“History never repeats itself, but it does often rhyme.”

17 years ago, the massive Cigar Lake Uranium mine in northern Saskatchewan, Canada was shut down due to a catastrophic flooding event. 

From that October 2006 event, the price of Uranium soared to a high of around $136 per pound or uranium in mid-2007.  

The event led to what is now regarded as a massive, historical uranium price bull.

At the time, the supply issues were also marked by a world considering nuclear energy as a clean, green pathway to prevent global warming. 

However, the big bull ended with the 2008 financial crisis, and later the 2011 Fukushima disaster – sending uranium into a long-term bear market.

Cigar Lake ’23

Fast forward to 2023, with nuclear energy in a new renaissance and uranium supply concerns growing, investors awoke to the news Monday that again, Cigar Lake could be the centre of a new uranium bull run for the history books.

Sunday afternoon in Canada, Cameco, the majority owner of Cigar Lake, announced to the market that it would have to lower production guidance significantly.

In a statement to the market, Cameco said production from Cigar Lake would drop off, from 18 million to 16.3 million pounds of uranium concentrate (U3O8).

Production at the nearby McArthur River Uranium Mine would also fall by 1 million pounds.

The news means the uranium market is short some 2.7 million pounds this year amid a tightening marketplace and a general positive macro environment for the critical mineral to power growing nuclear industries globally.

Cameco explained that skilled worker shortages, infrastructure costs and resourcing, and supply chain challenges were all to blame. Equipment and efficiency issues on a new zone of mining in the orebody at Cigar Lake were also a major factor.

The company said it would still meet customer demands through a range of tactics – buying uranium on the market to honour existing contracts.

Cameco said they would be “increasing our market purchases, pulling forward long-term purchases, using inventory or borrowing product,” Cameco said.

The news may explain the surge in the uranium spot price last week, with the market drifting above $60 a pound.

The news came just days before a major World Nuclear Symposium in London, an event that draws the biggest names in the industry. 

Market Reaction

The Sunday announcement was made ahead of a Monday holiday in Canada and the US.

However, major ASX-listed uranium miners opened higher, with Paladin (ASX: PDN up 3.4%), Boss Energy (ASX: BOE up 3.3%) and Deep Yellow (ASX: DYL up 3.8%) all up in morning trade Monday September 4th after the announcement.

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