Rio's ERA Q2 uranium output up, misses forecast

LONDON (Reuters) - Energy Resources of Australia (ERA), majority owned by mining group Rio Tinto, has posted a 44 percent rise in second-quarter uranium oxide output, but an analyst said it was lower than expected.

ERA said in a statement on Tuesday production for the three months to end-June was 1,481 tonnes due to improved grades and higher milled volumes.

The firm, which mines a 10th of the world's uranium, said first-half output was 2,695 tonnes, up 14 percent.

But analyst Edward Sterck at BMO Capital Markets said the second quarter figure was 24 percent below its forecast.

"The lower-than-forecast production in Q2/09 reduces forecast H1/09 earnings by 25 percent. BMO Research has also taken a more cautious view of likely production levels in H2/09, reducing forecast uranium output by 3 percent," a note said.

Sterck said ERA was a strong firm, but was fully valued compared to rivals. It reiterated a rating on the shares of "underperform" with a price target of A$19. ERA shares closed up 2.7 percent at A$21.67.

The group, in which Rio has a 68.4 percent stake, said work continued on the Ranger expansion project to build a heap leach facility to extract 15,000-20,000 tonnes of uranium oxide from stockpiles.

(Reporting by Eric Onstad; Editing by Greg Mahlich)