Cigar Lake Underground Could Be Secure By October

It’s finally safe for Cameco (CCO-T, CCJ-N) crews to go back underground at Cigar Lake, a troubled uranium development project in Saskatchewan’s Athabasca basin, 660 km north of Saskatoon, that has been delayed over the past couple of years due to repeated flooding.

Crews re-entered the main working level of Cigar Lake, about 480 metres below surface, on Feb. 10. They are working to inspect, assess and secure the underground development. The company expects the underground will be secure by next October, depending on the condition of the mine.

Once the underground is completely secure, the company will continue with underground and surface construction. The company had to reapply for a construction licence from the Canadian Nuclear Safety Commission last November because its original licence expired at the end of 2009.

Cameco began building the mine back in 2005 and expected to reach production by 2007. Flooding in 2006 and again in 2008 (caused by different problems) pushed the timeline far into the future. At one point the company thought mining would start in 2011, but now it’s taking a more cautious approach, not giving a date for production just yet. Cameco says it will provide a more-detailed update on Cigar Lake when it releases its fourth quarter and annual results on Feb. 24.

When the mine flooded in 2008, due to a fissure located in the top of a tunnel on the 420-metre level, the company decided to let the mine flood all the way up to the 500-metre level so it could monitor ground water conditions.

Once Cameco determined the cause of the flood it used remote-operated vehicles and directional drilling technology to drill holes from surface to the tunnel. An inflatable seal was placed near the entrance to the mine tunnel and then the company pumped 2,000 cubic metres of concrete behind the bag to seal off the entire level.

Cigar Lake has proven and probable reserves of more than 226.3 million pounds U₃O₈ at an average grade of 20.7%. Once in full production, the company expects the mine will produce 19 million lbs. of U₃O₈ per year.

Cameco owns 50% of the Cigar Lake project while French energy giant Areva holds 37%, Idemitsu Uranium Exploration Canada holds 8% and Tokyo Electric Power Co. has the remaining 5%.

Cameco shares were up 2% on Feb. 11, or 60¢, to $29.27 per share on a trading volume of 745,000 shares.