Energy Resources Says December Rains Hit Uranium Output

Uranium miner Energy Resources of Australia Ltd. (ERA.AU) had more bad news for investors Thursday, warning that the highest December rainfall on record has flooded its Ranger pit in Australia's Northern Territory, preventing it from accessing high-grade ore.

ERA, which is controlled by Rio Tinto Ltd. (RIO.AU), said it hasn't been able to fully dewater the pit, and that access is highly dependent on rainfall experienced for the rest of the wet season. The delay may impact uranium oxide production in the 2012 calendar year, it said.

For the 12 months to Dec. 31 it reported a 30% increase in output to 2,641 metric tons, although this was coming off a low base amid a difficult period for the miner. Ranger, the second-biggest uranium mine in the world by production in 2010, is just about spent and ERA is encountering lower-grade ore at the bottom of the pit, triggering a spate of production downgrades.

"The delay in obtaining access to the high-grade ore located towards the bottom of Pit 3 may impact production of uranium oxide in 2012, however, the extent of this impact is presently uncertain," ERA said in a statement. 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.

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