TORONTO (miningweekly.com) – One of the world’s largest uranium producers, Canadian firm Cameco, on Thursday reported that following several years of delays and project setbacks, it had started ore shipments from the Cigar Lake uranium mine, in northern Saskatchewan.

Cameco said that at December 31, the total costs for the project, the second-biggest high-grade uranium deposit in the world after its flagship McArthur River mine, had risen to C$2.6-billion, a far cry from the $450-million it expected the project to cost when it first approved its construction in 2004.

Back then, it had also expected first production by 2007. However, a series of setbacks added to rising costs and a lengthening timeline, including a rock fall causing an underground flood in October 2006, delaying construction.

The Cigar Lake deposit occurs at depths ranging between 410 m and 450 m below the surface where water-saturated Athabasca sandstone meets the underlying basement rocks. Owing to geological conditions, it is necessary to freeze the deposit and surrounding rock to improve the ground stability and prevent groundwater inflows to the mine.

Cameco then pushed the start-up date back further and further, eventually aiming for a start-up at the end of last year, but that deadline was not to be, either. During commissioning activities of the underground ore handling facilities in the mine last September, Cameco identified additional work that would delay jet boring in ore to the first quarter this year.

Project partner Areva Resources Canada had also at that point realised that further mill modifications were required at its McClean Lake mill, and that the mill was only expected to start processing Cigar Lake ore by the end of the second quarter.

Cameco on Thursday confirmed that the mining system and underground processing circuits were operational and ore was being transported to the mill, which is located 70 km north-east of the mine site.

The mill would produce between two-million and three-million pounds of uranium concentrate this year, ramping up to 18-million pounds by 2018. So far this month, uranium had been trading at about $35/lb, down 51% from peak prices of more than $72/lb at the start of 2011.

Cigar Lake has total compliant proven and probable reserves of 537.1-million tonnes grading 18.3% uranium oxide, containing 216.7-milion pounds of yellow cake.

Cameco's TSX-listed stock rose 2.68% to C$27.63 apiece on Thursday.