Takeovers Panel to review Rio-controlled ERA’s capital raise

The news: The Australian government’s Takeovers Panel has reversed its earlier decision and will now review a heavily discounted capital raise by Rio Tinto-controlled uranium miner Energy Resources of Australia.

The numbers: The Panel agreed to assess the capital raise after minority shareholders Zentree Investments and Packer & Co, which hold 3.04% and 8.82% voting power in ERA respectively, filed a review application into the decision late last month in which the government body declined to conduct proceedings against the equity raise.

ERA shares were up 10% to 1.1 cents after the news.

The context: ERA said the timetable for the equity raising would be revised as a result of the uncertainty from the decision. Its shares have lost more than half their value since Rio announced the heavily discounted entitlement offer at a price of $0.002 per share in late August. Zentree and Packer & Co had urged the Takeovers Panel to delay the capital raising saying that ERA and Rio were taking advantage of the ongoing litigation regarding the Jabiluka mineral lease and ERA did not need to raise capital immediately.

ERA's majority shareholder Rio has committed $760 million to the raise, which could see its stake increase from 86.33% to 99.2%. Rio has already provided an intention statement to ERA noting that it would proceed with the compulsory acquisition of all remaining ERA shares if it acquired the shares. ERA finished processing uranium at the mine in 2021 and is due to complete the clean-up of the site by 2028.The Ranger mine, located 230 km east of Darwin, has long been controversial because it is surrounded by the world heritage-listed Kakadu National Park and has a history of environmental incidents.