ERA chief executive Rob Atkinson said the board of the Rio Tintocontrolled miner was now expected to meet next month, rather than this month, to decide the fate of the Ranger Deeps exploration decline. The project could give it the ability to

continue mining after the open pit closes next year.

 

"I think Ranger 3 Deeps is a terrific project,” Mr Atkinson told The Australian Financial Review yesterday, adding that the board wanted to complete a broader review of the business before deciding whether to approve construction that would begin

next year.

 

CLSA analyst Michael Evans estimated the miner’s free cash flows were likely to remain negative over the medium term.

 

ERA has been looking to slash costs after it had to halt production following a fierce wet season because its tailings dam was full.

 

It restarted the processing plant yesterday, and although it will take a month to ramp up to full capacity, it will be producing earlier than its previous guidance of late

July.

 

ERA also told the market to expect a narrower half-year loss than flagged. It now expects a loss of $20 million to $30 million, rather than $30 million to $50 million.

 

Mr Atkinson said ERA had been able to complete maintenance at a lower cost than anticipated.

 

Despite having restarted production earlier than expected, the miner’s guidance of annual production of 2400 tonnes – down from an initial forecast of 3800 tonnes – remained the same.

 

UBS analyst Glyn Lawcock, however, raised his 2011 production forecast for the miner by 14 per cent to 2700 tonnes as a result of the update. He also upgraded his recommendation on the stock to “neutral” from “sell”, keeping in mind the shares have fallen 64 per cent this year.

 

ERA shares closed 14¢ higher yesterday at $4.18.

 

Although the market regarded as a positive ERA’s news about restarting production, the focus remains on the longer-term viability of the company.

 

Until recent analyst presentations, the expectation was that ERA would start construction on the Ranger Deeps decline this year.

 

Once construction begins, it will take a few years to prove up resources and then build a mine if enough are proven, meaning the first production is unlikely to start until about 2017.

 

The Ranger mining lease expires in 2021, and although ERA has hinted about the possibility of its being extended, it recognises it would be a complex process politically.

 

The indigenous landowners, the Mirrar, are opposed to uranium mining on the site and to the development of ERA’s Jabiluka deposit.

 

Any further delays to ERA’s decision on whether to approve the exploration decline are likely to concern the market, as the company’s future is, in effect, dependent on the project now that a heap leach operation looks doubtful because of water management problems.

 

Asked if it would be viable for ERA to postpone construction beyond the expected start next year, Mr Atkinson said: "I wouldn’t think so. It is important that we get on."