January 07, 2016

Cameco targets over 6000 tons of Uranium production in 2016 from Cigar Lake

Cameco expects the Cigar Lake operation to produce 16 million pounds of packaged uranium concentrate (U3O8) - equivalent to 6154 tU - in 2016, the company announced yesterday. Full achievement of the production outlook will depend on regulatory approvals to increase the production at the McClean Lake mill, where ore from Cigar Lake is milled and packaged.

Note - Disclosure - Author of Nextbigfuture has some shares in Cameco

The mine achieved its initial 2015 production target range - 6 million to 8 million pounds U3O8 (2308 to 3077 tU) - during the third quarter of the year. Full 2015 production will be reported in the company's fourth quarter results, due to be released on 5 February 2016.

With an average ore grade of 17.8% U3O8, Cigar Lake, in northern Saskatchewan, is claimed by Cameco as the highest-grade uranium mine in the world. Located at depths of 410 metres to 450 metres below the surface, the orebody is at the boundary between dry basement rock and water-bearing sandstone, meaning that the orebody must be frozen before mining to prevent water from entering the mine workings and to stabilize weak rock formations. A high-pressure water jet is then used to mine out cavities in the frozen ore in a technique called jet boring. Thickened ore slurry is pumped to the surface and transported in tanker trucks 70 kilometres to the McClean Lake mill where it is processed into uranium concentrate.

McClean Lake, majority owned and operated by Areva Resources Canada Inc, is currently licensed to produce up to 13 million pounds U3O8 (5000 tU) per year. A program to increase its total capacity to about 24 million pounds per year (9200 tU) has been funded by the Cigar Lake joint venture.

Underground tunnels at Cigar Lake (Image: Cameco)

Over $740 billion will be invested in the construction of new reactors going forward as operable reactors are slated to increase by 81 till 2024





Michael Dittmar wrote a series of posts about nuclear energy that was published on The Oil Drum in 2009. In the first post of the series, he said that uranium "civilian uranium stocks are expected to be exhausted during the next few years" and "the current uranium supply situation is unsustainable". Basically lack of uranium production from uranium mines would cause lack of nuclear fuel which would result in steadily dropping nuclear power generation. I made a series of three bets with Dittmar.

1. World Uranium production (I won in 2010, 2011, 2012, 2013. Lost in 2014)
2. World Nuclear power generation bets going to 2018 (I won in 2010, lost 2009, 2011, 2012, 2013, 2014)
3. Uranium production in Kazakhstan (I won 2010, 2011)

So out of 13 bets, I have won 7 bets and lost 6.

The hangover from Fukushima is costing Brian Wang at Nextbigfuture some of these predictive bets made in 2009 in regards to nuclear power generation and uranium production.

Uranium production was hit by the Ranger mine in Australia shutting down. The indigenous people and the mining company could not come to terms. Africa also had less production. Uranium production is not going up that fast because the price is low. the price is low because of 40 perfectly good reactors being shut down in Japan. Those 40 reactors (and 15 other older ones) would have easily generated 300 TWh. There were also several reactors shutdown prematurely in Germany. None of this has to do with Dittmars central thesis of "running out of producible uranium".

For 2015, Canada Cameco has started production at Cigar Lake. The Cigar Lake operation is expected to produce 6 million to 8 million pounds of uranium oxide (2308 to 3077 tU) in 2015, ramping up to full annual production rate of 18 million pounds per year (6920 tU) by 2018.

Japan should begin nuclear restarts in August for 2 reactors.





Dittmar              Brian                  Midpoint

2009   2575 TWhe            2600 TWhe            2587.5  Actual 2558 twh. Dittmar wins
2010   2550 TWhe            2630                 2590    Actual 2630 twh. Brian wins
2011   2550                 2650                 2600    Actual 2518 twh. Dittmar wins
2012   2550                 2700                 2625    Actual 2346 twh. Dittmar wins
2013   2525                 2750                 2637.5  Actual 2359 twh. Dittmar wins
2014   2250                 2800                 2525    Actual 2410 twh. Dittmar wins
2015   2250                 2900                 2575
2016   2250                 3200                 2725
2017   2250                 3500                 2875
2018   2250                 3800                 3025


The predictions and the bet is for the uranium production of the country of Kazakhstan. So not just Kazatomprom, although that is most of the production.

Again we use the World Nuclear Association numbers of uranium production when reported.

Brian Wang      Dittmar               Midpoint
2010   16500 tons      15000 tons         15750 tons 17,803 tonnes in 2010. Brian wins
2011   18000 t +       17,999.9 t or less 18000 tons 19,450 tons in 2011. Brian wins

World uranium production bets for 2010 through 2018

Uranium predictions
      Brian Wang  Dittmar            midpoint
2010  56000 tons  45,000 tons        50,500 tons 53,663 tonnes. Brian wins 
2011  60000 tons  45,000             52,500 tons 53,494 tons Brian wins
2012  64000 tons  45,000             54,500 tons 58,394 tons Brian wins
2013  68000 tons  45,000             56,500 tons 59,370 tons Brian wins
2014  72000 tons  45,000             58,500 tons 56,217 tons Dittmar wins
2015  76000 tons  45,000             60,500 tons
2016  80000 tons  45,000             62,500 tons
2017  84000 tons  45,000             64,500 tons
2018  88000 tons  45,000             66,500 tons

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