ERA to close Ranger uranium mine, in context of 90% share price fall
Doncha love the headline from this Sydney Morning Herald article about the uranium company Energy Resources of Australia? Anyone would think that the company had wonderful prospects. But read the lines (you don’t need to read between the lines) – and you see the true picture – colossal share price loss, closure of the Ranger open pit mine, and a laughable future prospect for their plan for an underground uranium mine.
From a share price of $18.22 in May 2009, the stock lost more than 90 per cent of its value to be languishing at $1.15 earlier this year, with the company’s future being seriously questioned.
Kakadu’s miner for all seasons SMH, Peter Ker April 28, 2012 After three decades as a major uranium producer in Australia’s top end, Atkinson’s company Energy Resources of Australia is about to fill in its massive open pit and return the landscape to something resembling the nearby Kakadu National Park.
In a reversal of the typical path taken by mining companies, ERA is about to go from producer to explorer, gambling its future on the viability of a deposit deep beneath its existing operations….
… ERA has spent the past 30 years digging uranium from a small province surrounded on all sides by Kakadu National Park. The company operates here at the grace of the indigenous community, which has long been reluctant to see any more of its land developed for mining. The NT’s extraordinary wet seasons add another
challenge,….. On more than one occasion, heavy rains halted production for months at a time and threatened [did!] to spill toxic tailings into the nearby environment. Other operational problems also caused delays, and they unfolded
against a backdrop of decline in the company’s flagship Ranger open pit, now reaching the end of its working life.
From a share price of $18.22 in May 2009, the stock lost more than 90 per cent of its value to be languishing at $1.15 earlier this year, with the company’s future being seriously questioned……
Known as the ”Ranger 3 Deeps” project, ERA will explore a major
deposit deep below its existing pit, which will soon be closed for
business, leaving only stockpiles of uranium to be processed.
Put simply, ERA is transitioning from major producer to hopeful
explorer,….But the wait will be long. More than two years of
exploratory and feasibility work will pass before the company decides
whether to go ahead with an underground mine.
As Macquarie Bank noted recently, that’s a long time for investors to
hold a stock without any clear factor to drive the share price…..
The monster market sell-down over recent years has further complicated
matters by pulling the stock beneath the investment grades held by
many big institutions….. The goal of turning ERA into an underground
miner won’t come to fruition before late 2015, and there will be
myriad environmental, indigenous, government and company approvals to
satisfy before then. http://www.smh.com.au/business/kakadus-miner-for-all-seasons-20120427-1xqg2.html#ixzz1tNGNVJGh
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