Tuesday, August 12, 2008
Cameco has uranium problems
This is a massive mine that utilities are counting on for future supply. If this continues to be delayed, I suspect it's going to have a significant impact on the future price of uranium and how much money the other miners make, especially the ones who are going to have mines ongoing or coming online in the upcoming years.
Tonight, Cameco reported that they're having significant unexpected problems trying to get the water out of the mine [from the last time it flooded... what is this, the third time?]. It keeps filling up too fast for them to drain: they're only licensed to pump out 550 cubic meters per hour [sustained] and it's filling at over 600.
No. 1 Shaft had been pumped down to 430 metres below surface when the increase was reported early Tuesday morning. Work in the shaft was suspended a few hours later. During the day, the inflow rate increased steadily to approximately 600 cubic metres per hour (m3/hr), which is beyond the range that can be managed while sustaining work in the shaft. The mine has a total depth of 500 metres and the mine underground workings are at the 480-metre level.They got the water level down almost to the bottom of the mine, but at that point, the inflow rate was too high. The plan is to take some measurements while it fills up and they'll let it fill all the way up.
This information will be analyzed to determine next steps. After this is complete, the water will be allowed to return to the natural equilibrium level.They can pump out water at up to 1,000 cubic meters per hour for a limited time and fill up a storage pond, but they can only sustain 550.
Not only does this probably add delay to the mine timetable, but the continued problems only help to confirm the opinions some had about the mine.
Needless to say, I consider this to be good news. Note that no miners were harmed, and in fact they're probably earning lots of overtime.
I think a lot of it is throwing the baby out with the bathwater. I think the fear is a lack of development capital. Yellowcake backed out of one of the joint ventures and Fission lost a joint venture partner (Tribune Minerals) on the "North Shore Property" north of Athabasca. Based on the press release, this was pretty much a dry hole, so I'm not surprised the partner walked away from it. I wonder if people confuse this property with the one next door to Hathor's "rough rider" discovery. That will be a fairly important announcement when it happens.
My view is that at a very minimum, Sumitomo with Roca Honda provide a solid floor on the value of Strathmore (along with the near-term Wyoming projects). But there's a lot more going on aside from that.
Basically everything that Strathmore said would happen has been happening when it was going to happen. Existing mines are having trouble, miners seem to constantly be coming up short, equipment problems, the 400 speculative uranium companies are going to disappear, etc.
Strathmore is playing this for the long term and I see nothing that would change my mind from what I saw years ago.
Right now, the market disagrees.