Energy Resources of Australia (ERA) this morning announced an 82% slump in after tax profits for the first half of the year compared to the corresponding period in 2009.
The company reported an after tax profit of $22.7 million for the first six months of 2010, compared to $127.6 million in the same period last year.
The uranium miner blamed the reduced results on lower production and sales.
The miner has so far produced 3.786 million pounds (1717 tonnes) of uranium oxide, down 36% on the 5.942 million pounds (2695 tonnes) from the first half of last year.
“This decrease was primarily due to a reduction of 48% in mill head grade to 0.15% uranium oxide; in June 2009 the grade was 0.29%,” the company said.
“The significant decline in mill head grade was mainly due to issues with mine sequencing due to the removal of material from a localised area of instability on the South Wall of the Ranger pit.
“This was exacerbated by delayed access to high grade ore located at the bottom of the pit, following higher than normal rainfall late in the wet season.
“The favourable impacts from strong plant operation in both utilisation and recovery, combined with a favourable contribution of the laterite processing plant, helped to mitigate the impact of the lower grades of ore processed.”
Sales were subsequently reduced 17% from 5.025 million pounds (2280 tonnes) to 4.171 million pounds (1892 tonnes).
However the company said sales will be heavily weighted towards the second half of the year.
Revenue also slumped by 37%, from $347 million in 2009 to 217.7 million in 2010 so far.
The company has revised its expected production for the full-year to between 4300 and 4700 tonnes.
ERA had expected that the 2010 production results would be broadly similar to the 5240 tonnes produced in 2009.
The sales volume is expected to exceed 5000 tonnes.
The company said the results were only “partially influenced” by the current market prices, because it has a “diversified and long term sales contract portfolio.”
“The average realised sales price of uranium oxide for the six months to June 2010 was US$44.79 per pound compared with US$48.02 per pound for the corresponding period in 2009,” the miner said.
“This change is largely attributable to first half deliveries under a lower priced legacy contract, which is now at an end.
“On 30 June 2010, the average long term market price for uranium oxide was US$59 per pound and the average spot price was US$41.75 per pound.”
The miner also attributed the results to the strengthening Australian dollar and an increase in maintenance expenditure on the mining fleet.
The average Australian-US dollar exchange rate increased by 24% from US71.8 cents in the first half of 2009 to US89.1 cents in the same time in 2010.