ERA to raise $476m to close uranium mine
Rio Tinto said it will subscribe to $326 million rights shares of Energy Resources of Australia, which has been desperately seeking funds to close and rehabilitate the controversial Ranger uranium mine.
The world's second-biggest listed miner, which has a 68.4 per cent stake in ERA, also said it will fully underwrite ERA's $476 million equity fundraising, after the uranium miner failed to secure someone else willing to do so.
The offer price of 15 cents per share represents a 38 per cent discount to its average price of 24 cents for the last 10 days.
Shares of ERA had slumped 20.4 per cent to 19.5 cents at 1451 AEDT on Friday, their lowest in almost five months, in a broader market that was up around one per cent.
ERA has been looking to raise money to fund the closure and rehabilitation of the Ranger project in the Northern Territory after it ran into controversy due to its proximity to the Kakadu National Park.
The Australian Government has documented more than 200 environmental incidents at the mine between 1979 and 2003.
ERA said it has been working closely with Rio for a funding solution after flagging, earlier this year, a higher-than-expected rehabilitation provision for the Ranger project which it could not cover.
"We take mine closure very seriously and are ensuring that ERA is able to fund the closure and rehabilitation of the Ranger Project Area," said Rio's group executive for energy and minerals, Bold Baatar.
ERA has until January 2021 to end mining activities, and until January 2026 to complete rehabilitation of the area.
The rehabilitation work will not lead to any returns for ERA.
ERA was the target of some of the biggest environmental protests across Australia in 1998, including an eight-month blockade and 500 arrests, after the local indigenous Mirarr people opposed its planned development of the nearby Jabiluka concession on the fringe of the Kakadu rainforest.
The entitlement offer could end with Rio Tinto's sharesholdings increasing to more than 75 per cent, which would let it delist the company from the ASX.
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