Shares of Centerra Gold fell more than 9 percent on Monday on expectations that parent company Cameco Corp was set to sell its 49 percent stake in the gold miner.

However, Cameco denied there were any undisclosed material developments regarding a sale, and said speculation that it had hired investment bankers to draft a deal were wrong.

The big Canadian uranium producer has long planned divest to the Centerra holding, but expectations of an imminent deal picked up after Toronto-based Centerra inked a much-delayed ownership agreement with Kyrgyzstan in April regarding its Kumtor mine, removing a major overhang on the stock.

Speculation heated up further on Sunday, after the Globe and Mail newspaper reported Cameco had hired bankers to go ahead with a public stock sale that could raise more than C$600 million ($555 million).

Centerra's shares fell 65 Canadian cents to C$6.51 on the Toronto Stock Exchange on Monday, before Cameco released its after-market denial.

Contrary to speculation, the company is not working with underwriters to draft a preliminary prospectus, Saskatoon, Saskatchewan-based Cameco said in a statement.

Earlier, Cameco spokesman Lyle Krahn refused to comment on speculation that a deal was imminent, but said Cameco has always intended to sell the shares when management saw an opportunity to get a good price.

Shares of Cameco, which formed Centerra in 2004 as a separate vehicle for its gold assets, fell 8 Canadian cents at C$30.20.

Centerra's stock has underperformed in recent years as the company has struggled to secure an ownership agreement for Kumtor and remove concerns that Kyrgyzstan might nationalize the mine, which is Centerra's main asset.

The April agreement was welcomed by investors, but Centerra almost immediately ran into trouble at its smaller Boroo mine in Mongolia, as workers struck in May, while the country suspended the mine's operating license in June.

The strike has since ended, and the operating license has been restored.

Haytham Hodaly, an analyst at Salman Partners, said the time was right for Cameco to divest the Centerra stake.

Many analysts see gold prices continuing to rise, while stock prices have been rebounding from last year's slump.

I think you get it out now when things are starting to get better, said Hodaly, who rates Centerra shares a top pick.

The market's good with strong gold prices, and the outlook for each of the company's assets is looking better with the resolution of the issues that were outstanding.

Gold XAU= was at $945 an ounce on Monday.

($1=$1.09 Canadian)

(Reporting by Cameron French; editing by Rob Wilson)