ERA profit up 74% for FY07, positive uranium outlook
Hamish King
egoli
Energy Resources of Australia Limited (ERA) announced that NPAT for the full year results ending 31 December 2007 was up 74.5% to $76.1 million. The company said it expected sales in 2008 to be similar to 2007 and confirmed a positive outlook for uranium demand.
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The world's third largest uranium producer and Rio Tinto Limited (RIO) subsidiary advised that revenue from ordinary activities for the year was up 14.2% to $362.4 million on sales of 5,324 tonnes of uranium oxide. EBIT was up 57.2% to $108 million.
The company said sales were down from 5,706 tonnes in the previous corresponding period due to a force majeure declared after storms impacted production at the Range mine in the Northern Territory in February and March last year.
"ERA expects sales in 2008 to be similar to 2007, possibly accompanied by a modest replenishment of inventory in the logistics chain," the company said in a statement.
The increase in revenue mostly came from a 36.5% rise in the average realised sale price of uranium oxide to US$25.06/lb, however this price was still well short of the spot market price of US$89.50/lb as at 31 December 2007.
ERA said its average realised sale price was only partially influenced by the spot market due to its diversified sales contract portfolio.
On the downside, the company reported that the higher Australian dollar exchange rate with the US dollar had negatively impacted revenue by about $38.6 million in 2007.
The group also noted that a rise in input costs, particularly sulphuric acid, and an increase in seen and unforeseen expenses such as capital spending and the removal of water due to flooding had negatively impacted revenue.
The company also added that expenditure on exploration and evaluation for 2007 had nearly doubled to $14.1 million.
ERA said it was still in discussions with insurers regarding cost recovery and business interruption claims following Cyclone Monica in 2006, and the weather event of February/March 2007.
On the upside, the company noted that an improved operational performance and a 14% increase in the grade of ore mined resulted in annual production of 5,412 tonnes, had led to the second highest annual production on record for the Ranger mine.
"The outlook for uranium demand appears positive
"ERA continues to position itself to benefit from this by seeking opportunities to add value by expanding production and extending the duration of output from resources available to ERA," the company said. The company said it had embarked on the $57 million Ranger mine expansion on budget and ahead of schedule with mining rates increasing from the first quarter of 2008.
However, the company noted estimated costs to complete the laterite treatment and radiometric sorting plants had increased as a result of changes in scope to optimise the designs, along with cost pressures in the mining construction market.
The company said the pre-feasibility study announced in September 2007 to examine options to further expand operations was progressing well and would be completed in mid 2008 at a cost of $10 million.
ERA declared a final dividend of 20c. It did not pay an interim dividend.
At AEDT 1253, shares in ERA were trading 97c above the gain line to $19.80.
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The world's third largest uranium producer and Rio Tinto Limited (RIO) subsidiary advised that revenue from ordinary activities for the year was up 14.2% to $362.4 million on sales of 5,324 tonnes of uranium oxide. EBIT was up 57.2% to $108 million.
The company said sales were down from 5,706 tonnes in the previous corresponding period due to a force majeure declared after storms impacted production at the Range mine in the Northern Territory in February and March last year.
"ERA expects sales in 2008 to be similar to 2007, possibly accompanied by a modest replenishment of inventory in the logistics chain," the company said in a statement.
The increase in revenue mostly came from a 36.5% rise in the average realised sale price of uranium oxide to US$25.06/lb, however this price was still well short of the spot market price of US$89.50/lb as at 31 December 2007.
ERA said its average realised sale price was only partially influenced by the spot market due to its diversified sales contract portfolio.
On the downside, the company reported that the higher Australian dollar exchange rate with the US dollar had negatively impacted revenue by about $38.6 million in 2007.
The group also noted that a rise in input costs, particularly sulphuric acid, and an increase in seen and unforeseen expenses such as capital spending and the removal of water due to flooding had negatively impacted revenue.
The company also added that expenditure on exploration and evaluation for 2007 had nearly doubled to $14.1 million.
ERA said it was still in discussions with insurers regarding cost recovery and business interruption claims following Cyclone Monica in 2006, and the weather event of February/March 2007.
On the upside, the company noted that an improved operational performance and a 14% increase in the grade of ore mined resulted in annual production of 5,412 tonnes, had led to the second highest annual production on record for the Ranger mine.
"The outlook for uranium demand appears positive
"ERA continues to position itself to benefit from this by seeking opportunities to add value by expanding production and extending the duration of output from resources available to ERA," the company said. The company said it had embarked on the $57 million Ranger mine expansion on budget and ahead of schedule with mining rates increasing from the first quarter of 2008.
However, the company noted estimated costs to complete the laterite treatment and radiometric sorting plants had increased as a result of changes in scope to optimise the designs, along with cost pressures in the mining construction market.
The company said the pre-feasibility study announced in September 2007 to examine options to further expand operations was progressing well and would be completed in mid 2008 at a cost of $10 million.
ERA declared a final dividend of 20c. It did not pay an interim dividend.
At AEDT 1253, shares in ERA were trading 97c above the gain line to $19.80.