Cameco Corp. said its Cigar Lake underground uranium project in northern Saskatchewan is expected to flood completely after a rockfall yesterday.

Cameco said the fall occurred Sunday afternoon in an underground area that had been dry and a "significant" amount of water started flowing in.

Cameco three-month trading

The company attempted to close two bulkhead doors Sunday evening to contain the flow and keep the rest of the area dry, but one door failed to shut completely.

Despite the flooding, the company said it is "committed to develop plans to remediate the project and preserve this valuable asset."

The mine had been on track for an early 2008 startup, but Cameco said Monday it will now have to develop new timelines for construction, cost estimates and production forecasts.

Following a trading halt for the news, investors sent Cameco shares down $4, or more than nine per cent, to a close of $38.95 on the TSX.

Other uranium producers got a big bounce from the Cameco news, on expectations that uranium prices will rise as the Cigar Lake supply stays off the market.

Denison Mines shares rose 80 cents to $18.75; UEX Corp. advanced 37 cents to $4.22; SXR Uranium Ore Inc. surged $1.41 to $10.15; and International Uranium Corp. rose 34 cents to $6.68.

It's the second such incident at the mine this year. In the spring, water flooded a shaft at Cigar Lake and delayed the project by six months.

Cigar Lake is believed to be the biggest undeveloped high-grade uranium deposit in the world, with proven and probable reserves of 232 million pounds of uranium oxide. 

Cameco said its estimate of Cigar Lake's uranium reserves is not expected to be affected.

Cameco is the operator and majority owner of the Cigar Lake project, 660 kilometres north of Saskatoon.