Tuesday, 17 April, 2007

The Age

ENERGY Resources of Australia (ERA) has had promising signs of new, high-grade uranium reserves at its Northern Territory Ranger mine as it prepares to invest in further exploration.

But the world's third largest largest uranium producer - 11 per cent of global supply comes from Ranger - is also encountering more intense wet seasons in tropical west Arnhem Land that have affected production.

At its annual meeting in Sydney yesterday, ERA said intense rainfall meant uranium oxide production was 32 per cent lower in the first quarter, compared with last year, at 399,303 tonnes.

Approximately 300 tonnes of uranium oxide production were lost to the monsoonal downpour that forced ERA to declare force majeure on its sales contracts on March 7.

Chief executive Chris Salisbury said the 850 millimetres of rain associated with cyclone George would affect production for some time.

"In 2007, production is likely to be similar to 2006, while production in 2008 could be 25 to 30 per cent lower than this," he said.

Environmentalists at the meeting suggested climate change meant increased tropical rainfall could be an ongoing problem, affecting production and environmental management into the future.

Speaking after the meeting, Mr Salisbury said ERA had mitigation plans in mind.

"We're looking at a range of options, including expansion of irrigation, expansion of our water treatment plant and the use of evaporation, which we used quite successfully last year," he said.

The company's mining effort was unaffected by the rain, however, increasing 45 per cent on the previous first quarter to 769,498 tonnes.

ERA also said it would, by the end of the year, announce the results of a feasibility study into extending mining by three years to 2011, through an extension of Ranger's operating pit.

ERA spent $7.2 million on exploration in 2006, and has already spent more than half that again on drilling despite the monsoons of the first quarter.

ERA shares rose 47c to $26.08 yesterday.