"it is not known when the mine will actually be able to come into production and some market watchers have speculated that the mine may never start commercial production."
Negative news from Cameco's anticipated February update will see this market go parabolic. YC
----------------------------------------------------------------- Cameco Says Cigar Lake Work Progressing “as Expected”
By Maria Babbage 22 Jan 2007 at 09:00 AM EST
TORONTO (CP) -- Cameco's [TSX:CCO; NYSE: CCJ] stock dropped nearly five per cent on heavy trading Monday, but the company said reclamation work on its Cigar Lake uranium mine in northern Saskatchewan is ''progressing as expected'' and that it will provide an update later this month as promised.
Lyle Krahn, a spokesman for the Saskatoon-based uranium giant, said he's heard speculation about the mine, which flooded last year, but that work is progressing as expected since the company's last update in December.
''We are drilling holes and pouring concrete into the underground areas there as we had planned,'' he said in an interview.
''We had promised an update in January, and we will issue it in January.''
Krahn declined to provide an exact date.
Cameco's stock fell C$2.23 or 4.8% to C$44.42 with 4,060,967 shares traded, one of Monday's most actively traded stocks on the Toronto Stock Exchange.
The flooding at Cigar Lake, a project the had hoped to bring into production in 2008, sent uranium prices soaring in 2006.
Uranium prices nearly doubled last year, with some analysts forecasting an average price of US$100 per pound in 2007 as demand continues to outstrip supply.
Construction at the deposit, which has proven and probable reserves of more than 232 million pounds of uranium at an average grade of 19%, began in January 2005. It came to a halt last April after water flooded a shaft at the project used mainly for underground ventilation during production after a valve broke, allowing water to enter the shaft.
Then in October, two massive bulkheads failed to hold back water from a flood after a rock slide in a shaft about a half kilometre underground, flooding the entire mine and pushing back its completion by at least a year and adding ''significant'' costs to its estimated C$660-million price tag.
In December, the company started round-the-clock work drilling holes to the source of the water inflow so it could pump in concrete. About 18 holes are planned, including four for removing water from the mine.
However, it is not known when the mine will actually be able to come into production and some market watchers have speculated that the mine may never start commercial production.
Cameco has also promised to provide preliminary capital cost estimates and a timeline for remediation in February.
The mine is a joint venture 50% owned by Cameco, with Areva Resources Canada Inc. holding 37%, Idemitsu Uranium Exploration Canada with 8% and Tepco Resources Inc. at five per cent. It is expected to produce 18 million pounds of uranium a year once it reached production.
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