Cameco 2023 forecast down at Key Lake, Cigar Lake, McArthur River operations

The Cigar Lake uranium mine in northern Saskatchewan. Credit: Cameco

Cameco (TSX: CCO; NYSE: OCJ) reported on Sept. 4 that challenges at the Cigar Lake mine, Key Lake mill, and McArthur River mine are going to negatively impact its production forecast. Total production from operations is  forecast to be 30.3 million lb. uranium concentrate (U3O8), down approximately 9% from the previous 33 million lb. (all numbers are on a 100% basis).

At the Cigar Lake mine, output is now expected to be 16.3 million lb. U3O8, down from 18 million lb. Mining reached a new zone in the orebody, the West pod, in the second quarter of the year, and that had a negative impact on productivity. Equipment reliability during the third quarter further reduced output. Cigar Lake is scheduled to enter its planned annual maintenance shutdown that will run through most of September.

Ramp up activities at the Key Lake mill are ongoing. Operational changes, the lack of personnel with the necessary skills and experience, and supply chain challenges are all taking a toll.

The McArthur River mine continues to operate well with a new production forecast of 14 million lb. U3O8, down from 15 million lb. Any ore from the mine that cannot be processed at Key Lake will be stored for future milling.

If necessary, Cameco can source material through various means beyond production to manage any contracted output shortfall. The company said in a release the shortfall comes at a time of continuing supply risks while it believes the demand outlook is stronger than ever. The broader uranium market is moving toward replacement rate contracting for the first time in over a decade, it added.

Cigar Lake, the world’s highest-grade uranium mine, is owned 55% by Cameco, 40% by Orano Canada (Orano) and 5% by Tepco Resources. The McArthur River mine is owned 69.8% by Cameco and 30.2% by Orano. The Key Lake mill is owned 83.33% by Cameco and 16.67% by Orano. All three operations are located in the eastern portion of Saskatoon’s Athabasca Basin.