RPT-Rio unit ERA's H1 profit jumps on uranium prices

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SYDNEY, July 25 (Reuters) - Energy Resources of Australia Ltd (ERA.AX> reported a sharply higher first-half profit, boosted by higher uranium prices and despite a fall in production.

But the 68.4 percent-owned Rio Tinto Ltd/Plc (RIO.AX)(RIO.L) subsidiary, which supplies one-tenth of the world's uranium from deposits in northern Australia, also warned that prices will be "somewhat lower" in the second half.

Net profit for the six months ended June 30 grew to A$38.9 million ($37.5 million), from A$5.7 million in the same period a year ago even as uranium oxide production dropped 6 percent to 2,357 tonnes and tonnes sold tumbled 21 percent to 1,746 tonnes.

ERA said it sold its uranium at an average $35.69 a pound, up from $16.90 in the year-ago period, the gain owing in part to the deferal of some lower priced deliveries until the second half, it said.

"The likely average price in the second half of 2008 will therefore be somewhat lower than in the first half of the year," it said.

ERA is spending A$57 million to expand mining at its main Ranger deposit on the fringe of the Kakadu National Park near Darwin in northern Australia to 2012 to meet projected new demand for uranium from the construction of new reactors.

Following a bilateral safeguards agreement signed by Australia and China last year, ERA as agreed to supply uranium to an electric utility in China this year.

Typically, a new reactor requires an initial 600 tonnes of uranium, then consumes around 200 tonnes of fresh fuel each year, according to industry data.

ERA was 1.85 percent lower at A$22.77 against a 0.6 percent drop in Rio Tinto and a 3 percent fall in the S&P/ASX 200 .AXJO index. ($1=A$1.04) (Reporting by James Regan; Editing by James Thornhill)