McArthur River Mine Running Again

Mining has resumed at Cameco Corporation’s 70%-owned McArthur River mine without much fanfare following the repair of what looked to be a very serious breach deep underground.

The world’s largest, high-grade uranium operation, based on reserves and production, was shut down on April 6, 2003, following an increase in water inflow occurring at about 510 m below the surface in an incline off the 530-m level of the mine. The re-opening of the operation, situated 620 km north of Saskatoon, Sask., occur- red in late June, one month earlier than first anticipated.

Water inflow is common at many underground mining operations and McArthur is no exception. Here, the water is found within and flows through the Athabasca sandstone. Before the breach occurred, the typical water inflow at McArthur was about 225 m3/hour but the mine was designed to handle this volume of water. As a result of the rupture however, water inflow in-creased by more than three times to about 900 m3/hour.

The immediate concern following the rupture was to protect the most critical part of the mine, 640 m below surface where ore processing equipment and two large pumps were located. Other concerns included adding water treatment capacity on the surface, repairing the rupture and protecting nearby areas of the mine from possible increased inflow.

At the beginning, Cameco issued frequent and timely press releases on developments at the site and held conference calls with investors and the media. After the breach, the two large pumps on the 640-m level, which normally pumped slurry to surface, were used to pump the increased water inflow to the surface. Additional water treatment capacity needed to remove suspended solids was added and efforts were made to begin constructing a concrete barrier.

The margin between pumping and treatment capacities and the volume of inflow was narrow and at times inflow exceeded these capacities. According to the company’s April 9 press release, the grinding mill, which is located at one of the lowest levels of the mine, was under water and the remaining critical facilities were threatened. Without additional pumping capacity, the company estimated that the critical area would have been flooded within a few days.

After some difficulties and delay, additional pumps were deployed on the 530-m level below surface and additional water treatment plant capacity was added, and on April 17 the water level which had been fluctuating had become relatively stable. Water was being drained from the affected area towards to inactive regions of the mine. The company also made progress in the construction of a concrete barrier above the 530-m level of the mine. The barrier filled a 10 m-section of the 4 m-wide and 4.5 m-high incline. In addition, the 50 m behind the concrete barrier was also filled with concrete to add strength to the barrier and prevent water from entering other nearby locations.

Eventually, the tide began to turn and on July 2 the company announced that the additional water inflow at McArthur was declining. By this point in time, the concrete barrier and additional concrete support were finished and had completely sealed off the incline. On the surface, the water treatment facility continued to treat and monitor the water to ensure its quality.

On June 30, mining operations resumed as two raiseboring machines began to churn. The permission to restart mining operations was conditional on a number of regulatory items including increased water monitoring and the operators providing more information to the regulators on how mining operations would be handled as the company continued to deal with the extra water inflow, as well as contingency plans.

Ironically, the flooding incident occurred almost three months to the day after Cameco announced McArthur River had received ISO 14001 certification. ISO 14001 is an international system through which a company demonstrates its commitment to sound environmental performance, pollution prevention and continual improvement. It also establishes a permanent framework to assist companies in reaching their environmental protection goals. Independent audits are completed annually as part of the re-certification process, which occurs every three years.

Cameco has revised its 2003 production figures for the McArthur River mine and Key Lake mill operations down from 13 million lb to 9.4 million lb of U3O8. (note: this is Cameco’s share of production.) During the time production was suspended, Cameco estimates it lost net earnings of between about $12 to $15 million after tax.

Since operations at McArthur resumed, there has been little news on how the underground mine is faring. In an article in the Globe & Mail, dated August 4, Cameco’s president Jerry Grandy confirmed that the loss of production and costs associated with the mine remediation efforts would have a negative effect on 2003 net earnings. (The costs are estimated to be $23 million which includes lost earnings and rehabilitation costs). The company is not anticipating any writedown at McArthur River at this time.