Energy Resources of Australia (ERA) Ltd, which produces 10% of the world's uranium, expects reduced production in the second quarter after flooding at its main pit restricted access to higher grade ore.

The stock declined nearly 2% after ERA said the average grade of uranium oxide during the second quarter was expected to be between 0.2 and 0.25%.

That compares with the grade of 0.32% in the three months to March, Darwin-based ERA said in a statement today.

The Rio Tinto subsidiary said there was restricted access to the bottom of the pit at the Ranger Mine in the Northern Territory, even though water levels were substantially lower than the same time last year, when exceptionally heavy rainfall caused production delays.

Full access should be re-established towards the end of the second quarter and the mill will process stockpiled ore in the mean time.

ERA shares fell 35 cents, or 1.72%, to $19.95 in afternoon trading.

ERA produced 1,327 tonnes of uranium oxide in the first quarter, a 32% increase on the corresponding period in 2007 because the weather was better.

Production fell 15% compared with the three months to December because the ore grade declined.

ERA mined 812,448 tonnes of ore in the three months to March, 6% more than in the corresponding period last year and in the fourth quarter 2007.

The miner milled 479,539 tonnes in the first quarter, a 20% gain on the corresponding period in 2007 and one per cent lower than in the three months to December.

ERA spent $3.8 million during the year to March on exploratory drilling. Uranium mineralisation is known to extend to the east and below the current Ranger pit.

The company plans to conduct further drilling east of the pit.

Rio Tinto, which owns 68.4% of ERA, is the world's second biggest uranium producer, according to the World Nuclear Association website.