TORONTO (miningweekly.com) – Canadian uranium producer Cameco has reported a sharp increase in profit during the third quarter ended September 30, as it pushed up output and benefited from higher-than-spot contract prices.

The TSX- and NYSE-listed company reported net earnings of $211-million, or $0.53 a share, up 167% year-on-year when compared with $79-million, or $0.20 a share, in the third quarter of 2012.

The Saskatoon, Saskatchewan-based yellowcake producer said adjusted earnings jumped 324% to $208-million, or $0.53 a share, beating Wall Street analyst’s average expectation of $0.17 a share on revenues of $596.98-million.

Production volumes rose 9% to 5.8-million pounds of uranium in the quarter, compared with 5.3-million pounds a year ago. This was mainly owing to ramping up output from the North Butte satellite operation, in Wyoming, and higher production at Smith Ranch-Highland, also in Wyoming, Rabbit Lake, in Saskatchewan, and Inkai, in Kazakhstan.

Cameco lifted uranium revenues 89% year-on-year to $449-million, mainly as a result of a 63% increase in sales volumes at 8.5-million pounds and a 15% increase in the Canadian dollar average realised price at C$52.59/lb.

The company’s average realised price for uranium was higher during the quarter, owing to the mix of contracts and higher US dollar prices under fixed price contracts. Spot prices averaged $34.75/lb in the period, which was 13% lower that the same period in 2012.

"Our strong third quarter and year-to-date financial results reflect the strength of our contracting strategy in this lower price environment, providing us with higher average realised prices that are well above the current uranium spot price,” president and CEO Tim Gitzel said.

The strong earnings were significant when considering the weak uranium market since the Japanese earthquake and tsunami in March 2011, which crippled the Fukushima-Daiichi nuclear power plant and prompted the shutdown of nearly all Japan’s reactors.

Cameco said the market continued to be in a state of uncertainty. Similar to the previous quarter, volumes contracted were low, as neither buyers, nor suppliers are under significant pressure to contract.

“A general lack of utility demand, combined with inventory overhang from Japan's idled reactors, as well as operational issues and shutdowns in South Korea and the US, has put further pressure on both spot and long-term uranium prices,” the company said.

Cameco’s NYSE-listed stock rallied strongly on Wednesday morning, gaining 6.06% to trade at $19.26 apiece.