The plant's operations were suspended last July after contaminants were found in nearby soil.

"Based on the data points we have, and the modelling that we do, it does appear that some contaminants are reaching the water," company spokesman Doug Prendergast told Reuters.

He said the data was taken from studies of wells dug on the property, but that recent samples of lake water have not suggested any noticeable change.

The discovery of the contaminated soil last year was one of a series of setbacks for Cameco, the world's top uranium producer. The company has also faced delays in overhauling its flooded Cigar Lake mine, and dealt with a water inflow at its Rabbit Lake mine. Both mines are in Saskatchewan.

The stock, which was down slightly before the news came out, ended the session down C$2.32 at C$40.52 on the Toronto Stock Exchange.

Analyst Ray Goldie of Salman Partners said the stock sell-off was likely overdone given that the vast majority of Cameco's revenue comes from its uranium mines rather than its conversion business.

"It does seem like something on overreaction to me," he said, although he added that concerns about potential litigation could also be having an impact on the stock.

LONG NUCLEAR HISTORY

The town of Port Hope has a population of about 16,000 and is about 100 kilometres (62 miles) east of Toronto. It has a history with the nuclear industry that dates back 70 years, when it was the site of a plant that refined uranium for use in the first atomic bomb dropped on Hiroshima, Japan.

Cameco also owns the Zircatec fuel manufacturing plant in the town.

Some citizen groups have in the past called for the federal government to do comprehensive health study on the community.

Cameco said in December that the soil contamination had come from trenches in the floor of the plant that had been in contact with chemicals and other liquids. It estimated in February that it will likely cost between C$15 million and C$20 million to clean up the soil and repair the plant.

The Port Hope facility normally employs about 340 people and is licensed to produce 12,500 tonnes of uranium hexafluoride -- a compound used in the production of nuclear fuel -- a year.

The company had hoped to reopen the Port Hope facility in the third quarter, and Prendergast said as yet there was no change to that plan.

"We don't believe that this produces any kind of timetable delay at this point," he said, adding "It clearly is a new wrinkle. It's a further complication."

(US$1=$0.98 Canadian)