Transportation

As part of our review of the McArthur River ore slurry processing at McClean Lake project we considered various options to bring the ore slurry from McArthur River to McClean Lake. The simple option would be to truck the ore slurry between McArthur River and McClean Lake directly. While the portion of road between Cigar Lake and McClean Lake is in place, unfortunately the portion of road between McArthur River and Cigar Lake does not exist yet. This section of road is now undergoing the regulatory process as a project description has been submitted by the Province of Saskatchewan’s department of highways; however we are not sure of the timeline for its approval and the actual construction of the road. Under these circumstances, we considered using a pipeline between McArthur River and Cigar Lake but abandoned the idea for many reasons as described in the paragraphs below. We opted to truck the ore slurry south on the existing provincial highway system and then back north via Air Ronge/La Ronge as described in our submission to the regulators.

Some of the reasons we did not pursue the pipeline option between McArthur River and Cigar Lake include the following:

• A pipeline bearing uranium solutions would have to be placed above ground such that regular visual inspections can be made to ensure there are not breaches of containment. To actually lay down a pipeline new construction would be required, which would be crossing water bodies including some with fish habitat, wild life habitats, fishing, trapping and hunting areas, we would need to perform an environmental assessment. This environmental assessment would include the following provincial and federal regulatory authorities: Saskatchewan Ministry of Environment, the Federal Department of Fisheries and Oceans and The Canadian Nuclear Safety Commission (CNSC) since the pipeline would be built to transfer a radioactive substance. This would be a long process requiring substantial environmental studies. The environmental assessment process to build the road section between McArthur River and Cigar Lake has already been started. The difference between the environmental assessment process to build a pipeline and to build a road section is that for the road section it does not involve the CNSC, therefore potentially narrowing some of the scope of the assessment. The window of opportunity to mill the ore slurry from McArthur River at McClean Lake is only about 3 years – basically for the restart of the McClean Lake mill (which was shutdown this summer) hopefully in 2012 and continuing through the ramp-up of production at Cigar Lake until 2014/2015. Given this narrow timeframe, we do not foresee that the regulatory process to approve and build this road between McArthur River and Cigar Lake will be completed by the time we actually need the road. We arrived at the same conclusion when we considered a potential pipeline option.




• The nature of the material we are proposing to haul also contributed to our decision not to look any further into a potential pipeline. The McArthur River ore slurry is about 40% to 50% solids of dense material. Uranium is one of the heaviest metals there is. The heavy and thick nature of the ore slurry allows it to have a lesser spread in case of a spill on the ground but makes it very difficult to pump over long distances. In order to be able to use a pipeline on such a long distance the solids ratio in the ore slurry would have to be diluted down to about 25% to 30% solids through the addition of water. By doing this we would potentially increase the volume and “spreadability” of the ore slurry compared to that loaded into the specifically design containers we are proposing for the road haul. Given the distance and the density of the material, even with dilution, numerous pumping stations with power-lines and maintenance access roads would have to be installed to keep moving the product through the pipeline without sanding out. Even if knowing all of this we proceeded with the environmental assessment to build the pipeline between McArthur River and Cigar Lake once the slurry would be at Cigar Lake it would need to be trucked to McClean Lake on the existing road. To truck this diluted ore slurry we would then need to have many more trucks than what we actually need to transport the higher solids slurry as we currently propose it. The increased truck traffic would generate increased costs, environmental and road maintenance impacts that would also have to be considered.

In conclusion, based on our review of the challenges and draw-backs of the pipeline option and the regulatory approval process, as well as the type of product we are transporting, we opted to use the ore haul such as we proposed it in our project description submitted to the regulators.