Energy Resources Of Australia Ltd., one of the world's biggest uranium miners, on Wednesday upgraded its annual production guidance after restarting processing operations following a bout of heavy rain.

 

The 8% upgrade was a rare piece of good news from ERA, which has almost exhausted the ore deposit at its Ranger mine in Australia's Northern Territory and is wondering what to do next.

Investors in ERA, 68%-owned by Rio Tinto Ltd. (RIO.AU), had become accustomed to production downgrades. Lower-than-expected ore grades are being encountered at the bottom of Ranger, and it rained harder than usual in Australia's top end during the wet season due to a la Nina weather pattern.

ERA in January was forced to stop processing uranium oxide after Ranger's tailing dams came close to overflowing. Ranger borders Australia's pristine Kakadu National Park and ERA was prepared to pump water out of the dams and into the main pit to stop it from overflowing into the park.

The pit is still partly flooded, so mining activities are currently focused on Ranger's upper benches. ERA said it is still installing extra pond water treatment capacity and doesn't expect to obtain access to the bottom of

the pit, where there's higher-grade ore, before the quarter starting Oct. 1.

In the three months to June 30 it produced just 83 metric tons of uranium oxide. It forecasts 2011 full year output of 2,600 tons, up from previous guidance of 2,400 tons as production, restarted June 14, continues to get back on track.

ERA on Wednesday didn't report much progress on its growth options. One is to tap a new resource at Ranger, called Ranger 3 Deeps. The other is to construct a heap leach facility, which would improve lower-grade ore with acid filtration.

A proposal to drill an exploration tunnel to help test the Ranger 3 Deeps resource "remains in the final stages of ERA's approval process", the company said. It said the same thing three months ago in April, at the time saying a decision was expected by June 30.

A draft environmental impact statement for the heap leach facility is expected to be presented to the board "early in the second half of 2011".

Analysts have said that ERA may be awaiting the blessing of traditional landowners before signing off on the developments.

The production upgrade helped push ERA shares up 1.7% to A$4.13 in a wider market up 0.2%. ERA shares were trading above A$26.00 in mid-2009 but have been hurt by its production woes and the fallout from Japan's nuclear crisis, which has clouded the outlook for uranium miners.