Courtesy of the Australian -:Energy Resources profit...

Courtesy of the Australian -:

Energy Resources profit soars

February 01, 2008

ENERGY Resources of Australia posted a 74 per cent rise in annual profit and said the outlook for the uranium market was positive.
Net profit at Energy Resources (ASX: ERA: quote) for calendar 2007 rose to $76.09 million, or 74 per cent, from $43.61 million in 2006.

Earnings before interest and tax increased 57.2 per cent to $108 million, after revenue jumped 14 per cent to $362.35 million.

Sales of uranium oxide for the year totalled 5324 tonnes, down from 5706.

The decline followed a force majeure that had been declared after storms affected production at the Range mine in the Northern Territory early last year.

“ERA expects sales in 2008 to be similar to 2007, possibly accompanied by a modest replenishment of inventory in the logistics chain,” it said.

ERA said its average realised sale price of uranium oxide was $US25.06 a pound, up from $US18.36 a pound in 2006.

“Looking forward, the outlook for uranium demand appears positive,” it said.

“ERA continues to position itself to benefit from this by seeking opportunities to add value by expanding production and extending the duration of output from resources available to ERA.”

ERA said the higher Australian dollar exchange rate with the US dollar had negatively impacted revenue to the tune of $38.6 million in 2007.

An improved operational performance and an increase in grade of ore mined resulted in annual production of 5,412 tonnes, an increase of 14 per cent.

“The 2007 annual production is the second highest annual production on record for the Ranger mine,” it said.

While revenues rose as a consequence of the rise in the average realised uranium oxide price, this was partially offset by a rise in employee and contractor numbers and associated costs and increased expenditure on key consumables, particularly sulphuric acid.

ERA also incurred increased costs associated with the removal of water from the operational pit after severe weather resulted in flooding in the first quarter of 2007.

“ERA remains in discussions with insurers regarding cost recovery and business interruption claims following Cyclone Monica in 2006, and the weather event of February/March 2007,” it said.

ERA has embarked on a $57 million mine expansion, and said the work is on budget and running ahead of schedule.

“The first new trucks have arrived and mining rates will increase from the first quarter of 2008,” it said.

“The pre-feasibility study, announced in September 2007 to examine options to further expand operations, is progressing well and will be completed in mid-2008.”

The cost of the study is $10 million.

This year ERA also expects to complete the expansion of its water treatment plant.

ERA declared a final dividend of 20 cents. It did not pay an interim dividend.