Energy Resources of Australia Ltd (ERA) shares went right off the boil yesterday when it described market conditions as soft in its first quarter operations review.
ERA said these softer market conditions are taking their toll and will influence average sale prices expected during the first half of 2010.
The market went argghhh and sold the shares down nearly 6%, or $1.17, to $18.52, after ERA said:
"In January 2010, ERA advised that 2010 average realised sales prices were expected to remain broadly similar to 2009,"
"Market conditions have since softened during the first quarter of 2010, with the spot price at US$41.75 per pound at the end of March, down US$2.75 from December 2009 and the long term price indicator closing at US$59.00 per pound, down US$2.00 from December 2009.
"These softer market conditions will have a partial influence on ERA’s average realised sales price of uranium oxide during the first half of 2010.
"As previously indicated, the current mine sequencing will continue to result in lower average head grades in the first half of 2010, with improvements expected through the second half of the year.
"Consequently, the projected level of production of uranium oxide in the second quarter of 2010 is expected to be in line with the first quarter, and 2010 sales deliveries have been sequenced accordingly."
ERA produces about 10% of the world’s uranium from its Ranger mine in the Northern Territory.
The miner also said production fell sharply in the first quarter of 2010, after lower grades and weather impacts took their toll.
It said production of uranium oxide in the first quarter of 2010 fell 27%, to 888 tonnes, compared to the first quarter in 2009.
Total material mined in the first three months of 2010 was down 60% on the same period last year, to 1.8 million tonnes.
In January, the company warned production and sales would be heavily weighted towards the second half of 2010, due to the effect of mine sequencing, lower grades and scheduled maintenance.
Yesterday, it said ore mined was down 59%, due to the sequencing of waste and ore removed from the pit and the impact of seasonal weather.
It also blamed reduced drilling availability and precautionary work conducted on an area of instability on the south wall of the pit for the reduced amount of mined material.
"The projected level of production of uranium oxide in the second quarter of 2010 is expected to be in line with the first quarter, and 2010 sales deliveries have been sequenced accordingly," ERA said yesterday.
