Energy Resources Australia's (ERA) share price fell sharply to its lowest close in seven years after it slashed the size of estimated reserves at its key Ranger uranium mine in the Northern Territory.

The downgrading from 29,800 tonnes to 16,000 tonnes wiped $99 million of inventory value from ERA's balance sheet.

Production at current Ranger mine was to have ceased mining two years ago but with stockpile processing until at least 2020.

ERA also announced the long-awaited expansion of its Ranger 3 Deep facility will go ahead in early 2012.

The miner on Thursday reported a net loss of $121.75 million for the six months to June 30 compared with a profit of $22.68 million for the same period a year earlier.

The miner's share price fell 9.7 per cent, or 42 cents to $3.93 on Thursday - its weakest finish since June 2004.

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 told AAP.

"At the moment they've exhausted their current mines and they have a significantly diminished stockpile," he said.

"They've had to tell the market they no longer have the high-quality uranium oxide they thought they had."

Mr McCarthy said the big question for the market was whether ERA went back into production.

The company's woes led from a rough year after it was forced to halt production for almost six months on its Northern Territory Ranger mine, about 200 km east of Darwin, due to an exceptionally heavy wet season.

ERA was forced to source uranium from swaps, loans and purchases over the past 12 months in order to meet its contractual obligations.

The miner is the world's fourth largest uranium producer and ERA been mining at Ranger since 1980.

Mr McCarthy said the decision to expand the Ranger mine would have been welcomed by the market, however the significant downgrade to ERA's resources offset any market confidence.

ERA chief executive Rob Atkinson told AAP the Ranger 3 Deeps resource was estimated to contain 34,000 tonnes of uranium.

"Until we put the tunnel in and do all the drilling, we don't know if we've got a viable mine," he told AAP.

The ERA board approved a $120 million project to conduct underground exploration drilling and explore areas adjacent to the Ranger 3 Deeps resource.

Mr Atkinson said he hoped the announcement would improve market sentiment.

Environmental groups welcomed the company's decision to scrap its controversial acid heap leaching project at the Ranger mine, which is close to Kakadu National Park.

Nuclear Free NT Campaigner Cat Beaton said the decision by ERA was a win for the environment and the local community.

Heap leach processing would have involved drizzling toxic sulphuric acid over small piles of ore to extract the uranium, leaving behind a poisonous liquid by-product.

"The public have made their opposition very clear on this issue, it seems that Rio Tinto (ERA's major shareholder) and ERA have listened to the voices of the people and conceded that acid heap leaching in Kakadu was nothing more than a bad idea," Ms Beaton said in a statement.

ERA directors did not declare an interim dividend, after an interim dividend of eight cents per share the year before.

No final dividend was paid for 2010.