URANIUM producer Energy Resources of Australia has launched an exploration project beneath its flagship Ranger mine in a desperate attempt to save the company from a disastrous downgrade and financial loss.

ERA, which is majority owned by Rio Tinto, had been expected to post a loss for the first half of the year, after extreme rainfall in the Northern Territory halted work at the Ranger uranium mine.

But the market was stunned yesterday when a $22.3 million operating loss was blown out to a $121.75 million loss by a shock downgrading of the company's stockpiles.

The downgrade saw more than 6000 tonnes of uranium oxide given a reduced value, with the resource at Ranger reduced from almost 30,000 tonnes to just 16,000.

The changes were worth almost $100 million to the company, and sent ERA shares plummeting to their lowest close in seven years. Almost 10 per cent was shaved off the company's value, as its shares fell 42¢ to close at $3.92.

CMC Markets chief market strategist Michael McCarthy said the downgrade came as a nasty surprise for the stricken miner.

"They're scraping the bottom of the barrel there," Mr McCarthy said. "At the moment they've exhausted their current mines and they have a significantly diminished stockpile."

The downgrade was also influenced by a long-awaited decision on a heap-leaching project at Ranger. The decision not to go ahead with the heap-leaching left some resources unable to be exploited. ERA has instead decided to go ahead with a $120 million plan to explore underneath the Ranger open pit, where it hopes to hit better resources.

ERA boss Rob Atkinson said the company was changing from a predominant focus on production to a focus on exploration.

The company has engaged an external financial adviser to help determine a clear path forward.

Rio Tinto boss Tom Albanese gave support to ERA yesterday, saying the company had done well to cope with three years of extremely bad weather.

He said the extreme rainfall at Ranger over the past three years meant the heap-leaching project could not be confidently approved.

Rio said it was committed to playing its role in ERA's long-term funding plan. The Ranger mine is within the Kakadu National Park, and environment groups were alarmed by ERA's plan to start the 'deeps' project.

"ERA's decision to dig a new tunnel to facilitate underground mining at Ranger suggests the company still hasn't heard the community and the market's message that uranium mining in Australia's largest national park is not acceptable," said Dave Noonan from the Australian Conservation Foundation. "ERA should be planning a comprehensive clean-up of the mine site and beginning an ordered and managed exit from Ranger."