ERA says water damage continues to take toll
Tuesday, 17 July, 2007
by Andrew Nelson
egoli
In s statement to the market, the uranium specialist said it produced 1,490 metric tons of uranium in the second quarter, up 150% on the previous corresponding period and a 48% increase on the prior quarter, with both periods impacted by heavy rains and cyclones.
The Rio Tinto subsidiary said the strong second quarter result was actually due to the processing of high-grade ore that was mined and stockpiled prior to the wet season.
Heavy rains in February and March caused water levels at the Northern Territory to rise drastically, disrupting production and forcing ERA to declare force majeure on its contracts.
In June, Energy Resources said it expects to report a first half loss of between $5 million and $10 million due to the disrupted timing of production and sales deliveries associated with the exceptionally heavy rainfall at its Ranger operation in late February/early March 2007.
The company declared force majeure on its contracts on 7 March following the weather event that resulted in 750 millimetres of rain in one 72-hour period alone.
Looking forward, the company said that production and sales deliveries for the balance of 2007 and 2008 would continue to be affected as a result of water levels in the pit delaying access to high-grade ore.
The company confirmed that ore mined in the second quarter decreased 10% over the first quarter of 2007 due to the elevated water levels in the pit.
However, ore milled in the quarter increased 40% as the plant was brought back to full production following the weather event in the first quarter.
Nonetheless, the company said that despite the uplift in second quarter production, sales contracts remain subject to force majeure as a result of flooding.
At 1019 AEST, shares in ERA had picked up 23c to $20.94.