SHARES in uranium miner Energy Resources Australia jumped more than 6per cent yesterday after the company reported an increase in reserves at its Ranger mine in the Northern Territory that will extend the life of the mine by four years to 2012.

Importantly, the increase provides ERA with more production to take advantage of soaring uranium prices after revenues had been held back by long-term contracts struck at prices substantially below current levels.

Spot uranium prices have soared in the past five years from less than $US10 a pound to about $US85 a pound, but about 90 per cent of uranium is sold under long-term contracts.

The share market also cheered news that ERA expected in November to finally drain the open pit of residual flooding following heavy rains in February that prevented it from accessing high-grade ore and curtailed production.

The resource increase means the mine will be able to continue processing ore and stockpiles till 2020, buying ERA time to try to win over traditional owners to support a new development at the nearby Jabiluka deposit.

ERA is treading carefully as it seeks to build goodwill and trust with the local Mirarr people. These efforts suffered a setback in May when the Mirarr restated their opposition to mining after ERA was embarrassed by comments from a senior executive at 68 per cent shareholder Rio Tinto suggesting there had been a "breakthrough" in relations.

News of the extended life at Ranger yesterday angered environmentalists, who have long opposed mining at Ranger, the lease for which is surrounded by Kakadu National Park.

ERA yesterday said drilling had added 4857 tonnes, or 10.7 million pounds, of uranium oxide at Ranger. ERA plans to spend $57 million expanding the open pit to access the new reserves. The extension will create 45 permanent jobs.

ERA will also spend $10 million on a prefeasibility study to assess options for further extending the mine and boosting production.

With the pit expected to be drained by November, ERA is forecasting a return to normal production next year, subject to a normal wet season.

In February, the mine was hit by exceptionally heavy monsoonal rain from Cyclone George. Mining ceased for nine days, reducing production.

ERA accordingly declared force majeure - a clause that excludes a party from liability or obligation when affected by an extraordinary event - on its sales contracts.