Uranium miner Energy Resources of Australia (ERA) will not proceed with its proposed 3 Deeps expansion project at the present time, the company has announced to the stock exchange.

In a statement, the company said the uranium market has not improved like ERA had previously expected and there is uncertainty as to what prices would do in the future.

The company also said the mine only had the authority to operate until 2021, and the economics of the project required certainty beyond that point.

Those conditions meant ERA would not proceed to a final feasibility study at this time, the statement said.

ERA will continue to “process stockpiles and meet obligations to its customers”, the statement said.

The 3 Deeps expansion would have seen the Ranger Uranium Mine commence underground operations for the first time.

Its current operations are open-cut.

ERA said it had engaged its major shareholder, Rio Tinto, about funding to rehabilitate the mine site, which is completely ensconced by Kakadu National Park.

The company previously said rehabilitation was funded under its current business plan, but if the 3 Deeps expansion did not go ahead it would require another source of funding to pay for all of the rehabilitation works.

Conservationist welcomes project shelving

The Australian Conservation Foundation’s Dave Sweeney said the news was “significant and positive”.

“ERA has stopped the delusion and the dream, crunched the numbers, probably at Rio Tinto’s insistence, and said this just does not stack up,” he said.

“We have long maintained that the Ranger 3 Deeps project is poorly considered, risky and dangerous, and for ERA to now have finally and formally announced that it won’t be advancing this project at this time is good news.

“It’s good news for Kakadu … in this very contentious and long-running story of uranium mining in Australia’s largest national park.”

Mr Sweeney said he felt ERA had finally accepted the advice of business people and conservation groups that the project was not viable.

“The production window for the proposed underground mining operation at Ranger is too short, that the commodity price is too low, and that the fixed cost of the operation is too high,” he said.

“This operation has never made economic sense.”

He said uranium was particularly unviable after the nuclear disaster at the Fukushima nuclear plant in Japan.

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Energy Resources of Australia shares dive on plans to axe Ranger mine expansion

Peter Ker and Angela Macdonald-Smith – http://www.theage.com.au/business/mining-and-resources/energy-resources-...

12 June 2015

The future of one the nation’s most controversial mines Ranger’s uranium operation near Kakadu is in doubt after its owner decided to abandon expansion plans.

Rio Tinto subsidiary Energy Resources of Australia confirmed the expansion project would not proceed amid depressed uranium prices, prompting a savage 48 per cent slump in its shares.

Mining ceased at Ranger in 2011 and the underground expansion project was the only hope of future mining at the site. Investors immediately grasped the significance of the decision driving the stock down to close 62.5¢ lower at 67c; the lowest price since the company was floated in 1980.

Ranger has been on the fault line of environmental and Indigenous landowner issues since being approved by former prime minister Malcolm Fraser in the late 1970s.

ERA raised $500 million to complete studies on the expansion in 2011, and much of that value will now be written down, with Rio expected to declare an impairment of more than $US300 million ($387 million).

Uranium prices have been depressed since the 2011 nuclear meltdown at Fukushima, and ERA said overnight the commodity price had not recovered as quickly as hoped.

“The board’s view is that the uranium market has not improved as ERA previously expected and there is uncertainty regarding the uranium markets direction in the immediate future,” the company said.

ERA’s licence to operate at Ranger was due to expire by 2021, and ERA felt the expansion could not be viable in just six years.

“The economics of the project require operations beyond the current Ranger authority, which expires in 2021,” the company said.

But ERA and its 68 per cent shareholder, Rio, appear to have different views about what should happen next.

ERA flagged it was keen to seek a lease extension beyond 2021 and has started talks about an extension with traditional owners and governments.

In its own statement, Rio indicated it was not interested in further attempts to make the mine expansion work.

“After careful consideration, Rio Tinto has determined that it does not support any further study or the future development of Ranger 3 Deeps due to the project’s economic challenges,” the miner said.

A $512 million rehabilitation of the mine looms as a big challenge, particularly given the proximity to Kakadu and recent comments by ERA that it may not have enough money to pay for the rehabilitation.

Rio has offered ERA “conditional” funding support to cover the shortfall in rehabilitation funds, and negotiations over that funding support are continuing.

“Rio Tinto is engaged with ERA on a conditional credit facility to assist ERA to fund its rehabilitation program, should additional funding be required beyond ERA’s existing cash reserves and the future earnings from processing ore stockpiles,” Rio said in a statement.

Few people are more affected by the decision than the traditional owners of the land, the Mirarr people, who initially opposed the mine and have since received lucrative royalty flows from it.

The Mirarr’s administrative body, the Gundjeihmi Aboriginal Corporation, said it would not support ERA’s bid to continue on the Ranger lease beyond 2021.

“As things stand today we will not support any extended term of mining at Ranger beyond 2021. We take this position because of our experience of 30 years of environmental and cultural impacts at Ranger and because in our talks with Rio Tinto and the Australian government we have been given no guarantee that Ranger will be the last uranium mine in Kakadu,” the GAC said in a statement.

“First and foremost in our minds is ensuring the permanent protection of the natural and cultural values for which Kakadu is inscribed World Heritage. We need to see a concrete and comprehensive commitment and plan for the clean-up of Kakadu; that commitment and planning needs to start today.”

Australian Conservation Foundation spokesman Dave Sweeney welcomed the decision and the focus on rehabilitation.

“We have long said the Ranger 3 Deeps project is poorly considered, risky and dangerous. That ERA has finally and formally announced it won’t continue with this project is very good news,” he said.

Shadow resources minister Gary Gray said he hoped the decision did not mean the end of Ranger, and pointed to the profound implications it would have for the economy of Arnhem Land.

“This decision casts a long and dark shadow that is truly unfortunate both for economic development in the Northern Territory but for uranium mining as well,” Mr Gray said.

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Mirarr statement on ERA shelving of Ranger 3 Deeps

Media Release – http://www.mirarr.net/media_releases/mirarr-statement-on-era-shelving-of...

12 June 2015

The Mirarr Traditional Owners of the Ranger Uranium Mine area and the site of the proposed Jabiluka uranium mine release this statement following yesterday’s announcements by Energy Resources of Australia and Rio Tinto that ERA will not at this time proceed with the final feasibility study of the proposed Ranger 3 Deeps underground mine.

The Mirarr and the GAC welcome the clarity that yesterday’s announcements provide in terms of the present viability of the Ranger Three Deeps project. We are also pleased that both companies now publicly recognise the importance of adequately financing the rehabilitation of the Ranger site.

First and foremost in our minds is ensuring the permanent protection of the natural and cultural values for which Kakadu is inscribed World Heritage. We need to see a concrete and comprehensive commitment and plan for the clean-up of Kakadu; that commitment and planning needs to start today.

Mirarr have maintained ongoing dialogue with ERA and governments throughout this process notwithstanding today’s announcement will continue to talk through all relevant issues as necessary.

However, as things stand today we will not support any extended term of mining at Ranger beyond 2021. We take this position because of our experience of 30 years of environmental and cultural impacts at Ranger and because in our talks with Rio Tinto and the Australian government we have been given no guarantee that Ranger will be the last uranium mine in Kakadu.

The Mirarr remain fundamentally opposed to Jabiluka’s development – that opposition is intergenerational. We are concerned about the lack of adequate planning for Jabiluka’s final rehabilitation and its incorporation into Kakadu National Park.

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Ranger 3 Deeps cancellation should spell end for uranium mining in Kakadu

http://www.acfonline.org.au/news-media/media-release/ranger-3-deeps-canc...

12 June 2015

Environment groups have welcomed the announcement that a planned underground uranium mine in Kakadu – Energy Resources of Australia’s Ranger 3 Deeps project – has been cancelled.

The Australian Conservation Foundation and the Environment Centre NT welcomed ERA’s statement to the Stock Exchange.

“ERA’s move to abandon plans for an underground expansion at Ranger is an overdue acknowledgement that the underground mine plan lacked economic and environmental sense,” said ECNT campaigner Lauren Mellor.

“It is also a significant step towards the end of uranium mining in Kakadu.”

Local and national environment groups have for long called for ERA and parent company Rio Tinto to commit to the rehabilitation of the Ranger site.

ACF and ECNT said the announcement to the Stock Exchange showed ERA has now accepted it needs to secure adequate rehabilitation funding.

“We welcome the fact that ERA has sought an assurance from its parent company Rio Tinto that the clean-up costs will come at the expense of the company, not the public,” said ACF’s Dave Sweeney.

“ERA has lost around $1 billion on the under-performing, accident-prone Ranger project.

“We have long said the Ranger 3 Deeps project is poorly considered, risky and dangerous.

“That ERA has finally and formally announced it won’t continue with this project is very good news.

“It’s good news for Kakadu that the very contentious and long-running story of uranium mining in Australia’s largest national park seems to be coming to an end.”

The groups called for all project applications and approvals to be withdrawn and for ERA to detail its closure and clean-up plan and costings.

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Energy Resources of Australia Ltd – Ranger 3 Deeps Project Update

Rio Tinto Media release

11 June 2015

Rio Tinto acknowledges Energy Resources of Australia Ltd’s (ERA) release to the Australian Securities Exchange on 11 June 2015, in which it announced it has decided it would not proceed with the Final Feasibility Study of the Ranger 3 Deeps project in the current operating environment.

Rio Tinto agrees with the decision not to progress the study. After careful consideration, Rio Tinto has determined that it does not support any further study or the future development of Ranger 3 Deeps due to the project’s economic challenges.

Rio Tinto recognises the importance of ongoing rehabilitation work at the Ranger mine site, which is surrounded by the World Heritage-listed Kakadu National Park. Rio Tinto is engaged with ERA on a conditional credit facility to assist ERA to fund its rehabilitation program, should additional funding be required beyond ERA’s existing cash reserves and the future earnings from processing ore stockpiles.
Rio Tinto is assessing a potential non-cash impairment charge of approximately US$300 million* (post tax) relating to its shareholding in ERA.

*nominal dollars

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