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PERTH (miningweekly.com) – Uranium miner Energy Resources of Australia (ERA) has announced a A$476-million renounceable entitlement offer to fund the rehabilitation of its Ranger project, in the Northern Territory, with major shareholder Rio Tinto saying it would subscribe for its full entitlement.
ERA on Friday said that it would undertake a fully underwritten 6.13-for-1 pro-rata renounceable entitlement offer, priced at 15c a share, with some 3.17-billion shares to be issued under the offer.
Rio currently holds a 69.4% interest in ASX-listed ERA, and would subscribe for some A$326-million under the entitlement offer.
The offer price represented a 38% discount to ERA’s ten-day volume weighted average share price.
ERA previously told shareholders that it did not have sufficient existing cash resources to fulfill its rehabilitation obligations at the uranium project, following an increase in the rehabilitation provision at the end of December last year.
The uranium miner said that in order to address the shortfall, ERA has undertaken an extensive and rigorous review process to explore a number of alternative funding options, including an assessment of the availability of alternative sources of debt and equity, potential corporate transactions, and other potential third-party sources of funding support.
Rio told shareholders on Friday that given ERA’s inability to secure third-party underwriting support, Rio has also agreed to fully underwrite the offer to ensure ERA has the funds it needs to meet its current rehabilitation obligations.
“We take mine closure very seriously and ensuring ERA is able to fund the closure and rehabilitation of the Ranger Project Area, through participating in this entitlement offer, is a priority,” Rio Tinto group executive Energy & Minerals Bold Baatar said.
“We have committed to supporting this offer with the objective of ensuring ERA is in a position to rehabilitate Ranger to a standard that will establish an environment similar to the adjacent Kakadu National Park.”
The proceeds from the raising will go towards rehabilitation obligations at the Ranger project area, and to allow ERA to continue as a going concern.
“The entitlement offer will ensure ERA’s future by funding its rehabilitation obligations for the Ranger project area. These long-standing obligations to the Commonwealth and the Northern Territory governments, as well as the Traditional Owners, aim to return the Ranger project area to an environment similar to that in the adjacent Kakadu National Park,” said ERA chairperson Peter Mansell.
He noted that Rio’s support for the entitlement offer demonstrated the two company’s shared commitment to an appropriate rehabilitation of the Ranger project area.
“In turn, this will secure a sustainable, positive legacy for ERA by meeting the statutory requirements of the Commonwealth and Northern Territory governments, reflecting the environmental and cultural significance of the region. Successful rehabilitation is a prerequisite to support the prospect of any future operations and growth beyond Ranger.”