Boss Energy made $550m Jabiluka bid before PM’s mine veto, page-2

Australia’s newest uranium producer Boss Energy was in talks to acquire the controversial Jabiluka uranium site in the Northern Territory, before Prime Minister Anthony Albanese dashed hopes that it would ever be mined.Boss Energy, an ASX-listed uranium producer that has just restarted production at South Australia’s Honeymoon project, made a confidential non-binding and indicative offer to Jabiluka’s leaseholder Energy Resources of Australia’s board, and was due to meet representatives of NT Aboriginal groups to discuss its proposal this week.The Ranger uranium mine in the Northern Territory, owned by ERA, stopped mining in 2021. Now it is a big and costly clean-up job and some shareholders were pushing the company to sell its Jabiluka lease to help pay for it. The offer valued Jabiluka at $550 million – more than 5½ times its value on ERA’s books – and landed amid considerable tension between ERA’s biggest shareholder Rio Tinto and minority investors over whether the company should ever try to develop Jabiluka.The proposal would have seen Boss Energy buy Jabiluka in return for Boss Energy shares, to be issued to ERA’s minority investors, sources with knowledge of the talks told The Australian Financial Review on Sunday.Rio Tinto, which has blocked previous Jabiluka sale attempts and repeatedly said it had had no desire to develop the uranium-rich site against the wishes of its traditional owners, would have retained ERA, its expensive rehabilitation liabilities and tax losses.Related QuotesRIORio Tinto$115.910 2.75%1 year1 dayJul 23Oct 23Feb 24Jul 24100.00110.00120.00130.00140.00Updated: Jul 28, 2024 – 9.41pm. Data is 20 mins delayed.View RIO related articles ERAERA$0.032 -5.88%Jul 23Nov 23Feb 24Jul 240.0300.0450.0600.0750.090Rio Tinto owns 86.3 per cent of ERA’s shares and is preparing to pay up to $1 billion to meet rehabilitation costs for the coming three years. The rehabilitation bill is slated to hit $2.4 billion. ERA would be insolvent without Rio Tinto’s financial support.Sources close to the situation said the Jabiluka talks were live until Friday night, when prime minister Anthony Albanese vowed to rule out anyone ever mining Jabiluka. Mr Albanese also had the NT government reject ERA’s application to renew its Jabiluka lease, a move that shocked investors.Now, there is little for ERA to consider selling, or Boss Energy to buy, concluding the process.Sources said Boss Energy’s proposal would have offered NT Aboriginal groups a direct stake in Jabiluka, should it be ever developed, and pay considerable royalties to the site’s traditional owners in a bid to advance a decades-long standoff.While there were significant obstacles – particularly Rio Tinto and the Mirarr native titleholders – Boss Energy’s willingness to try showed just how highly regarded the Jabiluka deposit is within the uranium sector.ERA’s board, stacked with Rio Tinto representatives, had to consider the offer given the mooted value and pressure from minority investors. The bid was enough to delay a proposed $1 billion rights issue, needed to pay for rehabilitation works slated for the coming three years.ERA had applied to the NT government to extend the lease beyond its August expiry date, however, the government blocked it at Mr Albanese’s request. “This means there will never be mining at Jabiluka,” he said.A potential NT change of government also appears unlikely to revive the Jabiluka uranium project, with opposition leader Lia Finocchiaro signalling she too would oppose renewal.Leaseholder ERA expressed disappointment at the decision, even though its 86 per cent shareholder Rio Tinto was “pleased” to see the wishes of native titleholders respected.Prime minister Anthony Albanese used the NSW Labor conference to rule out mining at Jabiluka. AAPIMAGESome ERA minority shareholders held out hope that the lease might be renewed if the Country Liberal Party won power at the NT election on August 24. Ms Finocchiaro clarified on Sunday: “The CLP respects the wishes of the traditional owners and any decision is a matter for the federal government,” she said.Spokesmen for Boss Energy, ERA and Rio Tinto declined to comment on Sunday.It was an ambitious play from a company with two uranium projects including SA’s Honeywell, a $1.5 billion market capitalisation, and a strategy to consolidate the sector in Australia, North America and Canada.ERA is now expected to re-focus efforts on trying to raise $1 billion to pay for Ranger rehabilitation works.That raising was mooted to launch as early as April, however was stalled by the Jabiluka extension request, Boss Energy’s proposal, and tension on its share register including a pre-emptive Takeovers Panel application. ERA has previously said it would run out of funds by the December quarter, absent an injection of capital.ERA stopped mining in 2021, has sold all uranium stockpiles and has no plans to develop any new projects or revenue sources.Minority investors now have little incentive to tip into the rehabilitation works – they were more focused on ERA’s board trying to do something to create value.No.2 shareholder Packer & Co, a fund manager in Perth with a 9.3 per cent stake, has repeatedly made the case for trying to develop Jabiluka in public comments in the past six months.The one potential source of value was ERA’s controversial Jabiluka lease, over a resource measured at 135,000 tonnes of uranium oxide. The nearby Ranger mine produced 132,000 tonnes of uranium oxide over its 40-year lifespan.ERA’s board considered selling Jabiluka in May 2019, following an unsolicited bid from a third party, according to evidence that went to a Takeovers Panel case in 2020.However, Rio Tinto knocked those deliberations on the head, according to a decision in a Takeovers Panel case in 2019. Rio Tinto has consistently said it would not support any plans to develop Jabiluka in light of opposition from the Mirarr people.