TORONTO (miningweekly.com) – Canadian uranium major Cameco on Friday announced that it had declared commercial production at its Cigar Lake operation, in Saskatchewan, effective May 1.
The TSX- and NYSE-listed miner had suffered several setbacks in developing the mine over the years, as frequent flooding and problems with freezing the earth around the underground passages delayed production.
The Cigar Lake deposit occurs at depths of 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.
Mining was suspended in July last year to allow the orebody to freeze more thoroughly. Mining resumed in the first week of September, delivering ore to Areva Resources Canada’s McClean Lake mill.
Cameco noted that commercial production signalled a transition in the accounting treatment for costs incurred at the mine. During May, Cameco met all of the criteria for commercial production, including cycle time and process specifications. From May 1, all production costs, including depreciation, would be charged to inventory and subsequently recognised in cost of sales as the product was sold.
Mining at Cigar Lake began in March 2014, with the first packaged uranium concentrate available in October last year. The operation remained on track to achieve its 2015 production target of six-million to eight-million packaged pounds, on a 100% basis. Cameco expected Cigar Lake to ramp up to its full production rate of 18-million pounds by 2018.
The mine employed more than 600 highly skilled workers, with the majority being residents of Saskatchewan's north.
The Cigar Lake mine is 50.03%-owned by operator Cameco, 37.1% by Areva, while Idemitsu Canada Resources and Tepco Resources owned minority stakes. The McClean Lake mill is 70%-owned by Areva Resources Canada, while Denison Mines holds a 22.5% stake and Ourd Canada the remaining 7.5%.