Ranger Misses Out On Boom
The Age
Thursday July 27, 2006
BOOMING uranium prices are taking a long time to feed into the revenue stream of Energy Resources of Australia, owner of the Ranger uranium mine inside Kakadu national park in the Northern Territory.
Spot uranium prices have surged in the past couple of years and were last quoted at $US47.25 a pound. But ERA is getting nothing like that for its annual production.The 68.4 per cent-owned Rio Tinto subsidiary revealed yesterday that its realised price for the June half was just $US15.57 a pound.While that was an improvement on the $US14.64 a pound received in the previous corresponding period, it still means Ranger uranium is being soaked up by overseas power utilities at a fraction of the spot price.The reason for the shortfall is simple enough. Ranger uranium continues to be sold under long-term contracts that contain pricing mechanisms entered into when uranium markets were severely depressed in the 1990s. Uranium did not move back through $US10 a pound until 2001.ERA gave no insight into when the full benefit of the boom in uranium prices would begin to tell, saying only that it would depend on new contracts coming into effect.As it was, the group's revenue on sales of 3198 tonnes of uranium oxide for the June half was $154.7 million. At spot prices, it would have been more like $440 million.The choking of group revenue because of the long contract position meant profit for the June half was an unspectacular $19.9 million, up from $17 million previously. Interim dividend is steady at 6? a share, payable on August 31 to shareholders registered on August 17.The group's outlook for the rest of this year is not all that bright. Production for the year is forecast to be down on last year due to some hangover effects of operational difficulties with the project's acid plant.The market reacted by driving ERA shares down 75? a share, or 6 per cent, to $11.40.LINK- For uranium prices, www.uxc.com
© 2006 The Age