning production with market opportunities and our contract portfolio is consistent with Cameco's tier-one strategy, and is expected to allow more time to evaluate the feasibility of extending the mine life beyond its current reserve base while continuing to supply ore to Orano's McClean Lake mill," the company said. "This will remain our production plan until we see further improvement in the uranium market and contracting progress, demonstrating Cameco's ongoing commitment to be a responsible supplier of uranium fuel."