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Community Updates

McClean Lake and Cluff Lake Projects

November 27, 2006

McClean Lake

Work is progressing on the expansion of the JEB mill to receive and process Cigar Lake ore to produce up to 12 million pounds U₃O₈ annually. Sue E open pit mining is progressing and some ore has already been removed and stockpiled by the mill. The mill is now processing stockpiled ore from the Sue E, Sue C and Sue A mines.

Test mining of the ore the mining equipment development (MED) program began in late October on a small orebody near the entrance gate to the McClean Lake site. The program is testing a method of mining from the surface by drilling holes down to the ore body, casing the holes and using jet boring under high pressure water to cut the ore loose and break it up so that it can be pumped to the surface. While there have been various equipment problems, some ore at 7% grade has been removed, showing that this form of mining can work. Jet boring mining from the surface allows small, high-grade deposits to be mined without the high costs of underground mining or the land disturbance from open pits.

McClean Lake has not had a spill since the last Community Update. The concentrations of elements contained in the water discharges during September were well below the limits set by the regulatory agencies.

Cluff Lake

Cluff Lake's 2-year decommissioning program that began in August 2004 is almost complete. The Cluff Lake site offices are now located at the camp. The mill was completely demolished and the area covered with soil. Cluff Lake is no longer running a treatment plant or discharging effluent. The site has not had a spill since the last Community Update.

Human Resources

Northern Scholarships 2006-2007

AREVA Resources believes in the power of education. Every year, we award scholarships to northerners to assist them in achieving their goals through education. We also manage funding provided by a former contractor company. We congratulate our scholarship winners for the 2006/2007 education year. The recipients are listed below.

Scholarship Recipients
2006-2007 AREVA Resources Canada Inc.

University

Institute

2006-2007 Jacobs Catalytic Corp. Awards

University

Institute

Cigar Lake Water Inflow Impact on AREVA Resources

The Cigar Lake flooding situation has major implications for AREVA Resources in part because our 37% interest in the project is impacted by the expected higher costs and the as yet unknown length of delay to project production. Cigar Lake is also planned to be the major source of ore for McClean Lake providing a stable supply of high grade uranium over the next several decades that would be supplemented by projects such as Midwest, Caribou and other developments that would also supply ore to the JEB mill.

Cigar Lake is the second largest high-grade uranium deposit in the world and it will be developed. We are working with Cameco engineers and consultants on plans to restore underground access to the mine. Remediation plan options are being developed and reviewed. A comprehensive remediation plan with revised capital cost estimates and timelines will be available in February 2007. Currently, Cameco is proceeding with the most conventional option to restore the underground workings in phases. The first phase includes surface drilling using oil field rigs and grouting to seal the inflow. Drilling is now under way. This phase will take at least 60 days.

There is no impact on the McClean Lake Operation in 2007 as no ore was expected from Cigar Lake to feed the JEB mill. Sue E mining will be completed by the end of 2007, and will provide ore for 2008 and 2009. Other sources such as the MED, and expansion of Sue E or the development of the Caribou deposit on the McClean site could complement this production and extend it into 2010 and after, pending regulatory approvals. Without the addition of Cigar Lake ore in 2008, the McClean Lake’s production will be lower than planned.

A positive impact of the Cigar Lake situation is the increased uranium spot price, which hit a new record of $64 U.S. since there is “not much breathing room in the system.”