Resource News

ERA’s profit up 23pc, flags higher costs in 2010

ENERGY Resources of Australia met analysts’ forecasts with a 23 per cent rise in annual profit boosted by higher uranium contract prices, but it foreshadowed higher costs in 2010 as it works to expand its Ranger mine.

ERA forecast 2010 production, sales and average realised sale prices to be “broadly similar” to those of 2009 but said the Ranger expansion plus higher maintenance costs are expected to “adversely impact earnings over the year”.

The forecast of flat output and revenue but higher costs suggests that ERA is expecting its annual profit to fall this year, which is in line with analysts’ expectations.

The Darwin-based uranium miner, 68 per cent-owned by Rio Tinto, booked a net profit for the year to December 31 of $272.6 million, rising from $221.8m in 2008. The average forecast of five analysts polled by Dow Jones Newswires was for a 2009 profit of $270.9m.

ERA owns the Ranger mine in the Northern Territory, which in 2008 was the second largest producing uranium mine in the world, according to the World Nuclear Association.

In a move to extend its life, ERA is studying what it calls the Ranger 3 Deeps mineral resource. It expects the studies to be complete around the middle of 2010 before making a decision on how it plans to develop the resource.

ERA reiterated today that it expects to submit a draft Environmental Impact Statement for its proposed heap leach facility some time in 2010. Heap leaching uses acid filtration to extract minerals from ore.

The company declared a final dividend of 25c per share, up from 20c in 2008.

Earlier this month, ERA said annual 2009 production fell 2 per cent on year to 5,240 tonnes but sales rose 4 per cent to 5,497 tonnes as the company drew on stockpiled ore.

Revenue totaled $780.6m in 2009, up 13 per cent from $691.8m in 2008.

Over the longer term, ERA said its prospects remain strong. “The outlook for uranium mining remains bright, with a strong market and sustained government and public interest around the world in nuclear energy as a critical part of the mix in a carbon-constrained economy,” it said.

The average spot price of uranium oxide in 2009 was $US44.50 per pound, down from $US52.50 per pound in 2008.

ERA, however, got an average 2009 uranium oxide price of $US50.84 per pound, up from $US32.53 per pound as old contracts struck at lower prices rolled out of its sales portfolio…read more at The Australian