First, there was Cameco’s Cigar Lake uranium mining flooding in Saskatchewan, which took away anticipated uranium mining production from utilities. Now, Energy Resources of Australia (ERA) has declared force majeure on its uranium sales contracts – as per a company news release issued by the company.

ERA also announced that first quarter production would fall by 20 to 30 percent below first quarter 2006 production. Annual production for the Ranger operation was down the past year.

The company is still assessing the impact of the water level in the pit. The company did announce, “…production will be impacted in the second half of 2007.”

Heavy rainfall, during February through March 4th, had forced the company to cease mining operations on February 27th. Mining operations started today and the processing plant is expected to restart next week.

ERA’s Ranger mining operation has received 1,600 milliliters of rain, thus far, in 2007. In a recent 72-hour period, the area was hit with 750 millimeters of rain. Widespread flooding has restricted access to and from the Ranger mine.

The currently tight uranium market may have suddenly taken a turn for the worse. Mining production at the world’s top mines was down by 10 percent in 2006. Over the past twelve months, the price of uranium has more than doubled and continues to show momentum in its price climb. ERA’s force majeure could likely panic those utilities, which have been holding out for lower prices.  

We remain bullish on the uranium price, the new wave of uranium producers and the near-term uranium producers – those with projects going into mining production by 2010.