Aurora shares hit by Labrador uranium mining ban

TORONTO, April 9 (Reuters) - Shares of Aurora Energy Resources Inc (AXU.TO: Quote, Profile, Research) recovered a bit on Wednesday after plunging on Tuesday in reaction to a decision by the Inuit government in Labrador, on Canada's East Coast, to halt uranium mining for three years.

On Wednesday the company and analysts downplayed the long-term impact of a 8-7 vote by Labrador's Nunatsiavut assembly to impose a uranium mining moratorium, partly due to health concerns.

Shares of Aurora -- whose Michelin uranium project in Labrador is slated to start production in about five years -- plunged more than 33 percent on the news, but recovered about a third of those losses on Wednesday.

The stock was up 42 Canadian cents, or 12 percent, at C$3.92 on the Toronto Stock Exchange.

Shares of Fronteer Development Group (FRG.TO: Quote, Profile, Research), Aurora's controlling shareholder, dropped 8.3 percent on Tuesday but bounced back by 6.8 percent, or 33 Canadian cents, to C$5.17 on Wednesday.

George Topping, an analyst at Blackmont Capital, said he was surprised at the extent of the selloff given Aurora hadn't planned to produce uranium from Michelin until the second half of 2013.

"The moratorium does not preclude exploration or, we believe, environmental permitting work," Topping wrote in a research note. "So, theoretically, it may not materially impact our ... production assumption."

Ministers of the Nunatsiavut government, which was created in 2005 in the province of Newfoundland and Labrador, were not immediately available to comment.

Vancouver, British Columbia-based Aurora, whose Jacques Lake project is also located on Inuit land in Labrador, said it is committed to working with the regional government and plans to conduct an infill drill program at the Michelin and Jacques Lake deposits.