Friday, 6 April, 2007

Herald Sun

HEAVY rainfall at Energy Resources of Australia's Ranger mine in the Northern Territory will hamper production for at least the next year.
The uranium mine inside the Kakadu National Park has had more than 1.6 metres of rain dumped on it this year, including 850 millimetres in just one week in early March.

ERA last month declared force majeure on its sales contracts as a result of the wet weather.

Force majeure is a clause which can free a company from its contractual obligations due to an extraordinary event beyond its control.

The rain halted mining at Ranger for a week in late February and shut down the processing plant for almost a fortnight at a loss of about 300 tonnes of uranium production.

ERA has warned that excess water in the pit could impact production for up to a year, restricting access to ore from which the uranium is recovered.

The company will begin processing high grade ore it stockpiled in 2006 in a bid to maximise its output this year, with production expected to be in line with its rain-affected 2006 result.

However, it warned yesterday that production in 2008 could fall by 25-35 per cent, to between 3000 and 3500 tonnes. Sales are expected to be in line with production.

ERA shares plunged more than 5 per cent yesterday, dropping $1.54 to $26.26.

The company, which supplies about 11 per cent of the world's uranium, has almost doubled in value in the past 12 months on the back of the soaring uranium price, although it has benefited little at the bottom line because most of its uranium is sold under long-term contracts.

ERA posted a $43.61 million profit last year.

The rain has already put a dampener on this year's profit forecasts, with analysts downgrading their estimates in the past two weeks.