McArthur River & Key Lake
McArthur River is the world’s largest, high-grade uranium mine, and Key Lake is the largest uranium mill in the world.
Ore grades at the McArthur River mine are 100 times the world average, which means it can produce more than 18 million pounds per year by mining only 150 to 200 tonnes of ore per day. We are the operator.
McArthur River is one of our three material uranium properties.
| Location | Saskatchewan, Canada | |
| Ownership |
69.805% — McArthur River 83.33% — Key Lake |
|
| End product | Uranium concentrates | |
| ISO certification | ISO 14001 certified | |
| Mine type | Underground | |
| Estimated reserves (our share) | 264.5 million pounds (proven and probable), average grade U3O8: 16.36% | |
| Estimated resources (our share) |
8.5 million pounds (measured and indicated), average grade U3O8: 5.65% 39.5 million pounds (inferred), average grade U3O8: 7.78% |
|
| Mining methods |
Currently: raiseboring Secondary (under development): blasthole stoping, Boxhole boring |
|
| Licensed capacity | Mine and mill: 18.7 million pounds per year (can be exceeded — see Production flexibility) |
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| Total production: (100% basis) |
2000 to 2012 | 230.5 million pounds (McArthur River/Key Lake) |
| 1983 to 2002 | 209.8 million pounds (Key Lake) | |
| 2012 production (our share) | 13.6 million pounds | |
| 2013 forecast production (our share) | 13.2 million pounds | |
| Estimated decommissioning cost (100% basis) |
$48 million — McArthur River (pending regulatory review) $225 million — Key Lake (pending regulatory review) |
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Background
Production flexibility
Our operating licences for the Key Lake mill and McArthur River mine were amended in 2009 and 2010, giving us flexibility in our annual licensed production limit. As long as average annual production does not exceed 18.7 million pounds per year, these amendments allow:
- the Key Lake mill to produce up to 20.4 million pounds (100% basis) per year
- the McArthur River mine to produce up to 21 million pounds (100% basis) per year
If production is lower than 18.7 million pounds in any year, we can produce more in future years until we recover the shortfall.
Mining methods and techniques
We use a number of innovative methods to mine the McArthur River deposit:
Ground freezing
The sandstone that overlays the deposit and basement rocks is water-bearing, with large volumes of water under significant pressure. We use ground freezing to form an impermeable wall around the area being mined. This prevents water from entering the mine, and helps stabilize weak rock formations. To date, we have installed five freezewalls and are currently preparing a sixth.
Raisebore mining
Raisebore mining is an innovative non-entry approach that we adapted to meet the unique challenges at McArthur River. It involves:
- drilling a series of overlapping holes through the ore zone from a raisebore chamber in waste rock above the mineralization
- collecting the broken ore at the bottom of the raises using line-of-sight remote-controlled scoop trams, and transporting it to a grinding circuit
- once mining is complete, filling each raisebore hole with concrete
- when all the rows of raises in a chamber are complete, removing the equipment and filling the entire chamber with concrete
- starting the process again with the next raisebore chamber
We have used the raisebore mining method to successfully extract about 230 million pounds (100% basis) since we began mining in 1999.
McArthur River currently has six areas with delineated mineral reserves (zones 1 to 4, zone 4 south and zone B) and eight areas with delineated mineral resources. We are currently mining zone 2 and the lower area of zone 4.
Zone 2 has been actively mined since production began. It is divided into four panels (panels 1, 2, 3 and 5) based on the configuration of the freezewall around the ore. As the freezewall is expanded, the inner connecting freezewalls are decommissioned in order to recover the uranium that was inaccessible around the active freeze pipes. Panel 5 represents the upper portion of zone 2, overlying part of the other panels. Mining is nearing completion in panels 1, 2 and 3, and the majority of the remaining zone 2 proven mineral reserves are in panel 5.
Zone 4 is divided into three mining areas: central, north and south. We are actively mining the central area. A new mining area is also under development – zone 4 north – and is forecasted to be in production in 2014. Raisebore mining is scheduled to remain the primary extraction method over the life of mine. We are testing two other mining methods, blasthole stoping and boxhole boring. Upon successful completion of the test programs in 2013, an application will be made to the CNSC to approve these mining methods as secondary extraction methods for McArthur River.
Boxhole boring
Boxhole boring is similar to the raisebore method, but the drilling machine is located below the mineralization, so development is not required above the mineralization. This method is currently being used at a few mines around the world, but had not been used for uranium mining prior to testing at McArthur River.
We expect boxhole boring will only be used as a secondary method, in areas where we determine raiseboring is not feasible or practical. Test mining to date has identified this as a viable mining option; however, only a minor amount of ore is scheduled to be extracted using this method.
Blasthole stoping
Blasthole stoping involves establishing drill access above the mineralization and extraction access below the mineralization. The area between the upper and lower access levels (the stope) is then drilled off and blasted. The broken rock is collected on the lower level and removed by line-of-sight remote-controlled scoop trams, then transported to a grinding circuit. Once a stope is mined out, it is backfilled with concrete to maintain ground stability and allow the next stope in sequence to be mined. This mining method has been used extensively in the mining industry, including uranium mining.
Blasthole stoping is planned in areas where blast holes can be accurately drilled and small stable stopes excavated without jeopardizing the freezewall integrity. We expect this method to complement the raiseboring method and to allow for more economic recovery of ore on the periphery of the orebody, as well as smaller, lower grade areas.
2012 Update
Production
Our share of production in 2012 was 1% higher than our forecast for the year and 2% lower than total production in 2011.
At McArthur River and Key Lake we realized benefits under the production flexibility amendments to the McArthur River and Key Lake operating licences (see Production flexibility) for the fourth consecutive year. Ongoing efforts to improve the efficiency and reliability of the Key Lake mill resulted in record mill performance. We have mitigated the risk to production in 2013 associated with the transition to the upper mining area of zone 4. We have made productivity improvements on cycle times, which include the use of blasthole stoping in smaller, lower grade areas of the mine located away from the freezewalls. In addition, we have changed the sequencing of the raises in zone 2, panel 5, which will improve productivity.
New mining areas
We continued drilling to install the freezewall in the upper mining area of zone 4 north. We expect to finish installing brine circulation lines and start freezing upper zone 4 north in 2013, and begin production from this area in 2014.
In addition to the underground work, we have started to upgrade our electrical infrastructure on surface to address the future need for increased ventilation and freeze capacity associated with mining new zones and increasing mine production.
McArthur River production expansion
In 2012, we completed the feasibility study on the McArthur River extension project, and based on the positive results, revised our mine plan to incorporate a mine expansion. This includes an increase in our annual production rate to 22 million pounds U3O8 (100% basis) by 2018, subject to receipt of regulatory approval.
We were notified by the CNSC that the environmental assessment for the planned increase in production would be transitioned to the CNSC licensing and compliance processes rather than the federal environmental assessment process. We are developing plans to complete this regulatory process.
In addition, we must continue to successfully transition into new mine areas through mine development and investment in support infrastructure. As part of this multi-year project, we plan to:
- expand the freeze plant and electrical distribution systems
- increase ventilation by sinking a fourth shaft at the northern end of the mine
- improve our dewatering system and expand our water treatment capacity
McArthur River technical report
In 2012, we updated the McArthur River technical report. Highlights included:
- a 19% increase in our share of the mineral reserves due to a 22% addition in tonnage and a slight decrease in the estimated average grade. For more information, see Mineral reserves and resources.
- a decrease in the estimated average cash operating cost to about $19.23 per pound over the life of the mine from about $19.69 per pound estimated in 2009, despite the escalating costs in the industry
- a production rate increase to 22 million pounds per year scheduled for 2018, subject to regulatory approval
- a mine life of at least 22 years, based on the planned production schedule
Key Lake extension project and mill revitalization
The Key Lake mill began operating in 1983. Mill production at Key Lake is expected to closely follow McArthur River production, subject to receipt of regulatory approval. As part of our Key Lake extension environmental assessment, we are seeking approval to increase Key Lake’s nominal annual production rate to 25 million pounds U3O8 and to increase our tailings capacity.
The mill revitalization plan includes upgrading circuits with new technology to simplify operations and improve environmental performance. As part of this plan, we replaced the acid, steam and oxygen plants.
Tailings capacity
This year we:
- advanced the environmental assessment for the Key Lake extension project by submitting the draft environmental impact statement to the regulators, receiving their comments and providing responses
- began flattening the slope of the Deilmann tailings management facility pitwalls, relocating about 80% of the sand
Exploration
In 2012, our surface exploration programs drill tested targets north and south of the current mining areas.
Planning For the Future
Production
Forecast: 18.7 million pounds of U3O8 per year until 2017 (our share will be 13.1 million pounds), with a planned production increase in 2018.
New mining zones
Zone 4 north is the next area to be mined. It is currently under development and we forecast production to begin in 2014. We expect to start freezing the lower mining area of zone 4 north in 2013.
We expect to use raisebore mining in this area, applying the ground freezing experience we gained in zone 2, panel 5. This should significantly improve production efficiencies compared to boxhole boring.
In 2013, we also expect to complete the expansion of the existing freeze plant to support our production plans at McArthur River.
Mill revitalization
In 2013, we expect to:
- complete installation and commissioning of a new electrical substation
- complete the structural steel work and equipment installation for a new calciner, to be commissioned in 2014
Tailings capacity
In 2013, we expect to:
- complete flattening of the Deilmann tailings management facility pitwalls and begin constructing a buttress to prevent sand sloughing when the water level is raised
- advance the environmental assessment for the Key Lake extension project, by submitting the final environmental impact statement for review by the provincial and federal regulators and pursue the required regulatory approvals
See Key Lake tailings capacity risk for additional information.
Licensing
We will be applying for a renewal of our McArthur River and Key Lake operating licences in 2013. The Canadian Nuclear Safety Commission has scheduled a one-day hearing in the third quarter as part of the application process.
Exploration
In 2013, we plan to continue advancing the underground exploration drifts to the southwest and northeast directions. Additional drilling is planned underground to delineate zone A, and from surface to identify additional mineral resources in the deposit.
Managing Our Risks
Production at McArthur River/Key Lake poses many challenges: control of groundwater, weak rock formations, radiation protection, water inflow, mine area transitioning, regulatory approvals and tailings capacity. Operational experience gained since the start of production has resulted in a significant reduction in risk.
Water inflow risk
The greatest risk is production interruption from water inflows. A 2003 water inflow resulted in a three-month suspension of production. We also had a small water inflow in 2008 that did not impact production.
The consequences of another water inflow at McArthur River would depend on its magnitude, location and timing, but could include a significant interruption or reduction in production, a material increase in costs or a loss of mineral reserves.
We take the following steps to reduce the risk of inflows, but there is no guarantee that these will be successful:
- Ground freezing: Before mining, we drill freezeholes and freeze the ground to form an impermeable freezewall around the area being mined. Ground freezing reduces but does not eliminate the risk of water inflows.
- Mine development: We plan for our mine development to take place away from known groundwater sources whenever possible. In addition, we assess all planned mine development for relative risk, and apply extensive additional technical and operating controls for all higher risk development.
- Pumping capacity and treatment limits: Our standard for this project is to secure pumping capacity of at least one and a half times the estimated maximum sustained inflow. We review our dewatering system and requirements at least once a year and before beginning work on any new zone.
We believe we have sufficient pumping, water treatment and surface storage capacity to handle the estimated maximum sustained inflow.
Transition to new mining areas
In order to successfully achieve the planned production schedule, we must continue to successfully transition into new mining areas, which includes mine development and investment in critical support infrastructure.
The zone 4 north transition planned in late 2014 carries a slightly higher transition risk than other mining area transitions due to the site’s limited flexibility to offset a shortfall in production due to schedule delays.
Labour relations
The current collective agreement with unionized employees at the McArthur River and Key Lake operations expires on December 31, 2013. There is risk to production in 2014 if we are unable to reach an agreement and employees go on strike.
Key Lake tailings capacity risk
Tailings from processing McArthur River ore are deposited in the Deilmann tailings management facility. At current production rates, the facility will reach licensed capacity by 2018. A significant delay in obtaining or a failure to receive, the necessary regulatory approval for the expansion of the facility could interrupt or prevent the operation of McArthur River and Key Lake as planned.
In the past, sloughing of material from the pitwalls has resulted in loss of capacity. Technical studies show that stabilizing and reducing water levels in the pit enhances the stability of the pitwalls and reduces the risk of sloughing. In 2009, regulators approved our plan for the long-term stabilization of the Deilmann tailings management facility pitwalls. We are implementing the plan, and expect it will be complete in 2014. We are proceeding with the environmental assessment to support an application for regulatory approval to deposit tailings to a much higher level. This would provide enough tailings capacity to mill all the known McArthur River mineral reserves and resources, should they be converted to reserves, with additional capacity to toll mill ore from other regional deposits.
We also manage the risks listed here.