Energy Resources of Australia (ERA) is raising $369 million to unlock interim funding for its Ranger rehabilitation project and repay its Rio Tinto debt facility.
The non-underwritten renounceable interim entitlement offer (IEO), undertaken on a 5-for-1 basis, will be priced at $0.02 per share, representing a 90 per cent discount from ERA’s five-day volume-weighted average price (VWAP) of $0.20 on April 3.
Proceeds from the raise will be used to fund the rehabilitation of ERA’s Ranger uranium mine in the NT until the end of the second quarter (Q2) of 2024 and repay the $100 million ERA owes Rio Tinto as part of a loan agreement between the two.
ERA said the expenditure involved in rehabilitating Ranger in the 18 months from the beginning of 2023 to the end of Q2 2024 is estimated to be $404 million. If this entitlement offer hadn’t taken place, ERA said it would be out of cash by the end of Q3 2023, hence it being an ‘interim’ funding solution.
“The size and price of the interim entitlement offer was determined having regard to ERA’s funding requirements and following a period of engagement with ERA’s largest shareholders,” ERA said in a statement.
“All three of ERA’s largest shareholders have provided a pre-commitment to take up entitlements, providing funding certainty for ERA for the purpose of rehabilitating the Ranger project area.”
Rio Tinto, which owns 86.3 per cent of ERA shares, is one of those major shareholders to have committed to the raise, with a $319 million outlay involved.
“We are committed to ensuring the critical rehabilitation of Ranger is completed to a standard that will establish an environment similar to the adjacent Kakadu National Park,” Rio Tinto chief executive, Australia, Kellie Parker said.
In the past, mining of ERA’s Jabiluka uranium deposit in the Kakadu National Park had been seen by some as a solution to offset rehabilitation costs at Ranger, and while ERA views Jabiluka as a “large, high quality uranium ore body of global significance”, it understands it cannot mine it without the consent of the Mirarr Traditional Owners.
Rio said the Mirarr Traditional Owners have an important role to play in Ranger’s rehabilitation.
“Rio Tinto … recognises that the Mirarr People’s continued involvement in and support of the Ranger rehabilitation project is critical for its timely completion and success,” the company said in a statement.
“As announced by ERA today, funds from the IEO are not expected to generate any financial return and will be dedicated strictly to the Ranger rehabilitation project and repayment of the credit facility.”
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