Chinese Premier Wen Jiabao is in Australia next week for four days of talks, and Mr Howard said a deal could be signed during that time.
This follows more than a year of discussions on how China can ensure that no Australian-sourced uranium is used for military purposes.
"We have made very good progress," said Mr Howard, speaking of the coming talks during a joint press conference in Canberra with visiting British Prime Minister Tony Blair.
"It's possible that the discussions could be satisfactorily concluded so that something could be said or signed when the Chinese premier visits Australia next week," he said.
Shares rallied on the news, with the already-hot uranium sector earlier getting a boost when a Chinese government spokesman on Monday night said draft texts of the safeguard agreement had been completed and are likely to be signed.
Interest was heightened by a report in the Australian Financial Review newspaper that China and Australia had two agreements ready for Mr Wen's visit -- one allowing uranium exports to China and another allowing Chinese companies to search for and exploit uranium resources in the country.
BHP Billiton, which owns one of the world's largest uranium mines at Olympic Dam in South Australia state, rose 36 cents or 1.35 percent to $27.14 dollars (US$20.36) at the time of writing.
The country's other major uranium producers, Energy Resources Australia (ERA) rose 47 cents or 3.53 percent to $13.77 in early afternoon trading.
Uranium explorers also rose sharply.
"Uranium is the new gold," said Aequs Securities dealer Ric Klusman.