May 4, 2016 / 1:05 AM / 3 years ago

Rio Tinto's ERA to sell stockpiled uranium to cover mine closure

MELBOURNE, May 4 (Reuters) - Rio Tinto’s Energy Resources of Australia said on Wednesday it plans to sell uranium from a stockpile over the next four years to fund the closure of its Ranger mine, while it tries to keep options open to develop a new mine.

ERA’s prospects beyond 2021 are bleak after Aboriginal land owners refused to back a renewal of its mining authority beyond 2021 and its parent, Rio Tinto, last year declined to invest in further studies on its Ranger 3 Deeps project.

Uranium prices have collapsed more than 60 percent since Japan’s Fukushima nuclear plant disaster in 2011.

Following a strategic review, ERA said on Wednesday it would spend about A$4 million ($3 million) a year keeping alive the option of developing Ranger 3 Deeps, which would require an extension of its processing license that expires in January 2021.

“ERA will maintain its dialogue with all stakeholders to ensure it continues to understand their perspectives in relation to an Authority extension,” ERA Chairman Peter Mansell said in a speech prepared for the group’s annual meeting.

He warned that the project’s viability might be hurt if it were reactivated later than mid-2018, as there would be a gap in sales from its stockpile, due to run down in late 2020, and the start of production from Ranger 3 Deeps.

“Maximisation of cash flow from the processing of stockpiled ore enables the company to strengthen its financial position, build confidence in its delivery of high quality rehabilitation outcomes and provides a foundation for the company to examine future growth options,” ERA said in a statement.

The company says it expects rehabilitation of Ranger, including filling up the the mine pits, will cost around A$509 million, after having spent more than A$405 million over the past four years.

ERA’s shares were steady on Wednesday but have plunged 73 percent since last June when Rio decided to stop funding work on Ranger 3 Deeps.

$1 = 1.3337 Australian dollars) (Reporting by Sonali Paul; Editing by Richard Pullin)

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