The company did not give details of the size of the area to be sealed off.

Water was entering the mine at a rate of about 110 m³/h, affecting an area about 90 m below the surface, the company said in an emailed statement. The leakage began last week.

"After further assessment, the company is allowing additional time before resuming underground mining activities."

The group said last week that the mine experienced an increase of water flow from a mining area at the same time as the capacity of the surface water-handling system was reduced due to an equipment upgrade.

However, the mine is currently able to remove water at approximately the same rate as all the water entering the underground areas, after successfully completing a planned 25% increase to the surface water handling-capacity sooner than anticipated, Cameco said on Monday night.

The mine was using only 4% of designated water storage areas available underground.

The company has set a preliminary target in the first quarter of 2008 to seal off the increased water flow, and mining will resume when the water flow has been sufficiently reduced to provide an adequate margin of surface water handling capacity.

Cameco has produced 3,7-million pounds of uranium at Rabbit Lake to date this year, and estimates annual production will be from 3,8-million to 4-million pounds from stockpiled ore.

CIGAR LAKE

Cameco also reported that it had been granted an amended construction licence for its Cigar Lake uranium project by the Canadian Nuclear Safety Commission.

The project, which seeks to exploit what is said to be the world's largest undeveloped high-grade deposit of the nuclear fuel, has been delayed after a flood in October last year stalled progress at the project, sending uranium prices skywards.

The mine was to have begun producing uranium this year, but Cameco, which owns 50% of the project, now says that it expects output to begin in 2011.

The construction licence will be valid for two years, until December 31, 2009.

The group will provide an update on progress at Cigar Lake later this month.

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