Uranium producer Cameco Corp has reported a significant setback to its operations at its Cigar Lake mine, located 660 km north of Saskatoon in northern Saskatchewan, Canada, after a rock fall allowed water to flow into the workings.

With all underground areas of the Cigar Lake project expected to be flooded construction is expected to be delayed by at least a year after efforts to protect the main shaft and key underground infrastructure failed.

Following the rock fall, initially, a portion of the underground development was allowed to fill with water while the mine shaft, future processing area, pumps, refuge station and heat exchanger for freezing the ore were protected behind bulkhead doors. However, this attempt failed after one of the doors did not seal properly and Cameco is now investigating options to restore access to the mine to provide a better estimate of construction scheduling and likely start up of production. Production was previously planned to begin in early 2008. Given the expected delay in construction, the capital cost is expected to be significantly higher than the current estimates of ($600 million, although Cameco is adequately positioned to meet its existing contractual obligations, it says. An earlier water inflow in April delayed the start of production by about six months to late 2007.

There were no injuries as a result of the incident and it is not expected to impact reserves at Cigar Lake which is 50% owned by Cameco Corp, Areva holds 37%, Idemitsu Uranium Exploration 8%, and TEPCO Resources 5%.

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