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    Cameco Falls on Concern New Flooding Will Delay Mine

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    Cameco Falls on Concern New Flooding Will Delay Mine

    Post by sang_garuda on Sun Aug 17, 2008 7:29 am

    Cameco Corp., the world's largest uranium producer, fell the most in 21 months in Toronto trading on speculation that company efforts to start production at the flooded Cigar Lake mine will be delayed further.

    Cameco plunged C$2.80, or 8.4 percent, to C$30.52 at 4:20 p.m. on the Toronto Stock Exchange. The decline was the greatest since Oct. 23, 2006, the day the mine originally flooded. The Saskatoon, Saskatchewan-based company's shares have fallen 23 percent this year.

    Chief Executive Officer Jerry Grandey said yesterday he expected renewed flooding this week at the mine would delay efforts to complete construction of the Saskatchewan mine, the world's richest untapped uranium deposit. The comments were made after Cameco said second-quarter profit fell 27 percent to C$150 million ($141.7 million) as output and sales of uranium declined.

    ``We expect that there will be an overhang on the stock until management provides more details on Cigar Lake, which is not expected until the end of September,'' TD Newcrest analyst Greg Barnes said today in a note to clients. Barnes said he doesn't expect the mine to open before mid-2013.

    Barnes, based in Toronto, is one of at least six analysts who have cut their share-price targets since Aug. 12, when Cameco reported the latest setback at Cigar Lake. The mine is expected to produce 18 million pounds of uranium a year at full capacity, or about 10 percent of global consumption, the company has said.

    Looking for Causes

    Cameco, which had expected to start the mine in 2011 at the earliest, said yesterday it will take time to understand the source of the latest flooding and how to fix it.

    ``No doubt this is going to delay things,'' Grandey said yesterday on a conference call with investors and analysts. ``We've got to understand where the inflow is coming and then, once we understand that, then we're going to develop a plan to deal with it.''

    Water inflows in the mine's No. 1 shaft were running at a steady 25 cubic meters to 30 cubic meters an hour before the Aug. 12 inflow, Grandey said. The hourly flow rate then increased to about 600 cubic meters an hour.

    ``I'm convinced this is a significant setback for the Cigar Lake project,'' Blackmont Capital Corp. mining analyst George Topping said today in a telephone interview from Toronto. Topping cut his price target to C$50 from C$55.

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    Re: Cameco Falls on Concern New Flooding Will Delay Mine

    Post by Prodip2007 on Sun Aug 17, 2008 10:06 am

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