Rio Tinto Ltd subsidiary Energy Resources of Australia Ltd (ERA) has lifted annual production at its Ranger uranium mine in the Northern Territory by 14 per cent on the back of a better operational performance and higher grades.

The Darwin-based company produced 5,412 tonnes of uranium oxide in calender 2007, up 14 per cent from 2006.

"The 2007 annual production is the second highest annual production on record for the Ranger mine," it said in a statement on Tuesday.

ERA shares rose 7.24 per cent, or $1.31, to $19.41 by 1519 AEDT, after peaking at $19.48.

ERA said the annual result was pleasing given rain-related problems at the mine in the March quarter last year, which resulted in an elevated water level in the operational pit, preventing access to higher grade ore.

"ERA successfully deployed a number of strategies to increase the rate of water removal from the operational pit," the company said.

"This resulted in an increase in the grade of ore, as the higher grade was located towards the bottom the pit."

During the fourth quarter of 2007, production totalled 1,553 tonnes, up 14 per cent from the third quarter, but was down seven per cent from the same period in 2006.

The production increase was largely due to the mill head grade being 16 per cent higher than the third quarter, the company said.

Ore milled in the fourth quarter, at 484,333 tonnes, was one per cent higher than the third quarter.

Ore mined in the fourth quarter, at 764,372 tonnes, was nine per cent higher than the third quarter - and 51 per cent higher than the fourth quarter of 2006 - due to improved access after the lowering of water levels in the pit.

The pit was emptied of water in November.

"Mining is now focused on stockpiling sufficient ore to lessen the impact on future production should the wet season be unusually heavy," ERA said.

The company met all of its delivery commitments by the end of 2007, resulting in sales of 5,324 tonnes, albeit down from 5,760 tonnes in 2006.

"Force majeure, declared after the February/March weather event, has now been lifted," it said.

"Subject to experiencing a normal wet season, production should be restored to more normal levels in 2008."

The spot market price of uranium at the end of December was $US89.50 per pound, up from $US72 per pound in 2006.

ERA's average realised sales price of uranium oxide for the year was $US25.06 per pound, up from $US18.36 in 2006.

Aiming to expand its mining operations at Ranger, the company spent $14.1 million on exploration and evaluation last year.

Shares in Rio Tinto, which is expected to release its fourth quarter production report on Wednesday, were up $2.17, or 1.74 per cent, to $127.17 at 1420 AEDT.

Rio Tinto is being pursued by BHP Billiton Ltd, which wants to merge the mining giant into its operations under a $100 billion-plus deal.

Rio has so far rebuffed its rival's advances.