The operator of a decommissioned uranium mine in Kakadu National Park is hoping to raise $369 million to continue paying for rehabilitation, with its current funds due to be exhausted by the end of September.
Energy Resources Australia (ERA) has been trying to find enough money to return the Ranger uranium mine, 250 kilometres east of Darwin, to its pre-mining state, after operations shut in January 2020.
The company has spent about $524 million on rehabilitation works, the total bill for which was estimated at between $1.6 billion and $2.2 billion — a figure that is being revised.
With no revenue stream, ERA turned to a share offer to raise money for the mine clean-up.
In an announcement to the ASX today, ERA said it would offer its shares for $0.02 — a 90 per cent discount on its five-day average price.
ERA's major shareholder, global mining giant Rio Tinto, has made a binding commitment to buy $319 million worth of the company's shares, while two minor shareholders, Packer & Co and Zentree Investments, have committed to a further $36 million.
Gundjeihmi Aboriginal Corporation chief executive Justin O'Brien, representing the Mirarr traditional owners, said he welcomed the capital raising effort but was alarmed to discover ERA's operational cash-on-hand funds were due to be exhausted by September.
"Anything that addresses serious funding shortfalls such as that — the cliff that we are facing — is welcome," he said.
"But we are also alarmed that at such a late stage in Ranger's mine life, we still don't have the full cost of rehabilitation."
Funds to be used for rehabilitation
ERA said the money it hoped to raise would allow it to fund planned works at Ranger until the end of 2024, while it revised its estimate for the total cost of rehabilitation.
The funds will also be used to repay a $100 million loan from Rio Tinto, which was drawn down last month.
ERA independent chairman Rick Dennis said, "ERA remains committed to the comprehensive rehabilitation of the Ranger project area for people and country, including meeting all its statutory and contractual obligations, and today's announcement is an important part of this commitment."
The capital raising is only an interim measure for ERA, with the company advising the ASX another $210 million to $756 million may be required to fund the balance of the cost of Ranger's rehabilitation.
"ERA will consider available funding options for the additional amounts at the relevant time, which may include a further equity raise in 2024," an ERA statement said.
ERA, Rio Tinto once at odds over valuation
The share offer of $0.02 is significantly lower than ERA had hoped it could sell its shares at.
In October, ERA released an independent valuation of the company which determined a "fair value" of about 20 cents per share.
According to that report, the majority of ERA's value as a company came from its ownership of the Jabiluka mineral lease and its uranium resource.
The suggestion from the report that Jabiluka could be mined angered Mirarr traditional owners and Rio Tinto, and ultimately led to the resignation of ERA's three independent directors several weeks later.
In its announcement to the ASX today, ERA said the offer of $0.02 per share "… was the only price at which ERA was able to obtain pre-commitments for the minimum necessary funds required".
Mr O'Brien said today's share offer was "an acknowledgement of the true value of [ERA]".
"We do not see, given the long-standing opposition of the Mirarr traditional owners, given the position of the majority shareholder, given the time frames that apply, any reasonable prospect of the Jabliuka deposit being developed," Mr O'Brien said.
He said Mirarr traditional owners were also disappointed by ERA's commitment to renew its lease on the Jabiluka mineral deposit.
Rio Tinto has long recognised the Mirarr people's opposition to further uranium mining on their country.
"This was a relevant factor in Rio Tinto's recent decision to no longer report the Jabiluka deposit as a mineral resource," a Rio Tinto statement said.
"Rio Tinto also recognises that the Mirarr people's continued involvement in and support of the Ranger Rehabilitation Project is critical for its timely completion and success."
