RIO Tinto subsidiary Energy Resources of Australia has lifted annual production at its Ranger uranium mine in the Northern Territory by 14 per cent thanks to a better operational performance and higher grades.

The Darwin-based company produced 5412 tonnes of uranium oxide in calendar 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 yesterday.

ERA shares closed at the day's high of $19.73, up 9 per cent or $1.63.

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 of the pit."

Fourth-quarter production was 1553 tonnes, up 14 per cent from the third quarter, but down 7 per cent from a year earlier.

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

Ore milled in the fourth quarter, at 484,333 tonnes, was 1 per cent higher than the third quarter.

Ore mined in the fourth quarter, at 764,372 tonnes, was 9 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 its delivery commitments by the end of 2007, resulting in sales of 5324 tonnes, down from 5760 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 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.

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 today, closed up $1.70 to $126.70.