Cameco Corporation, Canada's top uranium producer reported lower than expected quarterly earnings and cut its annual production forecast for nuclear fuel, sending its shares tumbling.

With hiccups at both its Smith Ranch Highland mine in Wyoming and the Inkai mine in Kazahkstan, Cameco expects to produce 21.7 million pounds of uranium compared with an earlier forecast of 21.9 million pounds.

The Saskatoon, Saskatchewan based company also cut 6% from its full year forecast for UF6, a compound used to make enriched uranium citing unfavorable market conditions.

Mr Edward Sterck analyst of BMO Capital Market said that "There seems to be an excess of conversion available at the moment to the market, but how long that will last for is difficult to say. It could be a very short-term situation."

He said that the uranium industry as a whole is expected to remain uncertain in the near term, as countries weigh their options on nuclear project development.

Mr Tim Gitzel CEO of Cameco Corporation said that he expects 2012 sales in the same range and added that the long-term outlook for the material used to fuel nuclear reactors is strong. The construction of new reactors in China and other Asian countries is expected to outweigh the loss of markets in Japan, where reactors are being take offline in the wake of the Fukushima reactor accident in March and in Germany where the Japanese disaster led to a policy shift away from nuclear power.

Mr Gitzel said that "The strong, long term fundamentals that we were seeing previously have not gone away. In fact we continue to see a very strong and promising future growth profile."

(Sourced from Reuters)