Ranger expansion on hold

11 June 2015

UPDATED: This story has been updated to include reaction from Rio Tinto.

The Ranger 3 Deeps uranium project will not proceed to a final feasibility study under the current operating environment, Energy Resources of Australia (ERA) announced today. The decision was driven by market conditions and project economics.

Ranger 3 Deeps is an extension of the Ranger 3 orebody, where open-pit mining was completed in December 2012. Since then, ERA has been investigating a potential underground mining operation at Ranger 3 Deeps, which is estimated to contain 34,761 t U3O8 (29,477 tU).

Work began on a 2.2 km exploration decline, reaching depths of 400-500 metres, in May 2012, to facilitate an AUD57 million ($44 million) pre-feasibility study to determine the economic viability of the proposed mine as well as optimizing mining methods. ERA's board has been reviewing the findings of the study since January, according to its March 2015 quarterly report. The company had been looking to start production by the end of 2015, subject to a favourable outcome from the study and securing the necessary approvals.

"First, the Board's view is that the uranium market has not improved as ERA previously expected and there is uncertainty regarding the uranium market's direction in the immediate future. Secondly, having finalised and considered the Prefeasibility Study, the economics of the project require operations beyond the current Ranger Authority, which expires in 2021," ERA said.

Ranger, in Australia's Northern Territory, is surrounded by the World Heritage-listed Kakadu National Park. Discussions with traditional owners and the Australian government regarding a possible extension to the existing authority for the mine are already under way, ERA said. "This would allow ERA to revisit the project's economics over time," it said. In the meantime, the company intends to "conserve cash until it has greater certainty" over the potential extension.

ERA says it will continue to process stockpiles from the open-pit operations, and to meet obligations to its customers. It is also in discussion with its major shareholder, Rio Tinto, about funding support for rehabilitation of the mine site should Ranger 3 Deeps ultimately not proceed. Rio Tinto confirmed that it is looking at a conditional credit facility should additional rehabilitation funding be required beyond ERA's existing cash reserves and future earnings from processing ore stockpiles.

Rio Tinto not only agreed with the decision not to progress the study but also said that "after careful consideration" it did not support any further study on future development at Ranger 3 Deeps "due to the project's economic challenges". The company, which owns 64.8% of ERA, said it is assessing a non-cash impairment charge of $300 million relating to its ERA shareholding.

ERA said in its initial statement that it would not provide any further public comment on the issue at this stage but issued a second announcement acknowledging Rio Tinto's comments. ERA said that its board remained "committed" to the approach it had already announced but would "engage with Rio Tinto to understand the implications of their position". 

Researched and written
by World Nuclear News