TSX:CCO - Post Discussion
Post by
retiredcf on Sep 27, 2023 8:54am
TD
Cameco Corp.
(CCO-T, CCJ-N) C$54.85 | US$40.62
McArthur River/Key Lake Tour Highlights Event
On September 26, we visited CCO's McArthur River Mine and Key Lake Mill in northern Saskatchewan.
Impact: NEUTRAL
McArthur River is expected to meet its 2023 production target of 14 million pounds U3O8. The mine continues to ramp-up following the restart earlier this year, and does not yet have a full complement of workers; management expects to reach full labour levels by year-end.
McArthur's 10-year operating license expires next month. Management expects the license to be renewed, although it is not certain whether the Canadian Nuclear Safety Commission (CNSC) will grant the requested 20-year extension. The mine has 394 million pounds in reserves, good for a 22-year mine life. McArthur River is licensed for 25 million pounds of annual production; operating capacity currently is 18 million pounds per year. Management indicated that there is sufficient infrastructure on site to meet the higher production rate, but with the orebody well-defined, increased production would reduce the mine life.
The Key Lake mill has faced numerous ramp-up issues following an extended shutdown and a number of modifications made to the process plant during the closure. The ramp-up issues have been caused by (1) a lack of skilled labour, combined with 50% of the workforce being new to the operation; (2) CCO made numerous changes to the mill (85 discrete changes), 50% of which are operating as expected and 50% have needed significant rework or redesign; and (3) the Key Lake mill is 40 years old, and was under-capitalized over the past decade.
Management at the mill believes that substantial advances have been made towards returning the mill to achieve production rates of 18 million pounds per year and that by year-end, the mill will be meeting targets.
We believe the Key Lake mill requires significant work to achieve a 25-million-pound annual production rate; the previous peak annual production was 21 million pounds. The calciner is known to be a bottleneck; management is assessing which other areas of the plant would need additional capacity/upgrading. We do not expect the operation to achieve a 25-million-pound annual production rate in the near term.
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