TORONTO (miningweekly.com) – Canadian uranium producer Cameco on Thursday reported sharply higher net profit for the three months ended June, as a weaker Canadian dollar and improved sales offset lower output.

The TSX- and NYSE-listed miner said net earnings attributable to equity holders rose 274% to C$127-million, or C$0.32 a share, compared with C$34-million, or C$0.09 a share, in the comparable period last year.

The Saskatoon, Saskatchewan-based company said its results were impacted by mark-to-market gains on foreign exchange derivatives, compared with losses in 2013, a C$12-million charge regarding the early redemption of its debentures, and lower tax recoveries as a result of a decline in pre-tax losses in Canada.

Excluding special items, Cameco reported earnings of C$79-million, or C$0.20 a share, compared with C$61-million, or C$0.15 a share, in the year-earlier period, lifted by higher earnings from its uranium segment, owing to increased sales volumes and Canadian dollar average realised prices.

Cameco also said it benefitted from a settlement of C$28-million from a dispute regarding a long-term supply contract with a utility customer.

During the period, Cameco, which mines for radioactive uranium compounds that are mainly used to fuel electricity-generating nuclear reactors, reported a 9% drop in output to four-million pounds of yellow cake. The drop was mainly owing to an extended planned yearly maintenance shutdown at its Key Lake mine, in Saskatchewan, lower output from Crow Butte, in Nebraska, and Inkai, in Kazakhstan.

Revenue rose 19% year-over-year to C$502-million, boosted by a 19% improvement in uranium sales volume to 7.4-million pounds, which benefitted from a change in the timing of deliveries.

The company’s average realised uranium price in Canadian dollars rose 7% to C$50.76/lb. The US dollar price declined 1% to $45.93/lb, while the average uranium spot price fell 28% to $28.97/lb.

Cameco said the average unit costs of sales rose 8% to C$35.86/lb.

The company added that the cost of purchased material was higher than the average spot price for the quarter, when uranium prices were higher than they currently are, prompting it to enter into back-to-back purchase and sale arrangements that, while profitable, required it to buy material at a price higher than the current spot price.

"Our marketing strategy and strong portfolio of contracts continues to serve us well, providing us with average realised prices that are well above the current uranium spot price and strong second-quarter financial results, despite the continued market uncertainty,” president and CEO Tim Gitzel said.

"It's that uncertainty that guides our strategic decision-making and keeps us focused on the things that are within our control – keeping costs down and ensuring we're running our operations safely, efficiently and reliably," he added.

Cameco noted that through the first half of the year, market conditions continued along the same trend as in 2013. On the supply side, production cutbacks and project deferrals had contributed positively to long-term fundamentals, while the near-term market continued to be adequately supplied.

As a result, downward pressure continued on both spot and long-term uranium prices. Utilities remained well covered and Cameco expected little improvement over the near to medium term.

Despite there not being a fundamental change to market conditions, Cameco said there had been developments that solidified the positive long-term outlook, including the approval of a new energy policy in Japan that confirmed nuclear power would remain an important electricity source for the country.

The Nuclear Regulatory Authority (NRA) has continued to clarify the process for utilities to begin restarting the country's idled nuclear reactors. Restart applications for 19 reactors have been submitted to the NRA by nine utilities, demonstrating utilities' commitment to bring their nuclear generating capacity back online.

Uranium miners have been struggling since Japan's Fukushima Daiichi nuclear disaster hit in March 2011, which prompted all nuclear reactors to be shut down in Japan and created significant backlash for global uranium markets and public opinions about the safety of using nuclear-derived power.

Cameco on Thursday lowered its full-year output guidance to between 22.8-million pounds and 23.3-million pounds of uranium, down from 23.8-million pounds to 24.3-million pounds previously, mainly as a result of a delay in the production schedule at its significant Cigar Lake mine, also in Saskatchewan’s prolific Athabasca basin.

Cameco earlier this month said production from its Cigar Lake uranium mine would be further delayed owing to the orebody not being frozen enough in certain places.

The company’s TSX-listed stock on Thursday trended lower, shedding C$0.40 a share to change hands at C$22 apiece.