New milling agreement to cut cost of Cigar Lake

6 October 2011

Cameco has signed a non-binding memorandum of understanding (MOU) with its joint venture partners to mill all Cigar Lake ore at the McClean Lake mill, operated by Areva.

At present, both the McClean Lake mill and Cameco's Rabbit Lake mill process uranium from Cigar Lake. Under the new arrangement, McClean Lake would process and package all of Cigar Lake uranium, with Rabbit Lake continuing to process ore mined on the site, and potentially other sources.

The new milling arrangement is expected to significantly reduce the operating cost of the Cigar Lake project.

In a March 2010 report, Cameco estimated average cash operating cost for Cigar Lake at $23.13 per pound. Today they have dropped to about $18.60 per pound, primarily due to the new milling arrangement, Cameco said.

Cigar Lake is owned by joint venture partners: Cameco (50%), Areva Resources Canada Inc. (37%), Idemitsu Resources Canada Inc. (8%) and Tepco Resources Inc (5%). The mine flooded in 2006 and is currently being remediated. Its production startup date remains around mid-2013, Cameco said.

Binding agreements with the owners of the Cigar Lake project and McClean Lake mill (Areva, Denison Mines and OURD Canada) are needed to proceed with the new milling arrangements. Cameco expects the deals to be concluded by end of November 2011.

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