UPDATE: Energy Resources Australia 1Q Uranium Output Falls On Lower Grades
April 12 2010 - 11:24PM
Dow Jones News
Energy Resources of Australia Ltd. (ERA.AU) said Tuesday first
quarter uranium output from its Ranger mine in Australia's Northern
Territory was down 27% on year to 888 metric tons.
The Rio Tinto Ltd. (RTP) subsidiary had previously flagged that
production was set to fall as it processed lower grade ore, but the
market still marked the miner down. At 0250 GMT, its shares were
off 4.9% at A$18.72.
ERA said average ore grades processed during the quarter ended
March 31 of 0.17% uranium were down 41% on the previous
corresponding period.
Chief Executive Rob Atkinson said higher seasonal rainfall meant
the higher grade ore at the bottom of the Ranger open pit was
currently under water and that he expected grades and production to
remain at similar levels in the second quarter.
However, production is expected to recover strongly in the
second half of the year when Atkinson said grades are expected to
rise to between 0.25% and 0.3%, allowing ERA to meet its guidance
for 2010 production to be similar to that seen in recent years.
"(The quarter) was pretty much in line with the guidance we
provided and it is very much a year of two halves," he said in an
interview with Dow Jones Newswires.
"The first half will continue at these sorts of grades, the
second half, we believe, will be a lot stronger in terms of
production, grades and also sales."
ERA noted that uranium prices had dipped during the quarter,
with the spot price falling US$2.75 per pound over the period to
US$41.75 and the long-term pricing indicator falling US$2 to
US$59.
The miner said the softer market conditions would have a partial
influence on its average realised sales prices in the first half of
2010.
However, Atkinson said despite this there was no change to the
company's guidance that it expects average realised sales prices
for the full year to be broadly similar to those seen in 2010.
Material mined during the quarter fell 60% on year and Atkinson
said this was due to one of its specialist drills being out of
action, preventing necessary drilling to protect the walls of the
open pit and therefore limiting blasting that could be
undertaken.
-By Alex Wilson, Dow Jones Newswires: 613-9292-2094;
alex.wilson@dowjones.com
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