Cameco Corp., the world’s largest producer of uranium, said Monday it was unable to control water flowing into its Cigar Lake project following a Sunday rock slide, and it expects all underground areas to be filled with water.
The company said it evacuated everyone by 11:30 a.m., and it will investigate options to restore access to the mine. Cameco said it is committed to the project, and it will develop new timelines for construction, cost estimates and production forecasts. The mine was originally slated to start production in early 2008.
At 5 a.m. Monday, Cameco closed two bulkhead doors to try to protect the project’s main shaft and key underground infrastructure. The company later, though, found one of the doors did not seal properly, allowing significant water to flow into the processing area.
Cameco said it is adequately positioned to meets its contractual obligations, as it has supply interruption protection in contracts.
Analysis: Well this is no the best of news. This mine was scheduled to come online next year and produce 18 million pounds per year. This is one of the hazards of mining. There are two paths forward for us sell now or hold on ride through this and have confidence management will fix the mine and bring it online in 2008. I am inclined to hold as I have confidence uranium and nuclear power is the only way to go for mass power generation. It will take a few days to digest this information and get a feel for where the stock should trade. You will notice this news got the other uranium stocks to rally hard as this is just makes a bad supply situation worse. I think you can pretty much count on a supply squeeze in uranium. Buying Uranium Particpation Corp. could be a good play here if you do not own it. In summary, I am a long term bull on uranium and I want to own the largest uranium miner so I will hold and add if the stock were to drop enough.