Reuters reported that shares of Cameco Corporation rose more than 6% after the uranium producer reported higher than expected earnings and its chief executive highlighted growing demand from China for nuclear fuel.

Mr Jerry Grandey CEO of Cameco said during a call with investors said that China is building 25 nuclear reactors and plans for more as part of its ambitious strategy to expand nuclear power output by 2020.

The Canadian based uranium producer signed long term supply contracts with the two top power utilities in China in 2010.

Mr Grandey said that "I think over time we would expect to attain additional supply contracts with China. And frankly look at expanding the relationship in other areas as well."

He said that Cameco plans to double annual uranium production to 40 million pounds a year by 2020 with production of 21.9 million pounds in 2011. That's the best guess of what we could do in 2011. One always hopes you can do better, as we did in 2010.

Over the next 5 years, the company plans to expand production at its mines in the United States, as well as from its Inkai project in Kazakhstan. Cameco also sees the Cigar Lake mine which flooded in 2006 coming online in 2013 with limited production.

Cameco reported a lower net profit late but Q4 earnings were up 12% after stripping out the impact of a one time 2009 gain. The uranium producer's underlying profit benefited from higher uranium prices and lower production costs, easily beating analyst expectations.

Mr H Fraser Phillips analyst of RBC Capital Markets said that Cameco remains the leader in the uranium industry. We believe the shares will continue to benefit from strong uranium markets and have further upside potential.

(Sourced from Reuters)