Energy Resources Of Australia Expects Long-Term Uranium Price Rise

Energy Resources of Australia Ltd. (ERA.AU) said Wednesday that the long-term outlook for uranium prices remains positive as it prepares to begin test work for a new underground mine.

The Fukushima nuclear accident in March last year sent uranium prices tumbling and they are expected to remain relatively static in the near term as surplus Japanese material clears the market, Chairman David Klinger said.

"Demand is expected to grow over the long term as concerns about climate change and energy security encourage further development of nuclear power," Klinger told the company's annual shareholder meeting. He noted that the World Nuclear Association recently said that over 80 new reactors are expected to be commissioned by 2017 out of 489 new reactors that are either planned or proposed.

The subsidiary of Rio Tinto Ltd. (RIO) owns the Ranger mine, which borders Australia's Kakadu National park in the Northern Territory. Counted in 2010 as the world's second-biggest uranium mine by production, Ranger is fast running out of ore and mining is expected to cease late this year or early in 2013.

The company recently ditched plans to build a heap leach facility to process poorer quality ore in favor of pursuing a possible expansion of Ranger through development of the adjacent Ranger 3 Deeps deposit.

It will start building the entrance to a A$120 million exploration 'decline'--a tunnel bored through the resource to facilitate closely-spaced drilling and a geotechnical assessment--in May ahead of drilling the actual tunnel in October.

ERA expects to decide whether to proceed with a new mine at Ranger in 2014.

-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692; [e-mail]