Cigar Lake start up is currently (mid-2007) predicted to be sometime in 2011. When I first came across this property, startup was predicted sometime this year. The delay has affected stock prices. But it is the technical factors leading to the delay that most interest us. So here is a collation of some of my previous writings on this topic.

Cameco in their 2005 Annual Report predicted that Cigar Lake would be in operation by early 2007. But ever thus, the goddess of hubris deals with our illusions. I for one cannot help but sympathize with them and send out my empathy to the shaft sinkers and miners who are trying to deal with the flooded workings. This emotion is probably illogical; I acknowledge it is aroused by long-forgotten memories of hard men who on Saturday nights gathered with their families to drink in the lounge and the mine pub and talk grimly about the shaft sinking successes and failures of the week as we kids continued to be a nuisance and demanded more coke.

Let us have a look at the technicalities to see if we can probe deeper than news releases and stock speculations. The only reasonable technical paper I could locate anywhere on the web is by Barry W Schmitke. It is called Cigar Lake's Jet Boring Mining Method and was presented in 2004 to the World Nuclear Association Annual Symposium. To access the figures go to http://www.world-nuclear.org/sym/2004/schmitke.htm .

Here are some extracts:

  • The Cigar Lake orebody is situated 430 metres below surface at the nonconformity between metamorphic basement rocks and flat lying sandstone. Major technical factors influencing the mining method selection include ground stability, control of ground water [sic], radiation exposure and ore handling and storage.
  • Cigar Lake's jet boring mining method involves several major steps: artificial ground freezing of the orebody and surrounding rock; TBM (tunnel boring machine) type development of access crosscuts below the orebody; installation of cased pilot holes upwards through the ore; and ore extraction using a rotating high pressure water jet within the pilot holes.
  • The cap (i.e., the clay above the orebody) is succeeded upwards by a highly heterogeneous, highly permeable zone from 20 m to 50 m thick consisting of variable soft to moderately indurated sandy clay, unconsolidated sand, and variably altered sandstone.
  • The deposit and area are highly fractured. Post-mineralization fracturing is the dominant control of hydraulic conductivity and, where it transects the otherwise impervious claystone core of the deposit, fracturing acts as conduits for water, sand, and soft clay.
  • Two of the primary geotechnical challenges in constructing the test mine have been control of groundwater, and ground support in areas of weak rock.
  • The support of the weak rock associated with the orebody and the minimization of the potential for a large inrush of water while mining the ore was addressed through ground freezing.

The paper proceeds to describe a test mine program and concludes: "The overall test mine program and, in particular, the 2000 Industrial Jet Boring Test, were considered highly successful with all initial objective fulfilled and results meeting expectations."

In October 2006, we read many reports that all amounted to the same thing:

Cameco engineers and consultants are on site working on plans to restore underground access to the Cigar Lake project in response to a major flooding incident on Monday. International experts are assisting with reviewing options and developing a remediation plan. We anticipate that a phased plan will be in place within three months outlining a preferred option and several alternatives. Most of the alternatives under consideration involve drilling from the surface and isolating the source of the inflow from the underground workings by using grouting or freezing techniques and then pumping the water out of the mine.

A news release from February 7, 2007 says:

Cameco Corp. reported a sharp drop in fourth-quarter profits due to problems at the project at its Cigar Lake project and said Wednesday preliminary cost estimates will take longer than initially expected... The company took a Can$15 million write down related to Cigar Lake, which was flooded last April and again in October, as well as another $5 million in costs related to remediation activities at the project in the fourth quarter. Cameco said Wednesday two drill rigs on site working around the clock have drilled eight of the 14 drill holes planned for reinforcing and sealing off the flooded area. The company had hoped to provide preliminary cost estimates and timelines for the remediation in February, but said Wednesday a technical report on the project will not be finished until late March, when it hopes to have a better idea of when the mine will be able to be put into production.

I do not know which consultants or which companies are involved in the ongoing work at the mine. The following are simply extracts from documents you could find on the web as easily as I did:

  • Controlled ground freezing for mining and construction applications has been in use for over a century. Despite the great technological evolution which has occurred during this period, it still remains more of an art than a science.
  • The present ground freezing technology used worldwide by most ground freezing companies is based on quick freezing using circulating brine or, in some cases, liquid nitrogen. These methods are fast but very expensive and utilize large equipment with high electrical requirements
  • In any ground freezing scenario, the presence of flowing water can significantly delay or even prevent the development of ice due to heat addition by the moving water.
  • The uncertainty of the pre-evaluation of potential ground water inflow rates in underground mines results in difficulty in planning and costing the water-related activities of the mines
  • Water in-rushes sometimes cause stoppages to shaft sinking operations because the sidewalls must be sealed or stabilized. Pre-grouting can to a large extent preclude in-rushes.

The simple fact is that at the Cigar Lake mine there are highly permeable soils and rocks above the ore body. There is no way anybody can absolutely characterize the water flow pattern. It is inherently uncharacteristic. This does not mean the ore cannot be mined. People have applied the art of engineering for a long time to deal with conditions like those at the mine. For over 100 years the mines of the South African Witwatersrand have collectively pumped the groundwater out and lowered the regional water table. I grew up on stories of one mine flooding when the adjacent mine stopped pumping.

The difference here is that we have but one isolated Canadian mine pumping all alone in the glare of the investment community's spotlight. The key issue that is utterly unquantifiable is how much it will cost to do what can obviously be done. If it costs lots, they will succeed. If it cost more, share prices will tumble, but the mine will go into production. And if it cost too much, they will shut it down and leave the uranium to nature, and the shareholders will cry.

In a Society of Mining Engineers session in February 2007, a United States uranium miner spoke disdainfully of Cigar Lake. I try to quote him from memory: "They have the best deposit, but they have spent fifteen years trying to get at it. You must wonder if they can or ever will." Of course he is American, not Canadian.

In late March 2007 Cameco issued updates on progress at their Cigar Lake property. Here are the main points from that news releases:

  • Cameco plans to freeze more underground areas such as the access tunnels to the production level.
  • Cameco plans to increase dewatering capacity.
  • 13 of 14 drill holes for "reinforcing and sealing off the water flow area" are complete.
  • Cameco has applied to the regulators to drill an additional four, larger-diameter holes that will be used to dewater the mine. (Does this imply that none of the 13 holes drilled so far is to be used for dewatering; maybe these holes are indeed only for pumping concrete in. In this case, may we conclude that they have not yet gotten into full swing with concrete pumping and have not even got permission to start dewatering?)
  • More than 1,000 cubic meters of concrete have been poured through drill holes into the "reinforcement area" (I am not entirely clear what the reinforcement area is, unless it is the area where concrete is being pumped into tunnels to hold the roof up and/or the water out. No indication of how much more concrete is likely to be needed.)

The work just noted above seems to constitute phase 1. The following phases of work remain to be undertaken:

  • Dewater the underground development. Verify that the water inflow has been sufficiently sealed. Start installation of surface freezing infrastructure. This is all expected to be completed by the end of the third quarter 2007.
  • Complete any additional remedial work identified in Phase 2. This may, for example, include determining if additional reinforcement is required in higher risk areas. This is expected to be completed by the end of 2007.
  • Complete underground rehabilitation. This includes securing areas to prevent ground fall or water inflow, re-establishing mine ventilation, installing pumping capacity and re-establishing the ore freezing program. This is expected to be completed by the summer of 2008.
  • Resuming construction activities that will lead to scheduled completion of the mine targeted for 2010.

My empathy is with Messrs. Alain G. Mainville and Barry W. Schmitke who are the "qualified people" for the purposes of National Instrument 43-101 reporting. They are respectively a geologists and a professional engineer, both employed by Cameco. I wonder if the following statement is posted as a result of their professional status and instincts:

Cigar Lake is a challenging deposit to develop and mine. These challenges include control of groundwater, weak ground formations, and radiation protection. The sandstone overlying the basement rocks contains significant water at hydrostatic pressure. Freezing the ground is expected to result in several enhancements to the ground conditions, including: (1) minimizing the risk of water inflows from saturated rock above the unconformity; (2) reducing radiation exposure from radon dissolved in the ground water; and (3) increasing rock stability. However, freezing will only reduce, not eliminate, these challenges. There is also the possibility of a water inflow during the drilling of holes to freeze the ground. Therefore, the risk of water inflows at Cigar Lake remains. The consequences of another water inflow will depend upon the magnitude, location and timing of any such event, but could include a significant delay in Cigar Lake's remediation, development or production, a material increase in costs, a loss of mineral reserves or require Cameco to give notice to many of its customers that it is declaring an interruption in planned uranium supply. Such consequences could have a material adverse impact on Cameco. Water inflows are generally not insurable.

Cigar Lake's remediation and production schedules are based upon certain assumptions regarding the condition of the underground infrastructure at the mine. The condition of this underground infrastructure, however, will not be known until the mine is dewatered. If the underground infrastructure has been impaired, this could adversely impact our schedules and cost estimates. The outcome of each phase of remediation will impact the schedule of each subsequent phase of remediation and the planned commencement of production in 2010. For example, if the plug is not successful in securing the inflow area, then ground freezing, already incorporated in the remediation plan, will be utilized to secure the inflow area. If this situation occurs, there could be a delay in the remediation schedule and the commencement of production.

Remediation and production schedules will be impacted by regulatory approvals. We have not yet received regulatory approval to drill four drill holes for dewatering the mine during the first phase of the remediation plan. This approval is required to move forward with our planned dewatering strategy. Working with the regulatory authorities to receive approvals for additional corrective actions which may result from current inflow investigations may impact our remediation and production schedules.

In May 2007 Gerald Grandey, Cameco’s chief executive said that mistakes were made at the Cigar Lake mine. He said that Cameco “failed to fully appreciate the degree of risk of working in less than ideal conditions at the mine in northeastern Saskatchewan.”

He continued “`No single cause led to these events. There were a number of root causes. The systems were there, they just weren’t being adhered to and implemented.” That is a pretty damning indictment of management and the people doing the work. I cannot believe the engineers and geologists were to blame. I have read everything I can find they have written, and I am persuaded they knew the risks. Is it that they were not allowed to tell the truth in the rush for riches? Even the project managers must be exonerated if it is true the systems were in place. The report on the failure tells of valiant miners who were trying to do the right thing by their judgment. So who was not implementing procedures? I suspect this is a smoke-screen statement by upper management.

Let us take a more detailed look at the “root causes” of the failure. I quote what I was able to track down on the internet.

The independent report, released by Cameco, outlined a series of mishaps, errors and procedures—including a cumbersome bureaucratic decision-making process leading up to the flooding, which is expected to keep the mine out of commission until about 2010. The report said the problems started when, due to a lack of specific instructions in construction plans, the wrong kind of drill was used on Oct. 11, 2006. This resulted in an opening that was larger than outlined in the mine plan. The mine plan also called for support structures to prevent a groundfall to be constructed 72 hours after blasting, but the critical work wasn’t finished until six days later, on Oct. 17. Two days after that, rock movement was observed and a “large geological structure” was identified, requiring the installation of more support. The structure hadn’t been previously identified since the company had not done geological mapping of the area, the report said.

Although workers moved to build the extra supports, a supervisor noticed evidence of more ground movement over a larger area on Oct. 22 and decided to use concrete to fix the problem. The groundfall occurred shortly after. “The circumstances surrounding the three causal factors related to the fall of ground, while pointing to an unfortunate combination of design issues, insufficient assessment of the ongoing development, lack of quality control of the excavation and slow installation of ground support when taken together demonstrate that, fundamentally, Cameco Cigar Lake failed to fully appreciate the degree of risk of developing in less than ideal ground conditions … ”

After the groundfall, a gasket on a door became loose, creating a gap that allowed water to seep into the mine. Workers wanted to fill it with concrete right away to prevent flooding, but were overruled by the head of the command centre, which ordered more gasket material be inserted into the door instead. After several attempts to seal the door failed, the gasket loosened further. Later, debris got caught in the door, increasing the water flow rate. The door was forced open again in an attempt to remove the debris, but the water flow was by then so strong the door couldn’t be closed. Eventually, the area co-coordinator decided to evacuate the mine and 24 workers exited via a cage on a hoist, leaving the door open behind them.”

So it all boils down to a big drill hole, unexplored geology, a delay in installing supports, and the wrong decision re gaskets. I for one cannot accept that a drill hole size started this chain of events. And I cannot blame the decision regarding gaskets. Seems to me the failure was to define the geology. They all knew the geology was treacherous; they all knew groundwater inflow was possible; they all knew support was crucial. Where was the advance rock characterization? Too expensive? Overlooked by overconfident miners? Maybe we will find out if we are able to get our hands on the report. But have you noticed that even the report is not available on the web?

I have written elsewhere that people die in mining accidents when ten seemingly ordinary things go wrong in sequence. Luckily nobody died here, but seems to me this is another instance of ten seemingly innocent deviations lining up in such a way that the result is disaster. If just one of them had not been done or happened the flooding would not have occurred. But it is statistically possible for a coin to land on tails ten times in a row and you loose you shirt along with the Cigar Lake investors.

In July 2007 this news report appeared:

The head of the Canadian Nuclear Safety Commission (CNSC), Canada’s nuclear industry regulator, recently said her organization has lost faith in Cameco management, following flooding at the Cigar Lake mine. “One of the very serious results of this is a lack of confidence that now the CNSC, the Commission and the staff has in Cameco and in the leadership of Cameco,” CNSC president Linda Keen said at a public meeting with management on June 21 in Ottawa. During the meeting, Ms. Keen took issue with Mr. Grandey’s suggestion that there were a number of root causes for last October’s devastating flood at Cigar Lake, which was expected to account for more than 10 per cent of the world’s uranium production. “Mr. Grandey, with due respect, saying that there wasn’t one root cause, and I think there was a root cause. I think there was a root cause of leadership and I think it’s leadership that we all accept at the top of organizations for what happens in this”, she said.

Stand by.