URANIUM production at Energy Resources of Australia's Ranger mine in the Northern Territory has returned to higher levels in the absence of the extreme rain that dogged the operation last year, raising expectations that annual output for this year will be at the higher end of company forecasts.

But as ERA advised previously, Ranger was a loss-maker in the June half, with a loss of between $50 million and $60m forecast for announcement on July 26.

And more losses are being incurred because Ranger's improved production is not enough to offset soft uranium prices and increased costs.

The listed Rio Tinto subsidiary reported yesterday that June quarter production was 632 tonnes of uranium, taking the June half total to 1288 tonnes.

The total for the quarter was slightly below market expectations of more than 650 tonnes but higher than the rain-affected level in the previous corresponding period, when it was hit by the suspension of processing operations from January 28 to June 15 because of a very wet season.

ERA did not update the market on the size of its expected loss for the June half.

It has been doing what it can to reduce costs, revealing it decided to reduce the quantity of reagents used to extract uranium from low-grade stockpiles of ore to "optimise economic returns" in the quarter.

"This resulted in a decrease in mill recovery compared to the preceding March 2012 quarter," ERA said.

Although mining operations in the June quarter were affected again by flood water in the Pit 3 open-cut, dewatering operations proceeded ahead of schedule, with full mining access achieved in late May. "Since that time, the productivity of the mining fleet has been high with the majority of the ore mined for the June quarter having been produced during the month of June 2012," ERA said.

ERA previously has forecast output for the full year of 3200-3700 tonnes of uranium, pointing to increased production in coming quarters.

Because access to Pit 3 has been re-established, analysts expect production for the year will be at the higher end of the company's forecast. The open-cut is, nevertheless, expected to be mined out by the end of the year.

The ability to extend mine life is dependent on accessing the Ranger 3 Deeps deposit.

ERA announced last month a $57m pre-feasibility study into the potential life-extending project.

Credit Suisse said it had become more confident that the "Deeps" would gain government approval and support of the traditional landowners. In a note on the June quarter, Credit Suisse said it had gained the impression, after visiting Ranger, "previous hostility of traditional owners towards the mine has been set aside and a new pragmatic relationship is developing".

It has predicted a full-year loss for ERA of $147m for the year and another loss of $100m next year.