ERA - Energy Resources of Australia

[Go Nuke]

Go nuke

Might be a bit harsh at $ 9.40 for PDn. The gap yesterday had to be filled so that would come to $9.90 . With the underlying trend line I sort of get a price of about $9.60 . $10.00 today was a great day after the large gain the day before . There was some real " buy at all cost " yesterday as people thought that they would miss out . I expect the price to hang around withinn a couple of % for the next few days . I suppose the next big news will be the cigar lake fiasco
Cheers martin

Might move this to PDN thanks mods

Thanks x2rider for your feedback
I always seem to fall for that "Im going to miss out bit" and have paid for it in recent times.
Questions is...an an inexperienced share goer...AM i going to miss out if I let say ERA continue on its merry way?
Been burnt so now Im waiting for it to fall a bit...but typical for me..both PDN and ERA will probably continue to climb

Thx again mate

 

[laurie]

Yes point taken Gary but anything over locked in contracts will be at spot prices the problem is finding out what is the contracted tonnage if the total produced is approx 6000T p.a. IMHO it could be approx 1000-1500T

cheers laurie

 

[Gurgler]

From FN Arena today:

ERA Declares Force Majeure
FN Arena News - March 08 2007

By Greg Peel

"While the uranium price has been heading north apace for the last two years, it was flooding at Cameco's Cigar Lake project in Canada that has forced the price to leap to the recent level of US$85/lb. Cigar Lake was expected to supply 10-12% of the world's uranium by 2010.

Energy Resources Australia's (ERA) Ranger mine in the Northern Territory supplies 10% of the world's uranium now. A week ago the NT was hit by Cyclone George. Heavy rain prompted a shutdown to mining operations.

Territory cyclones are hardly rare occurrences, and ERA suffered shutdowns last year under the same circumstances. Back then the company was able to meet its sale commitments through uranium loans and stock drawdowns. This time it's different.

This time the spot price is much higher, as the uranium market is extremely tight. Due to the long term contract nature of uranium sales, ERA is only averaging around US$22/lb for its ore. Were it forced to buy in uranium to make good on its contracts, ERA would be forced to pay at least US$85/lb and probably more.

Thus the company has declared force majeure, relieving it of such an obligation. Analysts all agree this is a sensible move.

The company has indicated that although it should have the mine back up and running within the week, the total effect will be a production level down 20-30% on the March quarter last year. Analysts have responded by reducing earnings forecasts accordingly, but no one has reduced target prices. The simple fact is that production might be reduced, but the only way for the uranium price to respond is another shift upwards.

ERA's contract customers will now be forced to go into the market, and uranium is extremely hard to find. The last auction trade a week ago – for 100kt at US$85/lb – was overbid by a significant volume at that price level.

This is good news for the likes of Paladin Resources (PDN), whose Langer Heinrich mine in Namibia has just commenced production. It's been a rollercoaster ride for the Paladin share price, as investors initially took profits above $10, and then started selling in earnest in this latest correction. The hardest hit stocks were those that had risen most dramatically, and Paladin found itself back in the sevens.

Closing yesterday at $8.85, one presumes another jump is on the cards. The ERA share price has suffered a similar ride, but will likely not be overly damaged by the production loss, given the force majeure and the likelihood of a higher uranium price. ERA closed yesterday at $24.60.

The FNArena database shows ERA on a 2/2/0 B/H/S ratio with an average target of $27.50 (take out Deutsche Bank and its $29.90). Paladin is showing 1/2/0 and $10.51."



May explain lower opening today; hope the impact is not too sustained. Increased demand will be good for all producers, long term.

 

[mickqld]

GSJBW website today has a short term marketperform, long term sell recommendation on ERA. Their forecast share price was between $13.54 to $18.24. They seem to be saying that uranium spot price has seen uranium companies become overpriced and expect them to fall back if the uranium price does not rise much above $110/lb.

 

[michael_selway]

GSJBW website today has a short term marketperform, long term sell recommendation on ERA. Their forecast share price was between $13.54 to $18.24. They seem to be saying that uranium spot price has seen uranium companies become overpriced and expect them to fall back if the uranium price does not rise much above $110/lb.

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 22.9 56.2 105.0 170.3
DPS 17.0 36.9 70.0 114.0

EPS(c) PE Growth
Year Ending 30-12-07 56.2 40.9 145.8%
Year Ending 30-12-08 105.0 21.9 86.8%

thx

MS

 

[laurie]

This is a sleeping giant slowly waking up and we still have Jabiluka heading for +$30 easy JMHO

cheers laurie

 

[Gurgler]

What's the feeling: at what level will this become a buying opportunity again?

It's one of the few current producers - despite the cyclone. Surely this can be seen as a short term hiccup.

(holding)

 

[Kauri]

Posted this elsewhere, was in todays West Australian paper.

The uranium price, already at $US95 ($117) a pound, could be set for further gains this week after Energy Resources of Australia said production from its Ranger mine in the Northern Territory would be flat this year and 25 per cent to 35 per cent lower next year. ERA, which is controlled by Rio

 

[Gurgler]

What's the feeling: at what level will this become a buying opportunity again?

(holding)

Well, we bit the bullet and took saw Thursday as a buying opportunity. Whether we are on the money or misjudging the tech aspects will be seen over the upcoming months. Opinions, anyone?

 

[Sean K]

Couple of things happening here.

Uptrend broken of course.
Tenuos H&S formed earlier, with target $20.
Hit support at $22 and bounced. Maybe a dead cat.

Anyone taking a punt that the Mirrar people will cave in to $$$ and give Jabiluka the go ahead? My money would be on $$$ ruling the day in the end. If they make that call, ERA should be very very well supported.

DARWIN, Australia (Dow Jones)--Rio Tinto Ltd. (RTP) said Monday a flare-up with traditional landowners over the Jabiluka uranium deposit in Australia's Northern Territory was a misunderstanding and not a major issue.

Shares in Rio Tinto subsidiary Energy Resources of Australia Ltd. (ERA.AU) slumped last week after the traditional owners of the land, the Mirarr people, said they were distressed by comments from Rio energy chief executive Preston Chiaro that the Mirarrs could soon approve development at Jabiluka, and restated their opposition to the mine.

"I do believe there was an element of misunderstanding in there and to the extent that that is being addressed I don't believe that it should be a major issue," Australian Managing Director Charlie Lenegan told Dow Jones Newswires in an interview.

Speaking on the sidelines of the Asia-Pacific Economic Cooperation Energy Business Forum, Lenegan said the misunderstanding had been unfortunate, but the miner has now reconfirmed that Jabiluka won't proceed without the support of the traditional owners.

Lenegan said Australia was well placed to become the leading supplier of uranium to growing Asian economies.

"There will be competition from other parts of the world, but we are very, very prospective in terms of low-cost nuclear sources," he said.

"We (Australia) may have as much as 40% of the resources capable of coming on at fairly low costs, and that has to position us very well to compete in that international market," he said.

At 0247 GMT, Rio Tinto shares were up 1.8% at A$94.37 and Energy Resources was down 1.8% at A$22.35.

 

[Gurgler]

Anyone taking a punt that the Mirrar people will cave in to $$$ and give Jabiluka the go ahead? My money would be on $$$ ruling the day in the end. If they make that call, ERA should be very very well supported.

This is exactly how I see it. Too much at stake for the two parties not to sort out some solution, probably lubricated with cash incentives.

Thanks for the analysis, Kennas.

 

[Sean K]

This is exactly how I see it. Too much at stake for the two parties not to sort out some solution, probably lubricated with cash incentives.

Thanks for the analysis, Kennas.

This could be worth a few c to ERA today. There's obviously something in it for the NLC. :

The Age:

Jabiluka may still be goer: land council
Lindsay Murdoch, Darwin
May 29, 2007

THE Northern Land Council plans to broker a meeting between Rio Tinto and indigenous owners of Jabiluka, reviving hopes of reopening the $50 billion uranium deposit in the Kakadu National Park.

Norman Fry, chief executive of the council, which represents Aboriginal groups in northern Australia, has declined to pre-empt the outcome of the meeting even though the Mirarr traditional owners said last week their approval for a mine was "not forthcoming".

Asked about the possibility of the Mirarr reversing their opposition, Mr Fry said: "We will be sitting down with Rio Tinto and the Mirarr in the not too distant future and that particular issue will be fleshed out."

Mr Fry made the comments last Friday on the sidelines of a full council meeting of the NLC at a bush site at Gulkula near Nhulunbuy in Arnhem Land, but they have not been made public until now.

Mirarr elders last week reacted angrily to comments made in London by Rio's chief executive, Preston Chiaro, that there was good reason to believe Mirarr senior elder Yvonne Margarula would soon say yes to the development of the mine.

The Mirarrs Gundjeihmi Aboriginal Corporation later issued a statement scathing of Rio's comments, which caused the share price of its subsidiary Energy Resources of Australia to fall 5 per cent.

Gundjeihmi late last week withdrew from training and cultural development projects with ERA, which also operates the Ranger uranium mine on Mirarr land in Kakadu, 20 kilometres south of the abandoned Jabiluka site.

The pro-nuclear NLC appears certain to try to influence Ms Margarula and other Mirarr to agree to develop Jabiluka, the world's largest known untapped uranium deposit.

The Mirarr could negotiate a multimillion-dollar royalty stream from the mine.

 

[Sean K]

Couple of things happening here.

Uptrend broken of course.
Tenuos H&S formed earlier, with target $20.
Hit support at $22 and bounced. Maybe a dead cat.

Anyone taking a punt that the Mirrar people will cave in to $$$ and give Jabiluka the go ahead? My money would be on $$$ ruling the day in the end. If they make that call, ERA should be very very well supported.

H&S pattern finalised at $22 ish today after releasing reduced earnigs guidance. $20 is also horizontal support and I see this as a potential consolidation area. I think that Jabiluka will be a goer after ERA agree to enough compensation which will result in ERA starting a new operation unheadged to a $200 ish uranium price perhaps. Long term the spot is obviously going to come back and even if it gets back to the lowest forecast that I have seen ($35) that will still make Jabiluka economical. (I think )

Anyone taking a punt here?

I'm going to wait to see it break back up through $22 I think before committing.

 

[56gsa]

nice call kennas - have been waiting for this to retrace and although hesitant to buy too much before july i think era could be an exception given the U price outlook and seems they are resolving issues with mirarr... will be watching closely

 

[Gurgler]

Well, we bit the bullet and took saw Thursday as a buying opportunity. Whether we are on the money or misjudging the tech aspects will be seen over the upcoming months.

Gulp - seems we may have misjudged the bottom (just a little!). Now sitting on $18.65 - but all the money's spent . Bummer!

I still have faith in the future though and agree with the sentiments expressed above.

 

[Sean K]

Gulp - seems we may have misjudged the bottom (just a little!). Now sitting on $18.65 - but all the money's spent . Bummer!

I still have faith in the future though and agree with the sentiments expressed above.

Reading the Melbourne Sunday Sun today in the 1 page finance section they have 3 brokers (experts ) give their Buy, Hold and Sell recommendations. One of them had ERA as a Sell, and one had it as a Buy.

It goes against a few general TA guidelines for ERA to have broken down through $20.00, so it's a little disturbing. There looked to be clear support at that level, coinciding with the 200d ma, so a break through that is significant. More support around $18.00 so it should pause there. But golly, what a fall from grace in a uranium bull market. Looking back, that break down through $24.00 in mid May, through upward support trend line, was the clincher.

This might be just part of the rotation around the commodities atm, and I think there's been lots of money transferred from U to O&G and the BIG miners. I think the really big money has gone into BHP, RIO and WPL over the past week.

I'm looking at this as a solid turn around story eventually. Maybe. Watching for the break up.

 

[mickqld]

Reading the Melbourne Sunday Sun today in the 1 page finance section they have 3 brokers (experts ) give their Buy, Hold and Sell recommendations. One of them had ERA as a Sell, and one had it as a Buy.

It goes against a few general TA guidelines for ERA to have broken down through $20.00, so it's a little disturbing. There looked to be clear support at that level, coinciding with the 200d ma, so a break through that is significant. More support around $18.00 so it should pause there. But golly, what a fall from grace in a uranium bull market. Looking back, that break down through $24.00 in mid May, through upward support trend line, was the clincher.

This might be just part of the rotation around the commodities atm, and I think there's been lots of money transferred from U to O&G and the BIG miners. I think the really big money has gone into BHP, RIO and WPL over the past week.

I'm looking at this as a solid turn around story eventually. Maybe. Watching for the break up.

Did you see the photos of Ranger on Inside Business this morning on the ABC. Blimey that is the biggest swimming pool in the world. Its going to be a long time before that start pulling more ore from this baby. Agree that this one will be a very solid turn around but I'd be waiting a few months yet before they even look like extracting again from this pool. I hope their stockpiles are going to last long enough otherwise there is more downside here yet.

 

[Lachlan6]

Waiting for a CFD long trade in (ERA) at the moment. Probably has hit its intermediate bottom and is looking to go higher from here. Nice little double bottom shaping up with very nice divergence in OBV and MACD. Will not enter until $22.00 is broken due to the cluster of resistance here (100 day EMA, horizontal resistance, down sloping resistance) for a possible first target of $25.18. This is calculated as the 38% level above the breakout coinciding with the range from June last year to March highs this year.

 

[56gsa]

Bounced off your $22 resistance Lachlan so more waiting I think - Qtrly report out today - good production figures of 1490kt of U against 4800 ktpa forecast, although still problems with the pit and force majure on sales until 2008 - despite these problems ABN still have a price target of $26 and forecast EPS in FY09 of 117cents. The potential is because of the investment now in Ranger on exploration etc which previously had fallen away - also Jabiluka upside still a possibility

 

[Gurgler]

Quarterly report out today indicates a drop in mining - only down 10% on last quarter) and production (and milling) is up 48%.

Not too bad despite the flooding of sections of the open pit.

(source: http://www.asx.com.au/asxpdf/20070717/pdf/313gqfqnnpd3y8.pdf)