Energy Resources Of Australia Woes Continue, Shares Down 10%

Energy Resources of Australia Ltd. (ERA.AU) on Friday forecast uranium production in 2011 to be similar to the subdued levels it mined in 2010 as wet weather disrupts its operations and it nears the bottom of its Ranger pit in Australia's Northern Territory.

Shares in the Rio Tinto Ltd. (RIO.AU) subsidiary plunged 10% after it also scrapped its final dividend and reported a 2010 net profit of A$47.0 million, at the bottom end of its recently delivered guidance of A$45 million-A$55 million.

Lower production due to wet weather and complex geology at the bottom of the pit, along with lower realized uranium prices and a strong Australian dollar, contributed to the 83% fall in profit.

Making matters worse, ERA said that in response to a higher-than-average wet season to date it will suspend plant processing operations for 12 weeks.

"As a consequence of the processing suspension, ERA's 2011 production of uranium oxide is expected to be at a similar level to 2010; however, actual production will depend on the actual level of rainfall for the remainder of the wet season," it said.

Last year, ERA paid a final dividend of 25 cents per share, but it decided not to pay one for 2010 due to uncertainty surrounding its first half production.

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

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