Shares in uranium miner and Rio subsidiary, Energy Resources of Australia Ltd (ERA), fell nearly 7% yesterday after the company revealed a drop in production for the March quarter due to lower head grade and mill recovery.
Investors took a set against the report and the company, steadily selling during the day.
The shares ended down $1.56, or 6.8% at $21.25.
Investors didn’t like news of lower than expected production in the quarter.
ERA said in its March quarter production and exploration report that drummed uranium oxide production for the March 2009 quarter was 2,676 pounds, 9% down from the March quarter in 2008 and 26% lower than in the December 2008 quarter.
"Material mined for the March 2009 quarter was 73 per cent higher than the March 2008 quarter primarily due to the purchase of additional mining equipment in the first half of 2008 and the continued access to the pit throughout the wet season.
"Material mined was 18 per cent lower than the December 2008 quarter due to the onset of the wet season which caused mining delays.
"Ore mined was lower than both the December 2008 quarter and the March 2008 quarter due to the sequencing of waste and ore removal from the pit."
ERA also said it had formally applied for statutory approval of an underground exploration decline at its Ranger operations in the Northern Territory.
"Work on the Ranger Expansion Project continues and is focused on the development of a heap leach facility for the extraction of 15,000 to 20,000 tonnes of uranium oxide contained in low grade mineralised material both in situ and on stockpile.
"ERA formally applied for statutory approval of a heap leach facility at its Ranger operations on 16 March 2009. March 2009 quarter evaluation expenditure was $5.4 million, which has been expensed.
"The exploration drilling completed in the Ranger 3 Deeps area has defined a zone of contiguous high grade mineralisation east of the current operating pit over a distance of at least 1.2 kilometres along a north west trend. Potential remains for further mineralisation to the north of this trend.
"During the quarter, the exploration programme focused on in-fill drilling to the east of the current operating pit. Twelve drill holes were completed for 3,748 metres with expenditure for the March 2009 quarter of $2.2 million (2008 March quarter: $3.8 million)," the company said in its statement.
ERA’s annual meeting will be held in Darwin next Wednesday.
And Rio’s NSW coal subsidiary, Coal & Allied Industries said yesterday its share of saleable coal production was down 9% in the March quarter due to wet weather.
The miner’s share of saleable coal production for the quarter was 4.2 million tonnes, 9% lower than the first quarter of 2008, the company told the ASX, and Rio Tinto also reported.
"During the quarter, production was adversely impacted by wet weather conditions," the company statement said.
The company said its share of saleable production during the three months to March 31 was 4.24 million tonnes compared to 4.664 million tonnes in the first quarter of 2008.
The first quarter 2009 saleable production was down 11% on the 4.745 million tonnes in the December of 2008, mostly due to wet weather at its Hunter Valley operations.
"Mount Thorley Warkworth’s production was 27 per cent down on the December quarter; largely impacted by coal seam presentation, truck availability and wet weather.
"Strong production and coal sales in the fourth quarter of 2008 resulted in all operations starting 2009 with low levels of in-pit coal inventories," the company said.
Coal and Allied shares rose 5cto $73.10.
