Willy Packer blasts ERA board over Jabiluka uranium deposit surrender
If Rio Tinto doesn’t want Jabiluka developed, it should pay out the deposit’s value to minority shareholders, according to fund manager Willy Packer.
Rio Tinto should pony up the value of the Jabiluka uranium deposit to minority shareholders if it doesn’t want to mine the rich uranium seam, according to fund manager Willy Packer.
Mr Packer, a long-term supporter of the development of Jabiluka, on Thursday sent a searing letter to the board of Energy Resources Australia, telling them to “stand up and be heard” on the company’s future, rather than merely focusing on the rehabilitation of the mothballed Ranger uranium mine.
The letter comes after the Northern Territory government effectively ended any prospect of development of an underground mine at the deposit by refusing to extend ERA’s mining lease at the project – on the heels of a May decision to excise the area from future expiration and mining claims when the lease expired.
While Rio owns a majority 86 per cent stake in ERA, the company remains listed on the ASX and Mr Packer said on Thursday that the company’s board – which includes only three directors independent of Rio in its seven-member ranks – still had an obligation to look after the company’s 9000 remaining shareholders.
Rio Tinto has had a long-held position that it would not support mining at Jabiluka while the Mirarr traditional owners opposed its development. On Thursday, Rio CEO Jakob Stausholm dismissed minority shareholders’ Jabiluka push as “a little bit of extortion”.
“I’m happy that we finally have taken all the noise out, because that noise is only about minority shareholders of ERA trying to get a little bit of extortion here,” he told analysts on the company’s half-year results call. “So, look, for me, it’s a clear-cut thing. Jabiluka will never be mined.”
Mr Packer’s fund has invested more than $80m into ERA over four years, as ERA had maintained its position that Jabiluka was a valuable asset.
Without a legal appeal by ERA the NT government decision will effectively end any hope of mining at the rich uranium deposit.
The decision also killed a $550m offer by Boss Energy to buy Jabiluka, which included a 10 per cent free carried interest in the project to be distributed to an Indigenous foundation.
Mr Packer said he was considering his options to sue over the decision: “I think ERA has to get its balls into line and sue for just compensation. If this is going to be taken off us, they have got to sue for just compensation.
“If Rio doesn’t want to be paid out, that’s fine. If they are pleased with this, that’s great. Well, we’re not pleased, and so we want just compensation. We want our fair share of what the stock was worth before they stole (Jabiluka).”
Mr Packer rejected the suggestion that minority shareholders were trying to extort cash, saying Mr Stausholm should instead apologise to ERA minority shareholders for the destruction of their investment.
“So the government’s either got to chip in and pay, or if Rio Tinto feel that they want to hand it to the government freely without fighting, then they’ve got to pay. But they can’t give my asset away just because they want to give their 86 per cent away,” he said.
In his letter to the ERA board, Mr Packer said their position was “untenable” if they chose not to pursue the retention of the lease.
“ERA has promoted Jabiluka to shareholders (for example, ‘Jabiluka is one of the world’s largest high-grade uranium deposits and it remains one of ERA’s key assets’, stated in the April 2023 capital raising presentation). The directors must act … to protect the interests of all ERA’s 9000 plus minority shareholders who invested on that promise,” the letter says. “There are times when a board of a company need to stand up and be heard.”
ERA shares last traded at 1.5c.
More Coverage
