RIO Tinto subsidiary Energy Resources of Australia has scrapped its final dividend after wet weather, lower ore grades and a drop in uranium sales drove 2010 profit down 83 per cent from a year earlier.

Almost $300 million was wiped off ERA's market capitalisation yesterday, with its shares tumbling to the lowest in a year as investors punished the company for a shocking report card. They closed down $1.53, or 13 per cent, at $10.34.

Showing the difference a year can make, ERA started the 2010 calendar year having posted a record $273 million net profit in 2009. Earnings for 2010 were just $47 million.

The collapse in net profit is reflected in sales for uranium oxide, which fell from 5497 tonnes in 2009 to 5026 tonnes while the average price slipped from $US50.84 a pound to $US48.16 a pound. That had a knock-on effect on revenue, which fell from $768 million in 2009 to $572 million due to sales being originally denominated in weaker US dollars.

In 2009, ERA paid a first-half dividend of 14¢ and a final dividend of 25¢. For 2010, investors will have to settle for the 8¢-a-share dividend paid in August, ERA saying it would not be wise to pay a final dividend with production for the first half of 2011 still uncertain.

The uncertainty is partly due to the three-month closure of operations at the Ranger uranium mine in the Northern Territory due to higher than average rainfall. ERA said the move was a precautionary measure to ensure that levels in its tailings storage facility remained below the authorised operating limit.

''Mining operations were severely hampered in the course of the year, due to an above-average wet season, which limited access to higher-grade ore, and geotechnical problems experienced with the south wall of the pit,'' the company said.

''As a consequence of the processing suspension, ERA's 2011 production of uranium oxide is expected to be at a similar level to 2010. However, actual production will depend on the actual level of rainfall for the remainder of the wet season.

''As a result, further guidance on the outlook for 2011 production will be given with the March-2011-quarter operations review.''

The company said work on the feasibility study for a heap leach facility at Ranger was continuing.

But Australian Conservation Foundation spokesman Dave Sweeney said the Ranger mine was ''running out of credit, time and excuses''.

''This ageing operation has hit the point of diminished returns and increased environmental impact,'' he said.

''The company needs to get its existing operations in order instead of trying to fast-track a mine expansion that includes the unproven and polluting acid heap-leach processing method.''