Nuclear power the cheapest by far...

World Nuclear News reported Friday that Canada's uranium output dropped five per cent in 2007. Production from Canada's three uranium mines fell largely due to Cameco's flooding troubles at its underground Rabbit Lake mine and digging through low-grade ore at the Areva- and Denison (AMEX: DNN, Bullboard) / (TSX: T.DML, Bullboard) -owned McClean Lake mine.

Canada's 2007 total was 11,046 tonnes of U3O8. The country just inched out Australia's production of 10,145 tonnes U3O8 and Kazakhstan's total of 6,637 tonnes.

The Nuclear Energy Institute in the U.S. also reported some interesting news: according to preliminary figures, American nuclear power plants posted all-time record highs in electricity production and efficiency in 2007.

The report states U.S. nuclear plants generated about 807 billion kilowatt-hours (kwh) of electricity last year, beating by two per cent the past record-high of 788.5 billion kwh set in 2004.

And, according to the data, the industry's average electricity production cost is dropping. The average production cost (which looks at expenses for uranium fuel and costs of operations and maintenance) was a record-low 1.68 cents/kwh in 2007.

The previous low was set in 2005 at 1.72 cents/kwh. This marks the ninth straight year the industry's average electricity production cost was below two cents/kwh and the seventh straight year that nuclear plants had the lowest production costs of any major source of electricity, besting coal- and natural gas-fired power plants.

Instability remains in global markets and analysts now predict a few years will pass investors will begin reaping the benefits of uranium's strong long-term fundamentals. The metal's spot prices are now expected to hit US$110 in 2010—compared to earlier estimates of US$50 for that year.

For now, the Ux Consulting long-term price is sitting flat at $95 per pound U3O8 through February. Contracts this month are priced at $78. As for the rest of 2008, March futures are trading at $80, April to May contracts are worth $75 and July to December contracts are worth $85.