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Project Review: Cameco’s McArthur River Uranium Mine

The McArthur River mine is the world’s largest high grade uranium mine located in northern Saskatchewan, Canada. The mine was discovered in 1988 and has been in production since 1999. It is currently operated by Cameco (TSX:CCO, NYSE:CCJ) who owns 69% of the operation. The other 31% is owned by French multinational, Areva. Mine reserves include 4,652,000 tonnes grading 21. 42% U3O8 proven and 5,722,000 tonnes grading at 11.17 % U3O8 in the probable category. Average annual production is 18 million pounds of uranium from 150 to 200 tonnes of ore per day. The mining operation is underground and is carried out via remote controlled mining methods in order to ensure the safety of the the workers.

Regional Geology

The McArthur deposit is located in the southeastern part of the Athabasca Basin. This portion of the basin consists of a sandstone and conglomerate package known as the Helikian Athabasca Group. The Helikian Athabsaca group unconformably overlies the Wollaston Domain, archean age (2.2 Billion year old) metamorphic rocks.

Regional Geology map of the Athabasca Basin
Regional Geology map of the Athabasca Basin (Source: sec.gov)

Deposit Geology

Uranium in the McArthur deposit is structurally hosted within the P2 fault and is classified as an unconformity-related uranium deposit. Mineralization occurs between 500 and 640m depth. The highest grade uranium occurs in the mineral uranite (U3O8). Metallic sulfides are also associated within the primary uranite mineralization including pyrite (iron sulfide), chalcopyrite (copper-iron sulfide) and galena (lead sulfide).


A vertical slice of the McArthur deposit
A vertical slice of the McArthur deposit (Source: sec.gov)



Cameco made the news at the end of August, 2014 when a labour dispute resulted in the suspension of operations at both McArthur River and neighboring Key Lake. The dispute has since been resolved, but operations are not set to resume until October. This disruption, along with concerns over Russian sanctions, have caused uranium prices to rally over the past month. The commodity hit a 9 year low of $28 per lb in May and is currently back to $36.50 lb. Whether the rally will last remains to be seen. Industry reports are still showing an oversupply of uranium in the market and demand has not recovered since the Fukushima disaster. Still, Cameco is an elephant in the industry, producing nearly 15% of global uranium production from it’s mines. The company also provides nuclear fuel processing and manufacturing services. And they consistently pay dividends to investors. So while the junior uranium explorers may struggle in an uncertain market, big players like Cameco and the world-class McArthur mine are likely to weather the downturn without too many scars.

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