Cameco Closer to Expanding Uranium Output

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Cameco Corporation (NYSE:CCJ)(Saskatoon, Saskatchewan), the world's largest uranium supplier, expects approval between August and December of 2004 for its construction licensing application from the Canadian Nuclear Safety Commission to construct a new uranium mine (Plant 1018357) at Cigar Lake, Saskatchewan. Cameco is the majority owner of the Cigar Lake project (PEC 55000001) with 50% ownership and will operate the mine. Other partners in the Cigar Lake project include: Cogema Resources, Incorporated (Saskatoon, Saskatchewan) 37.1%, Idemitsu Exploration Canada Limited (Chiyoda, Japan) 8%, and TEPCO Resources, Incorporated (Tokyo, Japan) with 5%.

In the works since the early 90's, the company completed a five-year environmental impact study on Cigar Lake in 2000 and submitted its construction application in 2001. Cameco is hoping to receive the license in time to begin construction this year during the narrow three-month summer construction time period. The Cigar Lake mine site, located in northern Saskatchewan, is inaccessible, except by air, during the winter freeze months. If construction starts in 2004, operation of the mine could begin in early 2006.

The cost for mine construction is estimated between $250-300 million and will involve the excavation of an underground mine, the installation of an underground milling system, conveyance to the surface, and surface facilities. Surface facilities will include ore preparation and thickening for transport as a slurry to the McClean Lake processing plant (Plant 1025583). The McClean Lake plant is 70% owned and operated by Cogema Resources, Incorporated (Saskatoon, Saskatchewan), who also owns 37% of the Cigar Lake Project. In order to process the ore slurry from Cigar Lake, the McClean Lake plant will undergo a $58 million expansion to improve existing process circuits, as well as install ore slurry receiving, unloading, and storage facilities.

The project will be bid out in a series of EPC contractor packages. In an agreement with the local government agencies, Cameco will award about 50% of the contracts to contractors based in the northern Saskatchewan area. In order to be considered for the project, some contractors with mining expertise located outside of the province have formed joint ventures with Northern Saskatchewan contractors.

Cameco is the sole uranium supplier to the Bruce Nuclear Station in Tiverton, Ontario (Plant 1017414, 2001001). Cameco, which holds a 31.6% interest in Bruce Power Limited Partnership, with current total nuclear power generation capacity of 4,660 megawatts, is aggressively looking at power generation expansion, including a study to examine the feasibility of restarting Bruce A units 1 and 2 to serve Ontario's growing electricity needs. The study will include a technical inspection of these reactors and an assessment of the cost to upgrade them to current operational safety standards. Units 3 & 4 were both recently brought online giving the plant six working reactors.

The study will also establish what improvements are required to extend the life of the four Bruce B reactors, which will reach the end of their useful reactor lives over the next 15 years. In addition, Bruce Power will examine the feasibility of building one or more Advanced CANDU Reactors currently being developed by Atomic Energy of Canada Limited.

Cameco has announced that it will spend about $400 million on capital outlays at its Bruce Power plant in 2004.

Cameco, with its head office in Saskatoon, Saskatchewan, is the world's largest uranium supplier. The company's uranium products are used to generate electricity in nuclear energy plants around the world, providing one of the cleanest sources of energy available today.