Wednesday 26 July 2006

By Isabelle Oderberg
AAP

URANIUM producer Energy Resources of Australia (ERA) has posted a 17 per cent rise in first-half net profit, but says full-year production is likely to be lower than for last year.

Net profit rose to $19.9 million in the six months to June, from $17 million for the same period in 2005.

However production difficulties in the first half would cut the full-year output, although sales should be in line.

"As a result of the operational difficulties experienced in the first half of the year, production for 2006 is forecast to be lower than in 2005," the company said.

"Sales volumes in the second half of the year are expected to be lower than in the first half. Full year sales are expected to be comparable with 2005."

ERA's uranium oxide production was lower in the first half due to wet weather caused by cyclone Monica earlier in 2006 and unusually high rainfall during the wet season that prevented access to higher grade ore.

ERA also experienced operational difficulties during the second quarter at its acid plant, which was shut down for planned repairs and maintenance in April.

"In order to supplement acid inventories, a program of higher price imports was initiated in June," the company said.

"The higher costs associated with this will have a negative impact on the price of consumables used in production."

Drummed production of uranium oxide for the six months fell 26.8 per cent to 1988 tonnes, from 2714 tonnes for the same period last year.

Sales for the first half of the year were up 6.6 per cent to 3,198 tonnes, leading to a 19.2 per cent increase in revenue to $154.7 million, but the company said it expects sales for the full year to be comparable to 2005.

Despite strengthening uranium prices, ERA said it would not feel the full benefit until new contracts come into effect.

The average long term uranium market price in June was $US46.75 ($A62.20) per pound, compared with $US30.00 ($39.92) in 2005. During the reported period, ERA's average realised sales price of uranium oxide was $US15.57 ($20.72) per pound, compared with $US14.64 ($19.48) per pound last year.

ERA expects exploration drilling to continue in the remainder of this year, both on the eastern vicinity of Ranger's current operating pit and on other targets in the Ranger project area, following the interpretation of results of the airborne geophysical surveys conducted in 2005.

The Ranger Operation is located about 250 kilometres from Darwin. At 1243 AEST ERA's shares were down 55 cents or 4.5 per cent at $11.60.