Thursday, 27 September, 2007

Sydney Morning Herald

Rio Tinto subsidiary Energy Resources of Australia Ltd has extended mining at its Ranger uranium mine in the Northern Territory until 2012.

It has also raised the mine's production outlook.

ERA said Thursday the extension was expected to cost about $57 million, largely for extra mining equipment and associated infrastructure, and would create 45 new jobs.

ERA said the extension was subject to normal regulatory approvals.

The commencement of preliminary mining has already been given the nod by the Ranger Mine Site Technical Committee, which comprises representatives of the NT Government, Commonwealth government and local aboriginal groups.

The company said most of the additional production from the extension will occur in 2011, with processing at Ranger to cease in 2020.

"The pit pushback will extend mining at Ranger until 2012, and combined with optimisation of the existing pit, will add an additional 4,857 tonnes (10.7 million pounds) of contained uranium oxide," ERA said.

ERA said it would also spend $10 million on a pre-feasibility study to examine options to extend the mine further and increase production from the processing plant.

The study will start immediately and continue to 2008.

The mine, previously called Jabiluka, was hit by exceptionally heavy monsoonal rain in February from Cyclone George. Mining ceased for nine days, reducing production.

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

ERA said it had been successful in implementing several mitigation strategies following the heavy rainfall.

It now expects to rid the pit of water by November 2007.

"This will allow mining of ore at the bottom of the pit and, subject to experiencing a normal wet season, should allow production in 2008 to be restored to normal levels," ERA said.

"Force majeure will continue to apply to sales contracts in the first half of 2008 as the backlog of deliveries is cleared."

In July, ERA posted a 71 per cent dip in net profit to $5.7 million for the half year to June compared with $19.9 million for the previous corresponding period.

The amount of uranium oxide sold during the half year to June fell 31 per cent to 2,200 tonnes.

Shares in ERA were $1.16 or 6.7 per cent higher to $18.48 at 1351 AEST Thursday.