Friday, 20 July, 2007

by Tim Blue
The Australian

IT might have rained bucketloads on ERA's Ranger mine in the Northern Territory, but the company produced more uranium oxide than ever in the June quarter. It will not go on for ever. ERA will maintain a force majeure over sales contracts from Ranger, where in the first quarter the open pit was flooded, cutting off access to high-grade ore at the base of the pit.

ERA returned the mine's plant to full production, and produced 1490 tonnes of uranium oxide during the June quarter, up 48 per cent on the rain-affected March quarter.

The mine has produced 2496 tonnes of uranium oxide over the year to date, 26 per cent higher than the first half of last year.

An ERA spokeswoman said the improved performance was a result of stockpiling high-grade ore late last year in case of another big wet season, which certainly occurred with a vengeance when the beginnings of Cyclone George dumped record rain on the mine.

After the event, the company forecast it would produce about 4750 tonnes of uranium oxide in the full year, about the same as last year. The forecast said the full effect of this year's rains would be felt in 2008, when ERA expects to produce 25-35 per cent less uranium oxide than this year.

The company's uranium production is committed under long-term sales contracts that last year averaged $US18.36 a pound. The spot price reached as high as $US138 a pound earlier this year, and is now trading at about $US129 a pound.

Who knows how long ERA will maintain force majeure, but the spokeswoman said more might be known by the time ERA hands down its half-year results next week.

ERA has said it expects a loss of $5-$10 million for the first half (against a $23.7 million gain in the second half of 2006) as a result of the water problems. It expects to completely drain the pit by early 2008.

Criterion ranks ERA a long-term buy.