* Parent Rio Tinto to take up full entitlementSYDNEY, Oct 12 (Reuters) - Major uranium miner Energy
Resources of Australia (ERA) unveiled a $500 million
rights issue on Wednesday to help solve a waste-water problem
that had forced it to sharply cut production at its only mine
and shelve an expansion project.ERA has struggled since heavy rains swamped north Australia
early this year, flooding the pits at its Ranger mine, raising
fears of a spill of contaminated water into the World
Heritage-listed tropical wetlands that surround it.ERA, owned 68 percent by Rio Tinto but
separately listed, said it would issue 12 new shares for every
seven held at A$1.53 each, less than half their last-traded
price of A$3.29 and fully underwritten. Rio Tinto would take up
its full entitlement and also stand as a sub-underwriter.About $270 million of the money would be used to fund an
expansion of waste-water treatment at mine, including a brine
concentrator which evaporates water that is then condensed and
discharged as distilled water.The rest of the money would also be used to fund exploration
around the mine, which sits within the World Heritage-listed
Kakadu National Park. Started in 1981, Ranger typically supplies
about 10 percent of the world’s uranium and has been dogged for
years by controversies over leaks and spills.”ERA takes water management very seriously,” Chief Executive
Rob Atkinson said in a statement.”This capital allows ERA to progress the implementation of
our water management strategy, which includes the construction
of a brine concentrator and other initiatives, in as timely a
manner as possible.”ERA this year took a A$99.4 million ($98.9 million)
writedown after shelving a project to process stockpiles of
uranium ore through acid-leaching, and due to a drop in uranium
grades of other stockpiles that ERA had planned to process.The decision was related partly to the water problem.In announcing the share issue on Wednesday, ERA also gave
its outlook for uranium demand, predicting continued volatility
in the wake of the Fukushima nuclear disaster in Japan.It forecast slower demand growth outside of China, and that
China might exceed current consumption estimates.ERA’s output of uranium oxide in the third quarter was 1,010
tonnes, up from only 83 tonnes in the previous quarter as the
wet season gave way to drier weather, the company said.It maintained production guidance for the year of 2,600
tonnes of uranium oxide, well below production of around 5,000
tonnes it had hit before the floods.Heavy rains stopped uranium processing operations at Ranger
early in 2011 and were not restarted until mid-June. An ailing
outlook for uranium markets in the wake of the Fukushima
disaster further exacerbated ERA’s situation.ERA’s exploration focus is on evaluating the potential for
the development of its nearby Ranger 3 Deeps deposit, but it
does not expect to reach a decision before 2014.Without the new deposit, UBS warned in a client note that
ERA would run out of ore to mine in about five years.”Should Ranger 3 Deeps prove economic and gain stakeholder
support, then mine life could extend to 2025 and beyond
dependent on exploration success,” UBS said.
