Mineral Reserves & Resources

Our mineral reserves and resources are the foundation of our company and fundamental to our success.

We have interests in a number of uranium properties. The tables in this section show our estimates of the proven and probable reserves, measured and indicated resources and inferred resources at those properties. However, only three of the properties listed in those tables are material uranium properties for us: McArthur River and Inkai, which are being mined, and Cigar Lake, which is being developed.

We estimate and disclose mineral reserves and resources in five categories, using the definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum, and in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101), developed by the Canadian Securities Administrators. You can find out more about these categories at www.cim.org.

About mineral resources

Mineral resources do not have demonstrated economic viability, but have reasonable prospects for economic extraction. They fall into three categories: measured, indicated and inferred. Our reported mineral resources are exclusive of mineral reserves.

  • Measured and indicated mineral resources can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters to support evaluation of the economic viability of the deposit.
  • measured resources: we can confirm geological and grade continuity to support production planning.
  • indicated resources: we can reasonably assume geological and grade continuity to support mine planning.
  • inferred mineral resources are estimated using limited information. We do not have enough confidence to evaluate their economic viability in a meaningful way. You should not assume that all or any part of an inferred mineral resource will be upgraded to an indicated or measured mineral resource as a result of continued exploration.

Our share of uranium in the mineral resource tables below is based on our respective ownership interests, except for Inkai which is based on our interest in potential production (57.5%), which differs from our ownership interest (60%). Mineral resources that are not mineral reserves have no demonstrated economic viability.

About mineral reserves

Mineral reserves are the economically mineable part of measured and indicated mineral resources demonstrated by at least a preliminary feasibility study. They fall into two categories:

  • proven reserves: the economically mineable part of a measured resource for which a preliminary feasibility study demonstrates that economic extraction is justified
  • probable reserves: the economically mineable part of a measured and/or indicated resource for which a preliminary feasibility study demonstrates that economic extraction is justified

We use current geological models, an average uranium price of $61 (US) per pound U3O8, and current or projected operating costs and mine plans to estimate our mineral reserves, allowing for dilution and mining losses. We apply our standard data verification process for every estimate.

The price assumption is based on independent industry and analyst estimates of spot prices and the corresponding long-term prices and reflects our committed and uncommitted sales volumes. For committed sales volumes, the spot and term price assumptions were applied in accordance with the terms of the agreements. For uncommitted sales volumes the same price assumptions were applied using a spot-to-term price ratio of 60:40.

We report mineral reserves as the quantity of contained ore supporting our mining plans, and include an estimate of the metallurgical recovery for each uranium property. The estimate of the amount of valuable product that can be physically recovered by the metallurgical extraction process is obtained by multiplying the quantity of contained metal by the planned metallurgical recovery percentage. Our share of uranium in the mineral reserves table below is before accounting for estimated metallurgical recovery and is based on our respective ownership interests, except for Inkai which is based on our interest in planned production (57.5%) assuming an annual production rate of 5.2 million pounds, which differs from our ownership interest (60%).

Changes this year

Our share of proven and probable mineral reserves went from 435 million pounds U3O8 at the end of 2011 to 465 million pounds at the end of 2012. The change in reserves was mostly the result of:

  • the mining and milling activities, which removed 22.9 million pounds from our mineral inventory
  • the conversion of mineral resources to probable mineral reserves from an updated resource model and mine plan at McArthur River
  • our decision to report our Inkai mineral reserves based on our interest in planned production (57.5%) rather than as previously reported based on our ownership interest (60%), which resulted in a decrease in our share of mineral reserves of 2.7 million pounds. This is in addition to the decrease due to the 2012 production.
  • the addition to mineral reserves at Smith Ranch-Highland from production drilling and production results

Measured and indicated mineral resources decreased from 254 million pounds U3O8 at the end of 2011 to 244 million pounds at the end of 2012. Our share of inferred mineral resources was 287 million pounds U3O8.

The variance in resources was mostly the result of:

  • the conversion of mineral resources to probable mineral reserves at McArthur River
  • a share ownership increase and additional surface drilling results at Millennium
  • a decrease of inferred mineral resources at Cigar Lake Phase 2 from additional surface drilling indicating a narrower width of the mineralization
  • our decision to report our Inkai mineral resources based on our interest in potential production (57.5%) rather than as previously reported based on our ownership interest (60%), which resulted in a decrease in our share of mineral resources of 7.3 million pounds
  • an updated mineral resource estimate following additional surface drilling at the Phoenix deposit
  • the underground drilling results at Rabbit Lake

Qualified persons

The technical and scientific information discussed in this MD&A, including mineral reserve and resource estimates, for our material properties (McArthur River/Key Lake, Inkai and Cigar Lake) were approved by the following individuals who are qualified persons for the purposes of NI 43-101:

McArthur River/Key Lake

  • Alain G. Mainville, director, mineral resources management, Cameco
  • David Bronkhorst, vice-president, Saskatchewan mining south, Cameco
  • Greg Murdock, technical superintendent, McArthur River, Cameco
  • Les Yesnik, general manager, Key Lake, Cameco

Cigar Lake

  • Alain G. Mainville, director, mineral resources management, Cameco
  • Eric Paulsen, chief metallurgist, technology & innovation, Cameco
  • Grant Goddard, vice-president, Saskatchewan mining north, Cameco
  • Scott Bishop, principal mine engineer, technology & innovation, Cameco

Inkai

  • Alain G. Mainville, director, mineral resources management, Cameco
  • Dave Neuburger, vice-president, international mining, Cameco
  • Lawrence Reimann, manager, technical services, Cameco Resources

Important information about mineral reserve and resource estimates

Although we have carefully prepared and verified the mineral reserve and resource figures in this document, the figures are estimates, based in part on forward-looking information.

Estimates are based on our knowledge, mining experience, analysis of drilling results, the quality of available data and management’s best judgment. They are, however, imprecise by nature, may change over time, and include many variables and assumptions, including:

  • geological interpretation
  • extraction plans
  • commodity prices and currency exchange rates
  • recovery rates
  • operating and capital costs

There is no assurance that the indicated levels of uranium will be produced, and we may have to re-estimate our mineral reserves based on actual production experience. Changes in the price of uranium, production costs or recovery rates could make it unprofitable for us to operate or develop a particular site or sites for a period of time. See here for information about forward-looking information.

Please see our mineral reserves and resources section of our annual information form for the specific assumptions, parameters and methods used for McArthur River, Inkai and Cigar Lake mineral reserve and resource estimates.

Important information for US investors

While the terms measured, indicated and inferred mineral resources are recognized and required by Canadian securities regulatory authorities, the US Securities and Exchange Commission (SEC) does not recognize them. Under US standards, mineralization may not be classified as a ‘reserve’ unless it has been determined at the time of reporting that the mineralization could be economically and legally produced or extracted. US investors should not assume that:

  • any or all of a measured or indicated mineral resource will ever be converted into proven or probable mineral reserves
  • any or all of an inferred mineral resource exists or is economically or legally mineable, or will ever be upgraded to a higher category. Under Canadian securities regulations, estimates of inferred resources may not form the basis of feasibility or prefeasibility studies. Inferred resources have a great amount of uncertainty as to their existence and economic and legal feasibility.

The requirements of Canadian securities regulators for identification of ‘reserves’ are also not the same as those of the SEC, and mineral reserves reported by us in accordance with Canadian requirements may not qualify as reserves under SEC standards.

Other information concerning descriptions of mineralization, mineral reserves and resources may not be comparable to information made public by companies that comply with the SEC’s reporting and disclosure requirements for US domestic mining companies, including Industry Guide 7.