Energy Resources of Australia has finalized its closure feasibility study for the rehabilitation of the Ranger uranium project area.
The company announced on Friday (February 8) that its board has approved the FS and recommends continuing the rehabilitation program. The cost of the rehabilitation provision, previously estimated in December 2017, has now risen from $526 million to $830 million.
According to ERA, the cost growth is primarily due to an increase in contingency, higher forecast costs related to site services and owners costs, as well as costs associated with tailings transfer to pit 3, additional water treatment, related infrastructure and revegetation requirements.
ERA went on to say that it is reviewing its funding options in light of the increased costs, and that parent company Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) has advised it will work with ERA to help ensure it will be in a position to meet Ranger’s rehabilitation requirements.
“In addition to its funding arrangements, ERA has implemented a business transformation program in order to increase cash flow from identified and new cost saving and productivity opportunities,” the statement reads. “The program aims to generate cash while maintaining the core values of health and safety and continued environmental protection.”
While Ranger has been producing uranium oxide for over 35 years, the project is gradually being moved to closure as its production comes to a simmer. On Friday, the company also released its annual statement of reserves and resources, which shows that Ranger’s proved and probable ore reserves decreased from 5,783 tonnes to 3,735 tonnes last year.
The annual statement also shows Ranger’s mineral resources decreased from 55,135 tonnes to 54,701 tonnes last year. Additionally released Friday were 2018 full-year results, which indicate that uranium oxide production came in at 1,999 tonnes, a 13-percent drop from 2017’s production rate.
ERA saw a net loss of $435 million in 2018 as opposed to 2017’s $44 million; the jump stemmed from the increased costs for Ranger’s rehabilitation provision and a $90-million impairment charge from the company’s undeveloped Jabiluka property.
Additionally, the company stated that its Ranger 3 Deeps exploration project will remain on care and maintenance as it has since 2015 through a “reduced” program.
ERA attributes part of the decision to the state of the uranium market, saying Ranger 3 continues to face material barriers to development and that it is not economically viable without a market turnaround.
The company’s share price was down 4.35 percent on Friday, ending the day of trading at AU$0.33.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.