* Resolves contract dispute with acid supplier
* To restart UF6 production in third quarter
* Shares up 4.4 percent
TORONTO, May 19 (Reuters) - Cameco Corp (CCO.TO) said on Tuesday it will restart production of uranium hexafluoride (UF6) at its Port Hope, Ontario, plant after resolving a contract dispute with a key supplier.
The uranium producer suspended production of UF6 — used in the uranium enrichment process — last December after failing to come to terms with its main supplier of hydrofluoric acid, which is needed to produce UF6.
Cameco said it has signed a new contract with the supplier and will resume UF6 production early in the third quarter, in line with its planned schedule. The company had said last year it hoped to resume output in the second half of 2009.
Saskatoon, Saskatchewan-based Cameco will recall 25 employees who were temporarily laid off last year, and is negotiating with other suppliers to broaden its acid supply base.
The Port Hope facility, on the shores of Lake Ontario 100 km (62 miles) east of Toronto, is one of only four commercial suppliers of UF6 in the western world, according to Cameco. The material is enriched and fabricated at other sites into fuel pellets used in nuclear reactors.
The company’s shares were up 4.4 percent at C$30.10 on the Toronto Stock Exchange.
$1=$1.16 Canadian Reporting by Cameron French; editing by Rob Wilson