(Reuters) - Canadian uranium producer Cameco Corp (>> Cameco Corporation) said on Thursday it has begun producing ore at its oft-delayed Cigar Lake mine in northern Saskatchewan, contributing to a spike in the company's stock.

The uranium sector also got a boost after the chairman of China's top nuclear firm, China National Nuclear Corp (CNNC), told Reuters that China is set to beat its 2020 targets for nuclear power.

Cameco signed agreements in 2010 to supply China Nuclear Energy Industry Corp, a unit of CNNC, with 23 million pounds of uranium concentrate through 2020, as well as to supply China Guangdong Nuclear Power Holding Co Ltd with 29 million pounds through 2025.

"If they're building more (reactors), we hope to supply them with even more material going forward," Cameco Chief Executive Officer Tim Gitzel said in a phone interview from the Cigar Lake mine site.

China already has "an aggressive program in place to have 58 gigawatts (GW) by the end of the decade. So to add to that will be even more impressive, but it's China and certainly the need is there," Gitzel said.

Cameco shares jumped as much as 6 percent, before finishing up about 3 percent in Toronto and New York. Fellow uranium producers Energy Fuels Inc (>> Energy Fuels Inc.) and Paladin Energy Ltd  (>> Paladin Energy Ltd) posted gains of 4 and 6 percent respectively.

Cameco's Toronto-listed stock touched C$28.57, its highest since May, 2011.

The C$2.6 billion ($2.3 billion) Cigar Lake mine comes on stream even as Cameco last month backed away from its 2018 overall production target, and as some other miners idle production and defer new projects to cope with low uranium prices.

Cigar Lake was first expected to open in 2007, but two floods pushed it way behind schedule. Such delays should be behind Cameco now, as the new technology used in the mine is working well, Gitzel said.

Cameco's jet boring system at Cigar Lake uses water under high pressure to carve out cavities in the orebody and then collects the ore slurry through pipes.

France's Areva SA (>> AREVA), which owns a minority stake in the mine, said the ore will begin moving to its mill at McClean Lake on Thursday, with processing set to begin by the end of the second quarter. Denison Mines Corp (>> Denison Mines Corp.) owns a 22.5 percent stake in the mill and several nearby uranium deposits.

The mill is expected to produce between 2 million and 3 million pounds of uranium concentrate this year, ramping up to its full production rate of 18 million pounds by 2018.

($1=$1.11 Canadian)

(Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Stephen Powell and Chris Reese)

By Rod Nickel