Energy Resources of Australia (ERA) admits the high rainfall levels coupled with a slip of a pit wall have significantly hampered their production capacity. A subsidiary of the IO Tinto, ERA predicts a possible reduction of their volume of produce this year, the lowest ever in the past decade.
Last year, a pit slip occurred in ERA’s Ranger Mine in Kakadu National Park denying the miner access to high grade ore. Yesterday’s full-year production volume is only around 4300 to 4700 tonnes of uranium, 18 percent lower compared to previous record of 5240 tonnes.
The Energy Resources of Australia has only produced 4203 tonnes of uranium in 2001 and 4700 tonnes in 2002 while this year’s volume ranges between the two periods.
But this year’s demand is around 5000 tonnes. In order to cope up with the sales, ERA is set to deliver flexible shipments schedules to its customers with all commitments to be addressed through supply inventory management and small volumes of purchases from other miners to augment supply shortage.
This year’s second quarter, ERA has already produced 1828 tonnes of uranium, 44 percent lower than the first quarter and more than 7 percent lower than last year.
ERA confirms it has to take concrete steps by this first half of the year on possibly developing exploration decline at its Ranger 3 Deeps site. The ERA has an estimated 10 million tonnes of ore reserves in the Ranger 3 Deeps project with mor or less .34 percent grade of uranium dioxide.
Both the continuing work on unstable pit wall conditions and the high rainfall level are considered to be the major factors affecting the decline of production volumes by the ERA. The high rainfall actually brings water pooling in the mine preventing miners from getting into the bottom of the mine pit.
ERA however is optimistic in can utilize high grade ore deposits in the lower parts of the pit therefore increasing mill grade and volume by the later part of the year.
During yesterday’s opening, ERA shares plunged 50 cents to 14.23 dollars or 3.39 percent. Sixty eight percent of the Energy Resources of Australia is owned by Rio Tinto. Yesterday, shares in ERA yesterday drop 68 cents of 4.6 percent to 14.05 dollars.
Rio Tinto owns 68 per cent of ERA.
With the reduced production volume, ERA is estimated receive an 8 million dollar profit decline for the first half of the year. By December however, ERA may recover 126 million for a total of 166 million dollars for 2010.
