The Cigar Lake uranium mine, in Canada’s northern Saskatchewan, will remain on care and maintenance for an “indeterminate period”, uranium producer Cameco announced on Monday, explaining that it sought to keep the remote, isolated communities in which its workers live safe during the Covid-19 pandemic.
The group further said that it was difficult to maintain the recommended physical distancing at a fly-in, fly-out site.
Cameco announced on March 23 that the Cigar Lake operation was being placed in safe care-and-maintenance mode for four weeks, during which we would assess the status of the situation and determine whether to restart the mine or extend the production suspension.
Cigar Lake ore is processed at Orano Canada’s McClean Lake mill, which is also currently idled. Orano has also decided to extend the temporary production suspension at its McClean Lake mill.
“The global challenges posed by this pandemic are not abating – in fact, they are deepening,” Cameco president and CEO Tim Gitzel said.
“We therefore need to stay vigilant and do everything we can to keep people and families safe. We are especially sensitive to the situation in the remote, isolated communities of northern Saskatchewan that are home to a sizeable portion of the workforce at Cigar Lake.”
In addition, Cameco withdrew its outlook for 2020 and would provide a further update on its business in its first-quarter results on May 1. The Cigar Lake mine produced 18-million pounds of U3O8 in 2019, of which Cameco's share was 9-million pounds. Its guidance for 2020 was the same as 2019's output.
Gitzel stressed that Cameco was resilient, despite the current uncertainties as a result of the Covid-19 pandemic.
“With many governments and communities declaring states of emergency in their jurisdictions, our utility customers’ nuclear power plants are part of the critical infrastructure needed to guarantee the availability of 24-hour electricity to run hospitals, care facilities and essential services. So our customers are going to need uranium. As a reliable, independent, commercial supplier, we will continue to work with them to help meet their delivery needs.
“However, the Covid-19 pandemic has disrupted global uranium production, adding to the supply curtailments that have occurred in the industry for many years. As such, we believe the risk to uranium supply is greater than the risk to uranium demand, creating a renewed focus on ensuring availability of long-term supply. Over time, we expect this renewed focus on security of supply will provide the market signals producers need, and will help offset any near-term costs we may incur as a result of the current disruptions to our business.”
Last week, the world’s largest uranium supplier Kazatomprom, from Kazakhstan, announced it was reducing operational activities across all its uranium mine sites for about three months, citing the risks posed by the coronavirus pandemic.
Cameco also already last week placed its UF6 plant at the Port Hope conversion facilities, in Ontario, in a temporary safe mode, owing to difficulty maintaining an adequate workforce as result of the escalating health crisis.
Cameco’s balance sheet remains strong. At December 31, 2019, the group had $1.2-billion in cash and $1-billion in long-term debt with maturities in 2022, 2024 and 2042. In addition, it had a $1-billion undrawn credit facility.
“We expect our cash balances and operating cash flows to meet our capital requirements during 2020, and therefore, we do not anticipate drawing on our credit facility.”
The Cigar Lake operation is owned by Cameco (50.025%), Orano Canada (37.1%), Idemitsu Canada Resources (7.875%) and Tepco Resources (5.0%) and is operated by Cameco.