Agreement on milling of Cigar Lake output

20 December 2011

All uranium ore extracted at Canada's forthcoming Cigar Lake mine will be processed and packaged at the McClean Lake mill under an agreement finalized by the partners in the mine project and the owners of the mill. Prior to the announcement of the agreement in October 2011, plans saw work being split between mills at McClean Lake and Rabbit Lake on a toll basis. Cigar Lake is being developed by Cameco (50%), Areva (37%), Idemitsu (8%) and Tepco (5%). The mine is expected to begin production in mid-2013 and will eventually increase its production capacity to 6900 tonnes of uranium per year. The McClean Lake mill is owned by Areva (70%), Denison (22.5%) and Japan's Overseas Uranium Resource Development Company (7.5%). According to Areva, McClean Lake is the only mill capable of processing high-grade uranium ore without diluting it. Cameco said its Rabbit Lake mill will continue to process ore mined at that site, but would have flexibility to process ore from other sources. The company expects the new milling arrangement will reduce the average operating cost of the Cigar Lake project from C$23.14 ($22.39) per pound to about C$18.60 ($18.00) per pound. Areva plans to invest almost C$150 million ($145 million) to upgrade the McClean Lake mill and increasing its capacity to over 8500 tonnes U3O8 per year.