The TapRooT Investigation Report examined events as far back as 1990, when the bulkhead doors for the mine were designed and installed, and considered both water pumping and water treatment capability and performance at the project at the time of the flooding. “Both basic and root causes of the inflow incident were identified, as well as corrective action recommendations to significantly lessen the chances of this type of incident occurring in the future, either at Cigar Lake or at any other Cameco mining operations.” The report identified nine causal factors for the flooding and makes recommendations for 21 corrective actions.

During a conference call to discuss the report, Cameco President and CEO Jerry Grandey said, “No single cause led to these events. There were a number of root causes identified and many contributing factors. I am disappointed to tell you, we made mistakes. Our performance did not meet expectations. It is not acceptable to me, and it certainly is not acceptable to our employees. As a result of these investigations, we have made and we continue to make changes in the way we operate Cigar Lake and other projects.

“The silver lining, if there is one, is that each of the factors identified can be addressed, and the deposit can be successfully developed,” said Grandey. We are committed to bringing Cigar Lake safely into production and intend to do this with enhanced attention to risk assessment and risk management.”

In its first-quarter report, Cameco said it had completed the 14 original drill holes planned for reinforcing and sealing off the water inflow area. Grout was being pumped through these holes. Additional holes will be drilled to dewater the mine. Subsequent phases will include ground freezing in the area of the inflow, restoration of underground areas, and resumption of mine development. Regulatory approval is required for each phase of the remediation plan.

Cameco expects to complete the work necessary to seal off the water inflow in the third quarter of 2007, assuming regulatory approvals are received in time to carry out the work, the current pace of placing concrete is maintained, and the concrete solidifies as planned to provide reinforcement and prevent or reduce water inflow sufficiently to enable mine dewatering. The effectiveness of the plug will not be known until dewatering is under way.

The Cigar Lake NI 43-101 report includes a new capital cost estimate for the project, updated mineral reserve and resource estimates, and a production forecast. Remaining capital cost to develop the project, as of January 1, 2007, is estimated at $542 million, not including $81.7 budgeted for flooding remediation costs in 2006 and 2007. Proven reserves now total 497,000 mt, grading 20.7% U3O8 and containing 226.3 million lb of U3O8. Production is forecast to average 15.1 million lb/y over a mine life of 14.8 years. Cameco is targeting a production start at Cigar Lake in 2010, ramping up to full production by 2012.

The Cigar Lake project is a joint venture owned by Cameco, 50%; AREVA Resources Canada, 37%: Idemitsu Canada Resources, 8%; and TEPCO Resources, 5%. Cameco is the operator.