Saskatoon-based Cameco (TSX: CCO; NYSE: CCJ) and French-owned Orano Canada have announced plans to increase their ownership stakes in the Cigar Lake operation, which is considered the world’s largest high-grade uranium mine.
Idemitsu Canada has agreed to sell its 7.875% interest in the Cigar Lake joint venture, with 4.522% of the mine ownership transferring to Cameco (bringing its ownership to 54.547%) and 3.353% to Orano (increasing the French share to 40.453%). TEPCO Resources, a subsidiary of Tokyo Electric Power Company, will maintain its 5% share in Cigar Lake.
Cigar Lake boasts reserves of 152.4Mlbs of proven and probable uranium oxide, along with resources totaling 103.7Mlbs uranium oxide (measured and indicated) and 22.9Mlbs (inferred). The increased ownership will bolster Cameco’s share of reserves and resources by 12.6Mlbs.
Cameco’s President and CEO, Tim Gitzel, praised Cigar Lake as “one of the best most prolific uranium producing assets on the planet.” He highlighted its proven track record as a safe and stable mine in a secure jurisdiction. The 2022 production forecast for Cigar Lake is 15Mlbs, making it the top uranium producer for the year.
In terms of future plans, Cameco intends to reduce Cigar Lake’s annual production from 15 million pounds of uranium oxide in 2022 to 13.5Mlb starting in 2024. This adjustment aims to extend the mine’s lifespan and align production with market conditions. The company also anticipates evaluating the feasibility of expanding the mine beyond its current reserves while continuing to supply Orano’s McClean Lake mill.
Cameco indicated that this production reduction strategy will remain in effect until they observe further improvement in the uranium market and contracting progress. This cautious approach signals the company’s stance in light of recent fluctuations in uranium prices, which have not yet reached levels that are attractive for new mining projects.
On 11 March, spot uranium prices briefly touched US$60/lb for the first time since 2011, but have since declined to around US$52.75/lb. While this price point may still support mine development, prospective miners may seek higher long-term contract prices for investment certainty.
