ERA hit by softer prices April 13, 2010 - 12:27PM Energy...

ERA hit by softer prices April 13, 2010 - 12:27PM

Energy Resources of Australia (ERA) says softer market conditions are taking their toll and will influence average sale prices expected during the first half of 2010.

ERA this morning said first-quarter output of uranium oxide dropped 27 per cent from a year earlier.
Average ore grade, or purity levels, processed during the quarter were 41 per cent lower than in the March 2009 quarter, causing the drop in production to 888 tonnes, ERA said.

Shares in ERA were down 78 cents, or 4 per cent, at $18.91.

ERA, 68 per cent owned by Rio Tinto, said market conditions were softening, with the spot uranium price dropping $US2.75 per pound over the quarter to $US41.75 per pound at end of March and the long term-price indicator closing the quarter $US2.00 lower at $US59.00 per pound.

"These softer market conditions will have a partial influence on ERA's average realised sales price of uranium oxide during the first half of 2010," the company said.

Second-quarter production will be in line with the first quarter but will pick up in the second half as richer ores are mined, it said.
ERA produces about 10 per cent of the worlds uranium from its Ranger mine in the Northern Territory.

The miner also said production fell sharply in the first quarter of 2010, after lower grades and weather impacts took their toll.

Total material mined in the first three months of 2010 was down 60 per cent on the same period last year, to 1.8 million tonnes.

In January, the company warned production and sales would be heavily weighted towards the second half of 2010, due to the effect of mine sequencing, lower grades and scheduled maintenance.

Today, it said ore mined was down 59 per cent, due to the sequencing of waste and ore removed from the pit and the impact of seasonal weather.

It also blamed reduced drilling availability and precautionary work conducted on an area of instability on the south wall of the pit for reduced material mined.,

The projected level of production of uranium oxide in the second quarter of 2010 is expected to be in line with the first quarter, and 2010 sales deliveries have been sequenced accordingly, ERA said on Tuesday.

AAP, Reuters