Rio Tinto’s ERA predicts a recovery in uranium output up to 3,700/t in 2012
Rio Tinto’s Energy Resources of Australia expects uranium output in 2012 to recover to between 3,000 and 3,700 tonnes after mining interruptions drove it to a A$154 million ($164 million) loss in 2011.
ERA’s shares, which have tumbled 78 percent over the past year due to the company’s production problems and wider concerns afflicting uranium stocks post Japan’s Fukushima nuclear disaster last March, were down 7 percent by early afternoon.
Production was suspended for five months last year at ERA’s Ranger mine, which in previous years supplied as much as 10 percent of the world’s uranium, due to heavy rains in Australia’s tropical north.
The result was a 30 percent decline in overall production in 2011 to 2,641 tonnes against its 2010 tally.
It also said it purchased 2,126 tonnes of uranium on the spot market, of which 1,636 tonnes was sold in 2011. Combined with inventory management and uranium loans, this enabled the company to meet all its sales commitments.
ERA warned in January that production may be hit again this year as rain had delayed access to high grade uranium-bearing ore.
“Production in 2012 will be weighted towards the second half of the year with mining operations limited due to the wet season, particularly the record December 2011 rainfall,” said ERA, which is 68-percent owned by Rio Tinto.
Sales were expected to be broadly in line with production in 2012, it said.
ERA expects to sell its uranium in 2012 at roughly the same average price — $59.23 a pound — it received in 2011, according to the company.
That’s slightly above the current spot price of around $52 a pound.
However, it warned the international market for uranium “remains subdued” as excess supply is worked off.
It would be 2014 before prices started to rise, according to the company.
ERA said it incurred depreciation costs and a higher rehabilitation provision in 2011, in addition to costs associated with outside uranium purchases to meet sales obligations.
The company also cut the size of its estimated reserves at the Ranger mine, wiping A$99 million of inventory value from its balance sheet.
Production for 2012 remains highly dependent on the levelof rainfall over the remainder of the wet season, it said. – Reuters
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