Uranium miner Cameco Corp. (TSX:CCO) announced an agreement Monday under which all ore from the Cigar Lake project in Saskatchewan will be processed at the McClean Lake mill.
The move is expected to reduce costs to about US$18.60 a pound from $23.14, Cameco said in a statement.
The mine, currently scheduled to start production in mid-2013, was repeatedly beset by flooding beginning in 2006. Cameco announced in February 2010 that all water had been pumped out and crews safely re-entered its main working level 480 metres underground.
Under the previous toll-milling agreements, both the McClean Lake mill and Cameco‘s Rabbit Lake mill would process uranium from Cigar Lake. Under the new arrangement, the McClean Lake operation will process and package 100 per cent of Cigar Lake uranium.
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Saskatoon-based Cameco said the Rabbit Lake mill will continue to process ore mined at its own site and has the flexibility to process ore from other sources.
The Cigar Lake project is 50 per cent owned and operated by Cameco, with joint venture partners Areva Resources Canada Inc. holding 37 per cent, Idemitsu Resources Canada Inc. eight per cent and Tepco Resources Inc. five per cent.
The McClean Lake joint venture is 70 per cent owned and operated by Areva Resources Canada, a subsidiary of French nuclear giant Areva. The other McClean Lake joint venture partners are Denison Mines Corp. (TSX:DML), 22.5 per cent and OURD (Canada) Co. Ltd., 7.5 per cent.
In a separate statement, Areva said the agreement “reinforces our position as a uranium mining leader in Canada, alongside our partner Cameco.”
“Our mining activities are an essential part of Areva’s integrated business model and now, more than ever, we are working to develop the mining know-how that makes the group one of the world leaders in uranium,” said Sebastien de Montessus, Areva senior executive vice-president of mining.
The McClean Lake mill is the only facility capable of processing high-grade uranium ore without diluting it and the company plans an investment of nearly $150-million to both upgrade it and increase its capacity to more than 8,500 tonnes per year.
Shares in Cameco, one of the world’s largest uranium producers, were up three cents at C$17.78 in afternoon trading Monday on the Toronto stock market.
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