Cameco Corp.
(CCO-T, CCJ-N) C$58.84 | US$43.19
Cigar Lake Technical Report
Event
CCO released an updated NI 43-101 technical report on the Cigar Lake mine (CCO
54.5% interest) that details a mine-life extension to 2036.
Impact: NEUTRAL
CCO provided some details from the updated technical report with its YE2023 results
in early February, and we updated our model at that time. As a result, the report is
largely as expected.
The mine life for the Cigar Lake operation will be extended to 2036 from 2031
via the development of the Cigar Lake Extension (CLEXT), the western portion
of the deposit that was previously referred to as Phase 2. The eastern portion of the
deposit, which is currently being mined, is now referred to as Cigar Lake Main (CL
Main), previously Phase 1.
The total estimated capital for the mine life to 2036 for Cigar Lake and the
McClean Lake mill is estimated at C$1.25 billion (CCO share C$680 million),
which will bring the remaining reserves contained in CL Main and CLEXT into
production. Life-of-mine (LOM) operating costs are forecast at C$20.58/lb, an
increase from the previous technical report estimate of $18.75/lb. We are currently
forecasting CCO's share of LOM capex at $665 million and LOM operating costs at
~C$19.00/lb.
Based on long-term U3O8 realized price of ~US$60/lb, CCO estimates its share
of the NPV-8% for Cigar Lake at C$2.5 billion with an IRR of 8.3%. The realized
price used in the forecast is based on CCO's current contract portfolio, and for
committed contracts with a market-related pricing mechanism or for targeted but
uncommitted production and purchases, a sales price forecast is used that gives
equal weighting to the long-term average historical spot price and an independent
third-party spot-price projection.
Our current NPV-8% for Cigar Lake is C$3.1 billion, based on an average long-
term LOM realized price of ~US$75/lb, and we estimate an IRR for the mine life
extension at ~14%.
On a preliminary basis, updating our model for the details contained in the new
technical report and maintaining our long-term price forecasts would result in our
Cigar Lake NPV-8% declining ~2% to $3.02 billion.
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