Cameco Big Delay at Cigar & PortHopeCameco's Cigar Lake Mine Flood Plug "Nearly Complete"
By The Canadian Press
06 Sep 2007 at 01:03 PM GMT-04:00
SASKATOON (CP) -- Uranium miner Cameco Corp. [TSX:CCO; NYSE:CCJ] has announced a plan to buy back up to 5% of its shares, which could cost C$750 million at current prices.
The world's biggest uranium producer also said Thursday it continues to make progress at its flooded Cigar Lake mine development in Saskatchewan, with pouring of a concrete plug ''nearly complete.''
And the company also disclosed that a pollution-prompted shutdown of its Port Hope, Ont., uranium hexafluoride plant will be longer than previously indicated.
The share buyback helped nudge Cameco shares up 98 cents to C$43.49 in Thursday trading on the TSX - still down from a high of C$59.90 in June, undermined by expectations of growing global uranium supply and the ongoing woes at Cigar Lake in northern Saskatchewan.
''We are committed to strengthening our core asset base for the long term,'' stated CEO Jerry Grandey.
''And, in the near term, as attractive assets have not been available at reasonable valuations, the best investment today is repurchasing our own shares.''
In the remediation at Cigar Lake following last year's flooding of the underground development, all holes for pouring concrete and pumping out water are finished, as well as reinforcement of the tunnel adjacent to the inflow.
''Pouring of the concrete plug in the tunnel at the vicinity of the inflow began at the end of July and is nearly complete,'' the company stated.
''Pouring cement and injecting grout into the rockfall pile and up into the location of the water inflow source has commenced and at this point it is expected to take another six to 10 weeks to complete.''
The effectiveness of the plug won't be known until pumping of water begins; pumps have been installed and wiring is underway.
Cameco is also drilling new holes to assess water pressure and rock firmness ''to determine if depressurization, reinforcement or other precautionary measures may be necessary in two other areas of the mine prior to dewatering.'' This assessment is to be done by year-end.
A revised production forecast will be provided after the mine has been dewatered and fully assessed. Cameco has previously said its production startup has been set back to 2011.
In another recent snag, Cameco reported in July that uranium and production-associated chemicals had been found under the Port Hope uranium hexafluoride plant.
Work is ongoing to determine the source, but it appears that ''the materials are in an area contained within the Cameco property and do not affect the health and safety of employees and the public,'' the company stated Thursday.
Testing has found uranium, potassium, fluorides and arsenic.
Cameco indicated in July that full production would likely be suspended for at least two months, but ''it's now known that UF6 production will be suspended for a period beyond the initial two months while Cameco continues its detailed, methodical investigation and develops its plan.''
An indication when production will restart is likely by early November, and in the meantime ''it may not be possible to avoid layoffs for part of the workforce at the Port Hope conversion facility.''
Cameco said its uranium hexafluoride inventory suffices to meet deliveries until the end of the first quarter of next year.
The company also said C$13 million in Canadian asset-backed commercial paper which matured Aug. 17 remains outstanding, but US$101 million Cameco invested in American commercial paper has been repaid except US$10 million which matures Sept. 18.
In the share buyback, Cameco is applying for approval to purchase on the open market and cancel up to 17.7 million of its 353.9 million shares during the year starting Sept. 11. It expects to use cash on hand and cash from operations, and ''we intend to acquire the maximum number of shares allowed,'' Grandey said.
It's Cameco's second buyback since it became a public company in 1991.
In another development Thursday, the company struck a deal to buy into Cue Capital Corp. [TSX-V:CUE], a Vancouver miner, in a strategic alliance to develop the Yuty uranium concessions in Paraguay.
In the transaction, a Cameco subsidiary will invest in a private placement that will give the company up to 60% of the joint venture developing the Yuty deposit.