This blog post is an edited version of a column published in Fuel Cycle Week, 02/17/10 V9:N364 by International Nuclear Associates, Washington, DC.
Cameco re-enters Cigar Lake mine after flood
Cameco Corp (TSX:CCO) announced Feb 11 its crews re-entered the main working level of the Cigar Lake mine, 480 meters (1,575 feet) below the surface. Lyle Krahn, a spokesman for Cameco, told FCW the re-entry does not mark the re-start of construction, but it is a significant milestone following work to stop the flooding and pump out water from the underground shafts. He said the workers are conducting damage assessments and safety inspections. A technical report is being prepared which will be released by the end of March. He added an update will be provided on Feb 24 when Cameco announces its 2009 financial results.
Krahn said the technical report will focus on a planned re-start of construction activities by October 2010. While Krahn did not give a data for completion of construction, he said that Cameco's goal for the mine is to reach a production level of 18 million pounds/year from the mine. He estimated it would take several years following start-up of production to reach that level.
The mine flood occurred in October 2006. It took three years for Cameco to get a solution in place at the 420 meter level and the source of the water. After direct pumping failed, inflatable seals were used and then covered with concrete.
The mine is expected to be one of the world's richest uranium deposits once it goes into production. The estimated reserves are 226 million pounds with ore grades as high as 20%.
Re-start of the nearby McClean Lake uranium mill will depend on when the Cigar Lake mine goes into production. Earlier this year Areva Resources Canada laid off about two-thirds of its workforce at the mill.
Cigar Lake, located in northern Saskatchewan, is a joint venture of Cameco which owns 50%, Areva at 37%, and two other partners.
Mitsubishi takes direct stake in Canadian uranium project
In a break with long standing practice, Japanese conglomerate Mitsubishi, acting through its Canadian subsidiary, completed the direct acquisition of a 50% stake in CanAlaska's West McArthur uranium project in Saskatchewan. In the past the firm has invested indirectly through consortiums with corresponding lower shares in the production.
If a mine is developed, Mitsubishi will have the exclusive rights to sell 50% of the output to Japanese utilities.
Emil Fung, VP for Corporate Development at CanAlaska, (CVE:CVV) told FCW, this is the first time MC Resources Canada Ltd, the subsidiary, has invested directly in an exploration project. The approvals Fung said, " had to go to the top of the home office corporate structure for sign off."
The two firms are now working on a C$20 million, five-year exploration effort with the objective of developing an ore body capable of producing 100 million pounds of uranium. Fung said the exploration project sounds ambitious, but the payoff could be enormous.
"We believe such an ore body can be found since we are just 8 km (5 miles) from the MacArthur mine in the Athabasca basin."
The kick-off of the exploration project follows completion of a three-year option agreement during which time Mitsubishi invested C$11 million a year in cash and exploration expenditures to earn its 50% stake in the project. The West MacArthur property being developed by the two firms is composed of 12 mineral claims covering 359 square kilomaters (138 square miles).
CanAlaska is also involved in another exploration project in the region at the Cree East project in a C$19 million joint venture with a consortium of South Korean countries. It received its initial funding in December 2007.
Denison forecasts production of 1.8 million pounds uranium in 2010
Denison Mines (TSE:DML) announced it expects to produce and sell 1.8 million pounds of uranium in 2010. This is a 14% increase over its production in 2009. Most of the production will be in the U.S. At price ranges of US$40-50/lb on the spot market, the production could be worth US$72-90 million.
Overall, Denison said it projects revenue in 2010 to be US$119 million which includes $19 million in revenue from vanadium.
The firm said it would spend US$6.3 million on new mine exploration and development activities. The most significant exploration project will be additional drilling on the Wheeler property in the Athabasca basin in Saskatchewan. It involves 45 holes over 22,500meters.
In December Denison announced a 7,500 meter drill program on the Wheeler River Property to further define the high-grade Phoenix discovery made in 2009. The Wheeler River project is a joint venture among Denison, who is the operator and holds a 60% interest, Cameco Corp. (30% interest) and JCU (Canada) Exploration Company, Limited (10% interest).
Another important project is the McLean North property and a scaled back but continued evaluation of the Midwest uranium project with Areva which is the majority owner.
Virginia Energy takes 100% interest in Otish Mountain property
Virginia Energy (TSX:VAE) announced it has taken a 100% interest in four claims in the Otish Mountains of Quebec which are spread out over 202 square miles. The claims are owned by Xemplar Energy. The deal will be closed by transfer of 1.2 million shares of common stock. At market close Feb 16, its stock traded at C$0.235 making the deal worth approximately C$282,000.
Virginia Energy Resources Inc. and Denison Mines Corp. announced the start of drilling on the Hatchet Lake uranium property in Saskatchewan. The 2010 program is budgeted at $700,000 and will include approximately 2000 metres of drilling in 8 to 10 holes in the Tuning Fork area. The firms each hold a 50% interest in the property.
This very large property consists of 11 claims totaling 39,930 hectares (154 square miles). It is located 20 kilometres north of Points North Landing, and 17 kilometres north of the McClean Lake Mill owned by AREVA-Denison-OURD.
Strateco closes C$15 million private placement
Strateco Resources (TSX:RSC) closed a C$15 million private placement through the Sentient Group, a private equity firm in the U.S. Strateco plans to use the proceeds to fund its exploration and mine development work for its Matoush project in the Otish Mountains of Quebec.
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