Monsters of Rock: Uranium bulls get excited, but Rio-backed miner seeks more money so he can SHUT DOWN
- Rio uranium miner ERA confirms it will seek more money to fund restoration of its Ranger uranium mine
- ERA revealed significant cost increases for the NT Operations Rehabilitation Project in February
- Gold Road is set to complete the acquisition of DGO after reaching the mandatory acquisition threshold
Uranium bulls are pretty excited right now.
Nuclear fuel is getting a new lease on life as an envisioned solution to the problem of firming electricity supply as wind and solar deployment expands and Western governments try (although at this point they seem largely fail) to wean off fossil fuels.
Spot prices may have fallen from over US$60/lb a few months ago to US$47.50/lb, but that makes the sector much more investment-friendly now than it was five years ago, when prices of US$18/lb were making a profit. in the field an almost impossible task.
For example, Boss Energy (ASX:BOE) recently announced that it would restart the Honeymoon uranium mine in South Australia after nine years of mothballs.
As market conditions have improved significantly, Rio Tinto (ASX:RIO) is now looking for more cash so it can close what was until recently one of three operating uranium mines in Australia.
Ranger Mine Blowout Needs Funding
Not exactly Rio, but Energy Resources of Australia (ASX:ERA), 86% owned by the mining giant and owner and operator of the Ranger mine in the Northern Territory.
Ranger is surrounded by Kakadu National Park and ERA has until January 8, 2026 to repair the seal and skedaddle after mining ceased on that date last year.
It will be a rare test of a major company’s ability to perform a thorough and comprehensive cleanup of a historic mine, something the industry has failed to do in the past.
Making this task even more difficult was a major cost explosion ERA revealed in February of this year, dropping from $973 million to $1.6 billion to $2.2 billion. The timing is also a concern, with full rehabilitation not expected until Q4 2027 and Q1 2028.
ERA has a commitment from Rio that it will help underwrite the bill, which it did in a major capital raise last year.
He will likely have to plunge his hands back into his very deep pockets after ERA confirmed media reports that he was considering a legal bid to bail out his coffers.
“Given ERA’s current cash position, an urgent interim financing solution is required,” the company said in a statement to the market today.
“ERA is engaging with its significant shareholders in connection with a possible interim rights offering to raise continued funds for the rehabilitation of the Ranger project.
“The size, price and structure of the interim rights offering are yet to be determined. ERA expects to be able to announce details of the rights offering in the coming weeks.”
ERA, which expected to make its last U3O8 cash sales this quarter, had just $164 million in cash in the bank and $535 million held in the Ranger Rehabilitation Trust Fund as of December 31.
Gold Road takes an important step in the acquisition of DGO
Gold Road (ASX:GOR) is set to swallow DGO Gold (ASX:DGO) whole after hitting the 90% mandatory takeover mark in its $308 million, 2.25 for 1 share offer .
The deal will make the owner of the Gruyère gold mine a 14.4% owner of De Gray Mining (ASX:DEG), owner of Australia’s next Tier 1 gold mine, the Hemi deposit in the Pilbara , to the tune of $1.2 billion.
DGO also has significant stakes in Dacian Gold (ASX:DCN) and Yandal Resources (ASX:YRL) as well as some of its own exploration properties.
In the broader market, falls in BHP (ASX:BHP) and Rio Tinto (ASX:RIO) drove the ASX Materials sector down slightly, capping a week-long loss of 4.88%. tough, despite a Friday rally in the lithium sector.
Monstars share price today: