Cigar Lake production delayed again; Cameco to miss 2013 target

Canadian miner Cameco (TSE:CCO) has announced that its Cigar Lake project in northern Saskatchewan – the world's second largest high-grade uranium deposit – will not meet foretasted production targets this year due to construction delays.

Based on the most recent projections, ore production is expected during the first quarter of 2014, the miner said in a statement. 

Construction is now 97% complete. Production was expected to begin by mid-2013.

Venture partner AREVA, which will process the ore at its McClean Lake operation, has advised that due to required mill modifications ore processing will not start until Q2 2014.

According to The Canadian Press, a small water leak caused the construction delay because it presents a safety hazard for workers.

Cameco says it will revise five-year production targets as part of its annual reporting this year. It will not meet forecast production of 300,000 pounds of milled uranium this year.

"Cigar Lake is among the most technically challenging mining projects in the world and we continue to make solid progress," said Tim Gitzel, Cameco's CEO in Monday's statement. "Cameco and AREVA are fully committed to bring this exceptional orebody into production in a safe and sustainable way."

The miner also noted that, based on preliminary information, capital costs will not be affected.

Flooding has been a major issue for workers operating more than 400 meters underground. The company was pumping out water from 2006 to 2010, CP reports. Miners have frozen the deposit and surrounding rock in order to prevent groundwater from flowing.

Cameco – which owns 50% of the project – lost $0.15 on the Toronto exchange by mid-afternoon Monday, trading at $20.40 – a 0.7% decline. The Cigar Lake mine is a joint venture between Cameco, France's AREVA, Japanese subsidiary Idemitsu Canada Resources, and TEPCO Resources.