Rio Tinto has agreed to provide funding to its subsidiary Energy Resources Australia (ERA) to clean up the Ranger uranium mine in the Northern Territory.
The mine is set to close by January 2021 after ERA failed to receive permission from the Mirrar Traditional Owners and Gundjeihmi Aboriginal Corporation to continue operations.
ERA has sought help from its parent company Rio Tinto given the uranium miner has total cash resources of $425 million, falling well short of the $799 million required for the rehabilitation of the Ranger site.
Rio Tinto has advised ERA it is only willing to provide additional financial support via a renounceable entitlement offer, with the mining giant indicating it will subscribe for its 68.6 per cent entitlement of new shares – the same percentage of ERA shares it owns.
Rio Tinto has also offered to underwrite the balance of a renounceable entitlement offer if an alternative underwriting solution is not available to ERA.
Responding to the proposal, the ERA reported it “is considering the size, structure and terms of any potential renounceable entitlement offer, having regard to the interests of ERA as a whole.”
The company added it continued “to investigate whether there are other potential funding sources,” and would “provide a further update in due course.”
ERA and Rio Tinto have been engaging in ongoing discussion regarding the cleanup of the Ranger site, with the objective being to ensure ERA is able to meet its future rehabilitation obligations for the Ranger project area.
This responsibility has been delegated by the ERA board to a committee comprised solely of independent directors.
ERA produced 1999 tonnes of uranium oxide at Ranger in 2018, including 613 tonnes during the December quarter. Since the 1980s, Ranger has produced over 126,000 tonnes of uranium oxide under its various owners.