Cameco to close Rabbit Lake mine

23 April 2016

Canada's Cameco is cutting back its uranium mining activities in response to market conditions, the company announced on 21 April. It is suspending production at the Rabbit Lake uranium mine in northern Saskatchewan, curtailing production at its US uranium operations, and reducing production at McArthur River/Key Lake. Work will begin immediately to transition the underground Rabbit Lake mine to care and maintenance and should be completed by the end of August. Production at the US in situ leach operations will instead decrease as head grades decline and development of new wellfields will be deferred. Cameco's US uranium operations comprise Crow Butte in Nebraska and Smith Ranch-Highland in Wyoming. Both are wholly owned by Cameco, and their combined output had made Cameco the largest uranium producer in the USA.

CEO Tim Gitzel said: "Unfortunately, continued depressed market conditions do not support the operating and capital costs needed to sustain production at Rabbit Lake and the US operations.... We will provide assistance to those affected by these decisions." Some 500 employees at Rabbit Lake and 85 at the US operations will lose their jobs. A workforce of about 150 will be required to maintain facilities and continue environmental monitoring and reclamation work at Rabbit Lake. About 170 people will remain at the US operations to operate existing facilities and restore depleted wellfields. Cameco also intends to review its office activities in support of those operations to reduce general and administrative costs.

Final 2016 production at Rabbit Lake is now expected to be 1.0m pounds U3O8 (385 tU), down from the 3.6m pounds (1,385 tU) expected previously, while US production is expected to be 1.1m pounds U3O8 (423 tU), down from 1.4m pounds (539 tU). Cameco will also reduce production at the McArthur River/Key Lake operation in Saskatchewan to 19m pounds U3O8 (7,308 tU) in 2016, down from 20m pounds (7,693 tU). "We will take the opportunity from additional downtime at the mill to further advance work needed to increase the mill's production capacity for when the market signals it is needed. This includes changes to the solvent extraction circuit, bringing some ?work on the crystallization circuit forward from 2017 and transitioning to the new calciner," the company said.

However, production at Cigar Lake will continue to increase, with plans to produce 16m pounds U3O8 (6,154 tU) this year subject to Areva's McClean Lake mill receiving the necessary regulatory approvals to increase its annual capacity. Cameco now expects its total annual production to be 25.7m pounds U3O8. Previously, planned production for the year had been 30m pounds.



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