ERA says uranium outlook remains strong

Uranium miner Energy Resources of Australia Ltd (ERA) says higher capital expenditure and a weaker US dollar will dent earnings in calendar 2010.

"Against a relatively strong average realised exchange rate in 2009 of US 82 cents, a weaker US dollar in 2010, currently trading at US 93 cents, will of course continue to be a very significant driver on realised sales revenues," chairman David Klingner told ERA's annual general meeting on Wednesday.

The weak US dollar and higher expenditure on scheduled maintenance programs and development projects during 2010, would affect earnings in the first half and full year, Dr Klingner said.

Capital investment will also increase in 2011 as the company advances production expansion plans at its Ranger mine in the Northern Territory.

ERA reiterated that its full year production and sales for 2010 should be broadly in line with the levels of recent years.

Production and sales will be more heavily weighted towards the second half of the year.

Lower production and sales during the first half were largely due to lower ore grades.

While the open pit at Ranger is almost exhausted, ERA hopes to maintain steady production levels for some time by using a proposed heap-leach facility that will recover material that was previously considered too low grade.

The mine's longer-term future hinges on the 34,000 tonne Ranger 3 Deeps discovery, east and adjacent to the Ranger 3 operating pit.

Dr Klingner said the long-term outlook for uranium remains strong.

"Despite price weakening in 2009, the long-term outlook for the uranium market remains strong, with nuclear power recognised as a key element of the global energy solution," he said.

"While market prices have stabilised well below the historic highs reached in 2007, current prices are still significantly higher than for most of ERA's 30-year history, supporting investments to increase output."

The spot price does not have a big effect on the Rio Tinto Ltd-majority owned company, which sells most of its product on long-term contracts.