Energy Resources of Australia shares fell more than 4% yesterday after it reported a 36% slump in first-half uranium oxide production and warned the market to expect full-year output to be down by at least 18% on 2009.
Second quarter output was down 44%, the company told the ASX yesterday
That took the market by surprise, although the shares have been on a long slide from the start of the year.
The shares hit a day’s low of $14.00 before bouncing softly to end at $14.05, down 4.3% on the day.
It is still well off the low of $12.51 reached in late May.
ERA’s news came in the June quarter’s operations report released yesterday.
The world’s fourth largest uranium miner reported that it produced 1,717 tonnes of uranium oxide in the six months to June and that it expected to produce between 4,300 and 4,700 tonnes of uranium oxide during 2010, compared with 5,240 tonnes in 2009.
So big will the shortfall be, that ERA said yesterday it will have to make "small secondary purchases" to satisfy contracts.
The company, which is majority owned by Rio Tinto, had previously said it expected 2010’s production to be similar to that in 2009.
The reduction in mining volumes was due mainly to having to work on instability on one of the walls, as well as higher than normal rainfall which caused more water to pool in the mine, preventing access to the bottom of the pit.
"In July, ERA expects to regain access to higher grade ore located in the lower levels of the pit, with mill grade progressively increasing throughout the second half of the year.
"Due to delayed access to higher grade ore, production of uranium oxide for the 2010 year is now expected to be between 4,300 and 4,700 tonnes.
"Previously, ERA had indicated that production of uranium oxide in 2010 was expected to be broadly similar to 2009 production (5,240 tonnes).
"Despite revised production for 2010; sales are expected to be somewhat in excess of 5,000 tonnes, with commitments met by way of inventory management, flexibility of shipments to customers and a small volume of secondary purchases."
