Kintyre is an advanced-stage, joint venture exploration project with Mitsubishi Development Pty Ltd acquired in mid-2008 from Rio Tinto. Cameco owns 70% and is the operator. The project land is located 60 km south of Telfer and 260 km northeast of Newman at the western edge of the Great Sandy Desert in the East Pilbara region of Western Australia. A large resource definition drilling program was begun in September 2009.
This year we:
- completed the value engineering study
- completed registration of the Kintyre Mining Development Indigenous Land Use Agreement with the relevant government authority
- submitted an Environmental Review and Management Program
- carried out further exploration to test for potential satellite deposits at Kintyre and at other regional exploration projects close to Kintyre
In the second quarter of 2012, we completed a prefeasibility study, and found that given the measured and indicated mineral resource estimate of about 55 million pounds (100% basis) at an average grade of 0.58%, low uranium prices and continued cost escalation in Western Australia, the economics of the project were challenging. The study was based on an open pit mine with an estimated mine life of about seven years, estimated total production of about 40 million pounds of packaged uranium at an average production rate of about 6 million pounds per year. To break even, the prefeasibility study indicated the project would require higher uranium prices or greater total production.
Based on our review of the current market environment, we are continuing to advance the project through environmental approvals and continuing to explore for additional resources in order to maintain the ability to proceed with the project should market factors improve the economics. Kintyre remains an important asset in our portfolio. However, given current market conditions, we have decided not to proceed with the detailed feasibility study at this time.
During the fourth quarter of 2012, we recorded a $168 million write-down of the carrying value of our interest in Kintyre. Due to the recent weakening of the uranium market and the decision not to proceed to a feasibility study, we concluded it was appropriate to recognize an impairment charge for this asset.
For community-based information on Kintyre joint venture activities in Western Australia, visit: http://www.cameco.com/australia/kintyre/