$800m NT mine rehab hits major hurdle

The multi-million rehabilitation of the Ranger uranium mine near Jabiru has hit a major hurdle with Rio Tinto’s plans to support ERA’s $476 million equity raising knocked back by the Takeovers Panel.

Stockpiled ore loaded onto a Haul Truck Ranger mine. Mining operations at ERA's Ranger Uranium Mine, including rehabilitation and revegetation at Jabiluka - November 2016 . Picture: ERA

The multi-million rehabilitation of the Ranger uranium mine near Jabiru has hit a major hurdle with Rio Tinto’s plans to support ERA’s $476 million equity raising knocked back by the Takeovers Panel.

Last month, on the back of support from Rio Tinto, ERA offered new fully paid ordinary shares to raise critical rehabilitation dollars. Ranger’s rehabilitation program now costs $808 million – up $296 million on the initial $512 million. Rio owns 68.4 per cent of ERA.

However the Takeovers Panel has ruled that Rio Tinto’s plans to support ERA would dilute the stakes of minority shareholders. It found the minority shareholders would be required to invest substantial capital to maintain their stake in ERA and avoid dilution.

The decision has forced Rio Tinto to put its plans on hold to consider other options.

The Panel ordered ERA to postpone the close of its entitlement offer and disclose Rio Tinto’s intentions in continuing the business of the uranium miner.

Importantly the Panel decision enables the Entitlement Offer to support the rehabilitation of the Ranger Mine Area to proceed, albeit with the provision of additional disclosures to shareholders and on a revised timetable. ERA will comply with these additional disclosures.

The Panel said it appeared that the entitlement offer is likely to result in Rio Tinto becoming entitled to proceed to compulsory acquisition (where it may acquire 100 per cent of ERA) without undertaking a takeover bid.

“The Panel has made orders that (in effect) Rio Tinto cannot compulsorily acquire shares in ERA as a consequence of the entitlement offer without shareholder approval,” it said.

It said any major changes to this and the future employment of ERA employees must also be disclosed to the Panel.

Should no other shareholders take up the entitlements Rio Tinto could end up increasing its voting power in ERA from around 68.4 per cent to 95.6 per cent.