PERTH (miningweekly.com) – ASX-listed Energy Resources of Australia (ERA) has entered into an amended A$100-million loan agreement with mining major Rio Tinto, with ERA’s independent directors, including its chairperson Peter Mansell, stepping down.

Rio at the start of the week called for Mansell's resignation just days after trashing an independent valuation of ERA, saying it failed to recognise opposition to the development of the Jabiluka uranium deposit.

The independent valuation, which was done on behalf of ERA’s Independent Board Committee (IBC), was based on the development of the Jabiluka deposit, which is located on the Jabiluka mineral lease, and contains 302-million pounds of triuranium octoxide at an average grade of 0.55%.

The valuation was undertaken to determine a fair value for the ERA after it failed to get shareholder support for a non-underwritten, renounceable entitlement offer to raise A$300-million in interim funding for rehabilitation work on an optimised basis, until the end of 2023.

Rio on Monday called for Mansell’s resignation to allow for ‘board renewal’ and to introduce new perspectives to address the material cost and schedule overruns on the critical Ranger rehabilitation project in Australia’s Northern Territory.

ERA said at the time that Mansell, along with the remaining members of the IBC, had taken the decision to step down after securing a clear pathway to an interim funding solution, saying they did not believe that it was in the best interest of ERA for them to continue working with Rio into the future.

Rio on Thursday welcomed the renewal of ERA’s IBC, with the miner’s Australia CEO, Kellie Parker, saying the major was committed to working with ERA to facilitate this board renewal process and to urgently develop a workable plan to fund the increased rehabilitation costs.

“We restate our belief that the successful rehabilitation of the Ranger project area, which is of critical importance to the Mirarr People, Rio Tinto and ERA, can be achieved in a way that is consistent with the Mirarr People’s wishes. This remains our utmost priority and commitment,” Parker said.

The revised A$100-million credit facility with Rio would provide ERA with additional liquidity to rehabilitate the Ranger project area, and would have a maturity date at the end of March 2023, unless additional funds were raised before then, or unless extended by Rio.

The maturity date is subject to deferral for some three months if ERA is unable to repay the loan at that time.

ERA said on Thursday that the revised credit facility provided the company with additional time to negotiate and implement a future funding solution and offered additional assurance to the company’s stakeholders that rehabilitation of the Ranger project area would continue to be funded.

ERA earlier this year revealed that it would require a further A$1.06-billion to A$1.65-billion in capital expenditure to complete rehabilitation of the uranium project, after an independent review of the rehabilitation estimated a cost of between A$1.6-billion and A$2.2-billion for the project, compared with the 2019 cost estimate of A$973-million, while pushing back the completion of rehabilitation work to between the fourth quarter of 2027 and the fourth quarter of 2028.