Energy Resources Australia (ASX:ERA) has announced Rio Tinto (ASX:RIO) will take over the rehabilitation of the Ranger uranium mine in the Northern Territory (NT).
ERA’s only real source of revenue is derived from Rio Tinto to rehabilitate the Ranger uranium mine.
Despite this, the stock is up 54% YTD (to 5.7c) on the back of the uranium rally seen this year. Prices have currently fallen to US$88/lb on the NYMEX.
This has given ERA a market cap of $1.2B – but the average four week share volume turnover is just 424K. The stock has 22B shares on issue and Rio Tinto owns 86.3% of its shares.
ERA announced today that it had “appointed” Rio to manage the Ranger Rehab Project (RRP) under a Management Services Agreement (MSA).
“The MSA follows discussions and negotiations between Rio Tinto and ERA’s Independent Board Committee in relation to a proposal to provide services and advice on the execution of the Project,” ERA wrote on Wednesday.
“The IBC sought and received a proposal from Rio Tinto.”
It appears that ERA expects to hang around after the takeover of the project, however. The company added it will “continue to directly manage its commitments in Jabiru … including the Jabiluka mineral lease renewal.”
Rio Tinto chief Kellie Parker said the mining giant is looking forward to working with Traditional Owners.