The McArthur River Operation is a material property for Cameco Corporation (Cameco) under Canadian securities laws. Production at the operation has been suspended for an indeterminate duration. This technical report has been prepared for Cameco by, or under the supervision of, internal QPs in support of disclosure of new scientific and technical information relating to the McArthur River Operation, including Cameco’s new mineral resource and mineral reserve estimates. This information is included in Cameco’s annual management’s discussion and analysis for the year ended December 31, 2018, Cameco’s annual information form and 40-F for the year ended December 31, 2018, and Cameco’s press release dated March 29, 2019. All monetary references in this technical report are expressed in Canadian dollars, unless otherwise indicated.
The McArthur River and the Key Lake Operations have been in care and maintenance since February 2018. In November 2017, Cameco and its joint venture partner Orano Canada Inc. (Orano) announced production from these operations would be temporarily suspended by the end of January 2018 for an expected duration of 10 months. In July 2018, the partners announced that the production suspension would continue for an indeterminate duration due to continued weakness in the uranium market. The production suspension resulted in the permanent layoff of approximately 520 employees. A reduced workforce of approximately 175 Cameco employees remain employed at the operations to keep the facilities in a state of safe care and maintenance. All development and construction for new mining zones were halted. A
ll underground definition drilling was halted. As a result of the suspension, Cameco does not expect the operations to produce any uranium in 2019. Cameco does not plan to restart McArthur River and Key Lake until it can commit its tier-one pounds under long-term contracts that can provide an acceptable rate of return on these assets for its owners. In November of 2012, Cameco prepared and filed a technical report for the McArthur River Operation based on scientific and technical information available at that time (2012 Technical Report). Since the 2012 Technical Report, there have been further advancements and changes in the McArthur River Operation. This technical report is based on the scientific and technical information as of December 31, 2018. Key highlights include:
- Cameco has updated the mineral reserve and mineral resource estimates. Cameco’s share of the
mineral reserves increased from 250.7 million pounds U3O8 as of December 31, 2017 to 273.6 million
pounds U3O8 as of December 31, 2018. The changes to the mineral reserve estimates are primarily due
to the addition of 23.8 million pounds U3O8 of proven and probable reserves (Cameco’s share) from
Zone B following the incorporation of new drilling results. - The McArthur River production schedule has been modified to incorporate the additional mineral
reserves and to maintain a production rate of 18.0 million pounds U3O8 per year upon a production
restart. Based on the current assumed production schedule, Cameco estimates that McArthur River will
have a mine life of 23 years. See Section 16.6 for more details. - Cameco’s share of the total estimated life of mine capital costs for the McArthur River and Key Lake
Operations is $658 million compared to $2.5 billion in the 2012 Technical Report. The reduction in
capital expenditures is due to mine design optimization, completed capital spend between 2012 and
2018 and a reduced annual mining rate of 18 million pounds which reduces infrastructure requirements.
See Sections 18, 21.1 and Table 21-1 for more details. - Operating costs for the MRJV are estimated to average $14.97 per pound U3O8 over the mine life. This
is a significant decrease from the estimate of $19.23 per pound U3O8 in the 2012 Technical Report.
reduction in operating costs is indicative of the work to optimize the mine design and gain efficiencies in
the mining and milling processes at an assumed annual production output level of 18 million pounds of
U3O8. Blasthole stope mining has significantly improved McArthur River’s overall operating costs by
reducing underground development, concrete consumption, mineralized waste generation, and
improving extraction cycle time. See Section 21.2 and Table 21-2 for more details. - Cameco’s share of cash operating and capital costs to maintain both operations during the production
suspension shutdown is expected to range between $6 million and $7 million per month.
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