MONTREAL (miningweekly.com) - Number-two uranium producer Cameco is actively hunting for acquisitions, and wants to add African production, but assets are expensive, CEO Jerry Grandey said on Wednesday.
“We have a team of people, geologists and business development types, financial types, that are looking always at acquisitions,” he told Mining Weekly Online.
“Our view is that the assets that would be meaningful and would add value to Cameco have been overpriced in recent years.”
Grandey said that Cameco had been “reluctant” to make an acquisition as an anticipated rise in the uranium price had been priced into explorers and miners of the nuclear fuel.
However, the company was keen on owning production in Africa – where it currently had no producing assets – to further diversify its supply.
“We look constantly at how discoveries are evolving in Africa and then the value equation,” Grandey noted in an interview on the sidelines of the World Energy Congress in Montreal.
“And [we are] looking for the opportunity, if you will, that would allow us to source uranium out of Africa.”
The bulk of Cameco’s production comes out of Canada. It is also the largest uranium producer in the US and has a mine in Kazakhstan. The company is also developing a mine in Australia.
Uranium One, also based in Canada, said earlier this year it was looking to add African production to its portfolio.
DOUBLING PRODUCTION
Grandey said that Cameco might be able to beat its stated target of doubling output to 40-million pounds over the next ten years.
“We’d look at that, and it’s possible (more than doubling output by 2020),” he said.
A key factor would be whether the company would be able to extend the life of its Rabbit Lake mine in Saskatchawan, which is currently projected to end in 2015.
“But we’re finding additional resources, and if those can be brought into reserves, then Rabbit Lake, which produces about three to four-million pounds a year, that could contribute to that.
“If we were then going to do an acquisition it would take us beyond the 40-million pounds,” Grandey said.
Cameco’s current plan to double production includes bringing the Cigar Lake mine into production, expanding in Kazakhstan and the US, as well as an expansion at McArthur River. It also included starting production at the Millennium project in Saskatchewan.
CIGAR LAKE ACCELERATION
Grandey said that Cameco was considering a plan to bring Cigar Lake into production sooner than the middle of 2013.
This entailed freezing the orebody from the surface, instead of from underground.
“Doing it from underground is another level of activity that is in addition to digging tunnels and setting up to start your mining, so we’re trying to freeze from the surface,” explained Grandey.
Asked how much this might accelerate first production by, he replied: “Months, we’re probably talking about. “
France’s Areva was the biggest uranium producer in 2009.
Edited by: Liezel Hill