Uranium miner Energy Resources of Australia Ltd (ERA) has revised downwards its production guidance after ore grade in the September quarter was lower than expected.

ERA shares finished 6.43 per cent lower at $13.53 versus a flat benchmark

ERA said its uranium oxide production in the September quarter was 10 per cent higher than the previous quarter, but was 35 per cent lower than the 2009 corresponding period.

ERA, the world's fourth largest uranium producer, said it expected uranium oxide production from its Ranger mine in the Northern Territory in calendar 2010 would be about 3,900 tonnes, down from a forecast of 4,300 tonnes to 4,700 tonnes previously.

The company, which is 68 per cent owned by Rio Tinto Ltd and in 2009 accounted for nearly 10 per cent of world uranium oxide output, said it would need to buy additional supply to meet its sales commitments in 2010, expected to be around 5,000 tonnes.

"This is expected to adversely impact ERA's 2010 earnings as the small price margin associated with the sale of the purchased material is more than offset by the ongoing costs of operation," the company said in a statement.

Mill head grade had improved compared from the June quarter, but was down 45 per cent compared with the September quarter in 2009, the company said.

"The lower than expected grade is a concern," UBS Australia Equities managing director and head of research Glyn Lawcock said in a report.

ERA chief executive Rob Atkinson said the company was not expecting the grades to be so low.

"So we thought it would be very prudent to do infill drilling," Mr Atkinson told AAP.

ERA hopes drilling in the lower benches of the pit will give it more confidence about the quality and volume of ore it will encounter towards the end of the mine's life.

"We started (infill drilling) in September, so we're well on our way with that program," Mr Atkinson said.

"That will be completed in the next few weeks and that will allow us to revisit our orebody model."

ERA said mining activity had resumed at the bottom of the Ranger mine pit, about 260 km east of Darwin, after a prolonged wet season.

Mr Atkinson said ERA's study on the development of an exploration decline for underground drilling of the Ranger 3 Deeps resource, which is expected to be the main source of ore in coming years, was now complete.

"I'm just taking that through the final discussions and I would hopefully be able to determine if it has been approved or not in coming months," he said.

"And the feasibility study for the heap leach facility continues and is going very well.

"I would expect that study as well will come to completion in the next few months, allowing us to complete the EIS (environmental impact statement), which I hope to submit next year."

Tight uranium supply

The news is expected to exacerbate an already-tight world market for uranium oxide, used in nuclear power generation.

"The shortfall represents about one per cent of world supply in 2010, so it's not the end of the world, but could have some impact on the uranium price," BGF Equities sector analyst and chairman Warwick Grigor said.

"Overall, ERA is coming in 20 per cent under their capacity, and that's significant," Mr Grigor said.

The limited growth in mined supply is a legacy of the 1990s, when plunging prices froze most exploration and development.

After falling as far as $US7 ($A7.10) a pound on spot markets in 2000, prices rebounded to $US136 in 2007 – spot uranium is now at $US48 – as countries searching for an alternative to greenhouse gas-producing power sources such as coal have re-embraced nuclear power.

The Australian Bureau of Agricultural and Resource Economics forecasts global uranium production in 2010 will rise five per cent to 60,190 tonnes, mainly because of higher output from Kazakhstan and parts of Africa.

ERA said its outside purchases were expected "to adversely impact 2010 earnings as the small price margin associated with the sale of the purchased material is more than offset by the ongoing costs of operation".