26th Jul 2006 09:13
Rio Tinto PLC26 July 2006 Rio Tinto's 68.4 per cent owned subsidiary, Energy Resources of Australia (ERA),issued the following news release in Australia today. ERA half year results 2006 Six months ended Six months ended Change 30 June 2006 30 June 2005 Revenue (A$ million) 154.7 129.8 19.2%Earnings before interest and tax (A$ million) 32.9 25.0 31.6%Net profit after tax (A$ million) 19.9 17.0 16.9%Interim dividend (cents per share) 6.0 6.0 0%U3O8 production (tonnes drummed) 1,988 2,714 (26.8)%U3O8 sold tonnes 3,198 3,000 6.6% Profit ERA recorded a net profit after tax of A$19.9 million for the half-year ended 30June 2006 compared with a profit of A$17.0 million for the same period in 2005. Operations Drummed production for the half year was 1,988 tonnes of uranium oxide (2005:2,714 tonnes of uranium oxide). This was lower than the corresponding periodlast year due to wet weather associated with cyclone Monica and unusually highrainfall throughout the wet season that prevented access to higher grade ore.Production was further impacted by a difficulties experienced in bringing theacid plant back to full production after a planned maintenance shutdown. As the wet season abated a number of programs to expedite the removal of waterfrom the operating pit, largely through accelerating evaporation, wereinitiated. The delay in accessing the higher grade ore at the bottom of theoperating pit meant that the average plant feed grade was lower, resulting inlower than planned uranium oxide production. During the second quarter a number of operational difficulties were experiencedwith the acid plant. A shutdown of the plant to carry out planned repairs andmaintenance took place in April. Cyclone Monica caused the shutdown schedule tobe extended and the resulting shortage of acid curtailed processing of ore. Theshortage of acid continued following difficulties experienced in the acid plantafter the start-up. These persisted until late May. The plant was returned tofull production in early June and acid inventory levels have since recovered. Revenue and Costs Sales for the period were 3,198 tonnes which included no new borrowed material(2005: 3,000 tonnes, including 113 tonnes of borrowed material). Revenue for theperiod was A$154.7 million (2005: A$129.8 million). ERA's average contractualsales price is only partially influenced by the spot market due to the portfolioof contracts containing a range of pricing mechanisms entered into when theuranium oxide market was considerably weaker. The average realised sales priceof uranium oxide was US$15.57 per pound (2005: US$14.64 per pound). Finished product inventory levels were drawn down during the half year in orderto ensure sales commitments were met. Customers continued to exercise upwardvolume flexibilities in existing contracts. A quantity of 158 tonnes wasborrowed in 2005 and this loan remains outstanding. The company settled US$33million (2005: US$34 million) in forward exchange contracts during the period atan average $A:US$ exchange rate of 67 cents (2005: 65 cents). No new currencyexchange contracts were entered into during the year. Unit operating costs were higher than the corresponding period last year due toexpenditure on removing surplus water from the operating pit, lower productionvolumes and higher fuel prices.. The addition to reserves in October 2005 meantthat units of production depreciation and amortisation charges were lower thanthe corresponding period last year. Taxation expense was higher than in 2005due to both the higher taxation charge on profit and the change to accountingpolicies on transition to IFRS in 2005. Cash flow The net operating cash flow of A$77.7 million (2005: A$23.1 million) was higherdue to the higher sales price realization and a favorable $A:US$ averageexchange rate received of 72.2 cents (2005: 75.9 cents). Dividends ERA Directors declared an interim dividend of six cents per share, (2005interim: six cents per share) fully franked at 30 per cent. The dividend will bepaid on 31 August 2006 to those shareholders registered on 17 August 2006. Outlook for 2006 As a result of the operational difficulties experienced in the first half of theyear, production for 2006 is forecast to be lower than in 2005. Sales volumes inthe second half of the year are expected to be lower than in the first half.Full year sales are expected to be comparable with 2005. In order to supplementacid inventories, a program of higher price imports was initiated in June. Thehigher costs associated with this will have a negative impact on the price ofconsumables used in production. Exploration drilling will continue in the second half of the year both on theeastern vicinity of Ranger's current operating pit and on other targets in theRanger project area following interpretation of results of the airbornegeophysical surveys conducted in 2005. Uranium prices continue to strengthen and the average long term market price inJune was US$46.75 per pound (2005: US$30.00 per pound). The full impact of thisincrease in the long term price will only flow through to sales contract pricesas new contracts come into effect. For further information, please contact: LONDON AUSTRALIA Media Relations Media RelationsNick Cobban Ian HeadOffice: +44 (0) 20 7753 2305 Office: +61 (0) 3 9283 3620Mobile: +44 (0) 7920 041 003 Mobile: +61 (0) 408 360 101 Investor Relations Investor Relations Nigel Jones Dave SkinnerOffice: +44 (0) 20 7753 2401 Office: +61 (0) 3 9283 3628Mobile: +44 (0) 7917 227 365 Mobile: +61 (0) 408 335 309 David Ovington Susie CreswellOffice: +44 (0) 20 7753 2326 Office: +61 (0) 3 9283 3639Mobile: +44 (0) 7920 010 978 Mobile: +61 (0) 418 933 792 Website: www.riotinto.comHigh resolution photographs available at: www.newscast.co.uk This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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