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Energy Resources of Australia Downgrades 2010 Production

Energy Resources of Australia (ASX:ERA) has downgraded its 2010 production guidance as it said that the uranium ore grade was lower than expected. This is the second time it has downgraded its annual production guidance this year.

It also said that it would need to purchase additional supplies to meet its sales commitments in the statement. The purchase of the additional 5,000 tonnes of uranium would erode existing profits. The shares in ERA fell by little more than 5% after the Northern Territory based uranium producer made the statement. The Darwin based company is owned 68% by the mining giant Rio Tinto.

ERA said that while its uranium oxide production in the September quarter was 10% higher than in the last quarter it was 35% lower than the corresponding quarter in 2009. The Rio Tinto subsidiary is the owner of the second largest uranium mine, measure on production, in the world.

The Ranger mine has produced 9% of the world's uranium in 2009 as per the World Nuclear Association. ERA has extended the life of the Ranger mine to at least 2012, after which it plans to sell stockpiled ore until the year 2020.

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