The world's third largest uranium producer, Energy Resources of Australia Ltd, expects future demand for the fuel to remain strong amid growing need for electricity.

ERA, which is majority owned by Rio Tinto Ltd, produced almost 10 per cent of the world's uranium in 2007 from its Ranger mine in the Northern Territory.

"The forecast for continued growth in demand for electricity, energy security issues, increases in fossil fuel prices, and most significantly heightened awareness of climate change; all continue the focus on nuclear power and the demand for uranium," chairman David Klinger told the company's annual general meeting in Darwin on Tuesday.

Dr Klinger said uranium prices "remain strong", kept high by a shortage of near term primary supply and the depletion of secondary market inventories.

"The likelihood of carbon emission costs being imposed on fossil fuel energy production also looms as another factor keeping prices high," he said.

ERA's averaged realised price for uranium in 2007 was $US25.06 per pound, compared to $US18.36 per pound in 2006, up 36 per cent.

The uranium market price rose from $US72 per pound at the end of 2006 to $US95 in May last year, where it remained for the rest of the year.

Dr Klinger said ERA's realised price for uranium continued to be below the current market price because its contracts were negotiated several years ago when prices were considerably lower.

He noted that the long term uranium market price remained more stable than the spot price, which rose from $US72 per pound at the end of 2006 to a high of $US136 in June last year before falling back to $US89.50 at the end of 2007.

Dr Klinger said ERA was well positioned to benefit from the strong demand for uranium worldwide and actively sought to expand and extend production from its resources.

The company has several planned projects including the construction of a laterite treatment plant and a radiometric sorter, a $57 million extension of the operating pit, and studies into a further expansion of the open pit.

"ERA should focus its resources on drilling on existing leases, both in the vicinity of the current operating pit as well as elsewhere on the leases to identify both near term and longer term expansion options," chief executive Chris Salisbury told shareholders.

"However, ERA will be opportunistic in evaluating other prospects as they arise."

Despite the impact of extreme rainfall, ERA achieved higher than expected uranium production in 2007 - the second highest in the mine's 26 year history.

It produced 5,412 tonnes of uranium oxide, up from 4,748 tonnes in 2006.

"It is expected that the extension will yield an additional 4,857 tonnes (or 10.7 million pounds) of contained uranium oxide (and) extend the life of the existing pit from 2008 until 2012," Mr Salisbury said.

A $10 million pre-feasibility study into further extension options at Ranger will, if successful, move to a full feasibility study by mid this year.

Construction of the laterite treatment plant and the radiometric sorter to further assist in processing low-grade stockpiles is expected to be complete by mid year.

ERA's customers include power companies in North America, Europe and South East Asia.

Shares ERA dipped 45 cents, or 2.23 per cent, to $19.70 at 1420 AEST Tuesday.