Cameco announced plans to restart production at the Cigar Lake Mine in September in a second quarter update on Wednesday.
Tim Gitzel, Cameco’s president and CEO, said he’s confident they can restart in a safe and healthy manner, but added commercial considerations played a part in the decision too.
“We expect our business to be resilient,” Gitzel said in a media release. “Our customers continue to need uranium fuel to power the carbon-free nuclear electricity that will be part of the critical infrastructure needed to ensure hospitals, care facilities and other essential services during this pandemic.”
Gitzel added that the restart would depend on how the COVID-19 pandemic is affecting northern communities.
The shutdown has cost the company an additional $37-million in care and maintenance costs at the Cigar Lake Mine, Blind River refinery and Port Hope conversion plant, and led to a total adjusted net loss of $65-million. The refinery and conversion plant both restarted operations in May.
Gitzel said they won’t be able to make up for lost production at the mine, and have set a new target of up to 5.3. million pounds of uranium. The mine produced 18-million pounds in 2019, roughly 9-million of which went to Cameco.
“With the uncertainty remaining about our ability to restart and continue operating the Cigar Lake Mine, the delays and deferrals of project work, and therefore the resulting production rate in 2020 and 2021, we believe the current plan represents an appropriate balance of the commercial considerations affecting our decision.” Gitzel explained. “We have the tools we need to deal with the current uncertain environment. We are well-positioned to self-manage risk.”
The company reported $878-million in cash and short-term investments on Wednesday, along with $1-billion in undrawn credit. The company also expects to recover $303-million in cash and $482-million in letters of credit after winning a tax case with the Canadian Revenue Agency for the years 2003, 2005 and 2006.
Cameco temporarily closed the mine in March due to COVID-19 concerns, leaving a 35-person safety and maintenance team on site. The mine typically employs roughly 300 workers at any given time.
Cameco owns just over 50 per cent of the mine, with Orano Canada, Idemitsu Canada Resources, and Tepco Resources owning the rest.
Orano also owns the McClean Lake Mill operation in Northern Saskatchewan, which processes ore from Cigar Lake. With Cigar Lake restarting, Orano said the McLean Lake Mill would do the same.
“As long as it remains safe to do so, Orano Canada plans to restart the McLean Lake uranium mill at the beginning of September,” reads a statement from Orana president and CEO Jim Corman. “In tandem with the successful restart of Cigar Lake operations, we expect to be processing uranium by mid-September.”
The mill employs roughly 160 people on site at one time. COVID-19 safety protocols will remain in place during the restart. That includes pre-screening, temperature monitoring, mandatory COVID-specific training, and increased sanitation and isolation procedures. Corman also promised to work with northern community leaders during the process.
As with Cameco, Orano will not be able to make up for production lost over the past five months. Corman said they’re targeting 10.5-million pounds of packaged production for 2020. The mill produced 18-million pounds in 2019, 6.7-million of which went to Orano.
“We have been successful at bringing forward much of the work that was planned for the summer shutdown, and now we are able to shift gears to efficiently move back into production,” he explained.