Uranium's Future Is Good - Miner
Sydney Morning Herald
Saturday February 2, 2008
THE Northern Territory uranium miner Energy Resources of Australia said the outlook for uranium demand "appears positive" as it reported a 75 per cent increase in annual profit to $76.1 million.
The uranium price, which peaked at a record $US136 a pound last June, has since fallen to $US78 a pound. But ERA received only $US25.06 a pound for its yellowcake last year - up from $US18.36 in 2006 - because it had signed long-term contracts at a time of low uranium prices earlier in the decade. The long-term contract price is $US95 a pound.The Rio Tinto-controlled company's shares rose 97c to close 5 per cent higher at $19.80 yesterday, given the earnings beat analyst consensus expectations of $61.7 million.Goldman Sachs JBWere this week predicted ERA's earnings would rise to $97.4 million this year and then double to $178.3 million in 2009.ERA sold 5324 tonnes of uranium from its Ranger mine last year and expects this year's sales to be similar.ERA said a $57 million mine expansion was on budget and ahead of schedule, meaning mining rates would increase, starting in the current quarter. A laterite treatment plant and a radiometric sorting plant will be commissioned in the middle of the year. But the capital costs of those projects have risen to a combined $51.1 million, up from $40.8 million.Although uranium was an extremely hot commodity at the time of its pricing peak last year, investors have recently lost enthusiasm for most uranium stocks. In its quarterly report, released this week, Paladin's managing director, John Borshoff, said a resurgence in nuclear power plant construction should underpin uranium demand in the longer term.
© 2008 Sydney Morning Herald