Cameco May Halt Water Leak at Mine in Second Quarter (Update2)
By Christopher Donville
Jan. 25 (Bloomberg) -- Cameco Corp., the world's largest uranium producer, plans to finish sealing a water leak at its flooded Cigar Lake mine in northern Canada in the second quarter and said a cost estimate would be delayed by a month.
Preliminary costs and a timeline for repairs will be ready by late March, Saskatoon, Saskatchewan-based Cameco said today in a statement.
Cameco's shares fell 5.1 percent three days ago as investors grew concerned rehabilitation might be delayed indefinitely. Cameco spokesman Lyle Krahn denied the speculation. The stock fell 47 cents, or 1 percent, to C$45.10 at 4:10 p.m. on the Toronto Stock Exchange.
Cameco had predicted the mine would supply as much as 10 percent of the world's uranium when it reached full production in 2010. The Cigar Lake deposit, in northern Saskatchewan, contains reserves of 232 million pounds of uranium, a raw element used in fuel for nuclear reactors.
``On the surface, the news appears to be better than some rumors that have been circulating about extreme difficulties with remediation,'' Kevin Bambrough, a strategist at fund manager Sprott Asset Management Inc. in Toronto, said in a telephone interview.
Development of the mine was halted in October after the flood. It had been scheduled to open in 2008. The company initially said the flood would delay construction by at least a year.
Timing
The price of uranium almost doubled last year to $72 a pound as hedge funds and other speculative investors competed with nuclear power plants for supplies. The price has been unchanged since the middle of December.
``I expect the uranium price will begin to head higher in anticipation of Cameco's full mine update in March,'' Bambrough said. ``There's a significant possibility the rehabilitation will take many years.''
The mine at Cigar Lake is 50 percent owned by Cameco, with the remainder held by Areva Resources Canada Inc., Idemitsu Uranium Exploration Canada Ltd. and TEPCO Resources Inc.
To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net
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