July 30 (Bloomberg) -- Cameco Corp., the world's largest uranium producer, said second-quarter profit rose 36 percent to a record on increased uranium prices and shipments. The shares fell after the company lowered its price forecast.

Net income rose to C$204.9 million ($192 million), or 55 cents a share, from C$150.4 million, or 40 cents, a year earlier, Saskatoon, Saskatchewan-based Cameco said today in a statement. Sales rose 74 percent to C$725.4 million from C$417.4 million.

Cameco has benefited from surging uranium prices as the company tries to regain the confidence of investors after delays in building a Saskatchewan mine and radioactive contamination found at a refinery in Ontario. Uranium prices had their first major decline in four years this month after tripling in the preceding year on speculation supplies may outpace demand.

``The fundamentals are strong,'' said Brian Mok, an analyst at Research Capital in Toronto, who had a forecast of 38 cents a share for Cameco's second-quarter net income. ``My expectation was that they'd have better leverage on uranium prices in the second half and they started doing that a quarter earlier.''

Shares of Cameco fell 15 cents, or 0.3 percent, to C$42.85 at 4:10 p.m. in Toronto Stock Exchange trading.

Revenue from uranium sales more than tripled to C$458 million in the second quarter from C$141 million a year earlier, helped by a 61 percent increase in realized prices and a doubling of sales volume, the company said today.

Prices Rise

Cameco's average realized sales price in the second quarter was $34.69, compared with $20.62 in 2006, the company said.

Full-year revenue may rise 40 percent in 2007, driven by an expected 75 percent increase in uranium sales, Chief Executive Officer Jerry Grandey said in a conference call today. Those gains may be partly offset by an expected decline in demand starting in the second half.

Cameco's shares fell as much as C$1.55, or 3.6 percent, after the company lowered its forecast for average 2008 realized prices to $58.50 a pound, from $75.75 estimated on April 28.

``Few utilities have uncovered needs for the remainder of this year and demand from other spot market players -- the traders, producers and investor funds -- is uncertain as the large increase in the spot price has caused some to move to the sidelines,'' Cameco Senior Vice President George Assie said in a conference call today.

Uranium Sales

The company's uranium sales may fall to about 30 million pounds this year from 32 million pounds in 2006, Assie said.

Uranium fell 7.7 percent, its biggest weekly drop, to $120 a pound in the spot market in the seven days to July 20, according to prices published by Ux Consulting Co. of Roswell, Georgia.

``Uranium prices have almost doubled since the beginning of 2007, so you'd have to expect some kind of correction,'' Research Capital's Mok said.

The price of uranium has risen in tandem with the popularity of nuclear power as governments from the U.S. to China seek to generate more energy without adding greenhouse-gas emissions.

On July 20, Cameco said it would halt production of uranium hexafluoride at a plant in Port Hope, Ontario, for at least two months after discovering contaminated soil at the site. Converting uranium oxide into a gaseous form is one of the first steps in making nuclear fuel.

Port Hope

The Port Hope contamination is ``fairly well-contained,'' and may cost the company about $3 million to remediate, Grandey said today. The company will announce more details about Port Hope operations on Sept. 19, he said.

An announcement on Port Hope contamination came just nine days after Cameco said clearing the flooded Cigar Lake mine in Saskatchewan would take longer than expected, delaying production by as much as a year to 2011. The mine sits atop the world's largest untapped deposit of uranium.

``Cameco is not really about the short-term earnings,'' said Michael Smedley, who helps manage about $1 billion at Morgan Meighen & Associates in Toronto, including Cameco shares. ``It's the dominant player in the industry. People lose sight of the fact that they have huge reserves. They can earn more money in the future if they increase prices at which they sell.''

Centerra Gold Inc., 53 percent owned by Cameco, lowered its 2007 production forecast for the precious metal to between 550,000 and 560,000 ounces from an earlier estimate of 700,000 to 720,000 ounces because of changes in the mining plan at Centerra's operation in Kazakhstan, Cameco said.

Higher gold prices will prevent revenue from declining as a result of the lower output, Cameco said. Centerra's realized gold price rose to $667 an ounce in the second quarter from $632 a year earlier.

To contact the reporters on this story: Rob Delaney in Toronto at robdelaney@bloomberg.net; Christopher Donville in Vancouver at cjdonville@bloomberg.net.

Last Updated: July 30, 2007 17:30 EDT