Cameco profit sags; Cigar Lake delays seen

Thu Aug 14, 2008 3:05pm EDT
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By Cameron French

TORONTO (Reuters) - Cameco Corp posted a 27 percent drop in quarterly profit and trimmed its 2008 production outlook on Thursday, while the company's CEO said to expect delays in overhauling its Cigar Lake uranium project after additional flooding this week.

Speaking on a conference call, Chief Executive Jerry Grandey said the company would need some time to determine the full impact of the water inflow reported on Tuesday.

However, he acknowledged it would affect the company's overhaul of the mine, which has been under repair since it flooded while under construction in 2006. The mine is the richest undeveloped uranium deposit in the world, with the potential to supply 10 percent of global needs.

"No doubt this is going to delay things. We have to understand where the inflow is coming from and then, once we understand that, we're going to have to develop a plan to deal with it," Grandey said.

Cameco, the world's top uranium producer, had been in the process of pumping water out of the mine, but a surge of water flowing into the main shaft forced it to stop pumping and let the shaft fill up.

The mine had originally been expected to begin production in 2007, but the 2006 flood, coupled with other delays has forced the company to push its expectations back to 2011 at the earliest, and that was before the most recent setback.

The company will provide a further update next month.