UPDATE: Uranium Miner ERA Upgrades Guidance; Future Still Cloudy
13 July 2011 - 11:36AM
Dow Jones News
Energy Resources Of Australia Ltd. (ERA.AU), 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.
-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692;
ross.kelly@dowjones.com
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