Energy Resources of Australia Ltd (ERA) expects to report a first-half loss of between $30 million and $50 million for 2010/11 after extending the suspension period for operations at its Ranger uranium mine due to extreme rainfall.

The expected loss compares with a first-half net profit of $22.7 million for the six months to June 30 last year.

ERA said that, as a consequence of the extension of the suspension of processing operations and the large volume of water in the mine, 2011 production at the mine is now expected to be about 2,400 tonnes of uranium oxide.

This is down from the previously announced 2011 production expectation that was in the vicinity of 2010 production, which was 3,793 tonnes.

 

"In light of this continued suspension, which has occurred immediately after a very challenging 2010, a comprehensive business review of ERA's current operations and future projects is well underway," ERA said in a statement on Tuesday issued after the close of share market trading.

"The review will assess priorities, processes and future expenditure.

"In parallel to the business review, work continues on a full and detailed review of the substantial water and rehabilitation projects to be undertaken and the associated expenditure requirements."

 

ERA shares closed down 34 cents, or 4.22 per cent, at $7.72.

The Rio Tinto Ltd majority-owned company said in July last year that first half net profit for 2009/10 had fallen by 82 per cent as production falls, higher maintenance costs and a stronger Australian dollar took their toll.

ERA said in the statement on Tuesday that it would extend the suspension of plant processing operations at the Ranger Mine in the Northern Territory until late July.

When the suspension was announced on January 28 this year, it was to have been for an initial period of 12 weeks as a precautionary measure to ensure that levels in the tailings storage facility (TSF) remained below the authorised operating limit throughout the wet season.

ERA said the actual level of 2011 production remains dependent on the level of rainfall for the remainder of the year.

ERA said that since the initial announcement, the Northern Territory has continued to receive significantly higher than average rainfall as a result of the La Nina weather pattern and that the Ranger mine has recorded the third highest wet season on record.

"Whilst the water level in the TSF is below the authorised operating limit, the total process water inventory at Ranger has recently exceeded the level at which operations are able to recommence," it said.

"Further, there remains approximately three weeks until the official end of the wet season.

"In light of these circumstances, ERA announced today that it will extend the suspension of processing plant operations until late July 2011 to allow the total process water inventory at the Ranger mine to reduce."