Mr. Tim Gitzel reports
CAMECO PRODUCES FIRST PACKAGED POUNDS FOLLOWING MCARTHUR RIVER/KEY LAKE RESTART
The first pounds of uranium ore from Cameco Corp.'s McArthur River mine have now been milled and packaged at the Key Lake mill, marking the achievement of initial production as these facilities transition back into normal operations.
"McArthur River and Key Lake are among the best and most prolific uranium assets on the planet, and after building homes for these pounds in our long-term contract portfolio, we are delighted to have them back in production," said Cameco president and chief executive officer Tim Gitzel. "Market conditions have continued to strengthen since we announced their planned restart, with growing geopolitical uncertainty adding to energy security concerns worldwide and the ongoing global emphasis on decarbonization and electrification only gaining momentum."
Production was suspended at McArthur River and Key Lake for approximately four years beginning in January, 2018, due to persistent weakness in the global uranium market. In February, 2022, with a notable market improvement under way and an increase in long-term contracting activity adding significant volumes to the company's portfolio, Cameco announced the next phase of its supply discipline, which included the planned restart of both operations.
This initial production is a significant milestone for the operations and comes as the result of completing critical automation upgrades, maintenance readiness checks and restaffing, recruitment, and training for key positions at both facilities. There are now approximately 730 employees and long-term contractors working at the mine and mill -- more than half being of indigenous heritage -- with additional hiring planned going forward. The sites will continue with final commissioning activities to ensure target production rates can be met and normal operating conditions are being achieved.
McArthur River/Key Lake are expected to produce up to two million pounds (100 per cent basis) of uranium concentrate (U3O8) in 2022. Starting in 2024, Cameco plans to produce 15 million pounds of U3O8 (100 per cent basis) per year from these operations, 40 per cent below their annual licensed capacity, as part of the company's continuing strategy to align its production decisions with its customers' procurement needs.
Cameco expects the return to production at McArthur River/Key Lake will lead to a significant improvement in its future financial performance. The company anticipates it will be positive for cash flow and will allow it to source more of its committed sales from lower-cost produced pounds. In addition, the company will no longer be required to expense care and maintenance costs directly to cost of sales. Until the company achieves a reasonable production rate, however, it expects to incur between $15-million and $17-million per month in operational readiness costs, which will be expensed directly to cost of sales.
The COVID-19 pandemic and related supply chain challenges have the potential to impact the availability of materials, reagents and labour at McArthur River/Key Lake, which could not only impact 2022 production, but could also introduce additional risk in 2023. Cameco will continue to report on the progress of the production ramp-up at these operations moving forward.
The technical and scientific information discussed in this document for McArthur River/Key Lake was approved by the following individual who is a qualified person for the purposes of National Instrument 43-101: Greg Murdock, general manager, McArthur River, Cameco.
About Cameco Corp.
Cameco is one of the largest global providers of the uranium fuel needed to energize a clean-air world. The company's competitive position is based on its controlling ownership of the world's largest high-grade reserves and low-cost operations. Utilities around the world rely on Cameco's nuclear fuel products to generate safe, reliable carbon-free nuclear power. Cameco's head office is in Saskatoon, Sask.
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