The Cigar Lake mine, whose output provides the throughput at the McClean Lake mill from which the Group derives a toll revenue, faced operational disruption as a result of the COVID-19 pandemic.
The mine was placed on care and maintenance for a six-month period in 2020 and again from January to April of 2021. During this time, there was no throughput at the mill and as such no toll revenue accrued.
Operations at Cigar Lake and the McClean Lake mill resumed in April 2021 and monthly toll revenue has now returned to normal levels, averaging C$0.5m in H2 2021. Despite not receiving toll milling receipts during the periods that the mill was shut down, the interest on the Denison loan continued to accrue. The Group received $3.4m in capital and interest payments in 2021 (2020: $2.5m) on throughput of 12.5Mlbs (2020: 10.0Mlbs). Total interest earned under the loan in 2021 was $2.4m (2020: $2.3m).
As part of its supply discipline strategy, however, Cameco announced in mid-2022 that starting in 2024, it plans to operate Cigar Lake 25% below licensed capacity targeting 13.5Mlbs of production per year. The reduction in production volumes from Cigar Lake will impact volumes processed at the McClean Lake Mill, resulting in lower tolling revenues for the Group.