01 Sep 2016
Rio Tinto's interest in mining uranium at the Ranger mine near Kakadu might have waned, but that doesn't mean it has lost all interest in finding the commodity in Australia's top end.
Rio finalised an exploration deal with junior explorer Eclipse Metals on Monday which will give it an option over a uranium-rich tenement in the same Alligator River region where Ranger and the Jabiluka uranium deposit are located.
Unlike Ranger and Jabiluka, which are entirely surrounded by Kakadu National Park, the tenement is understood to be east of the national park boundary, and about 60 kilometres east of the Ranger mine.
Rio could earn up to 90 per cent of the tenement if it spends $5 million on exploration studies. The staged deal requires Rio to spend at least $250,000.
While the spend is tiny in the context of Rio's global portfolio, it is notable in that it reveals Rio's ongoing interest in building its uranium division.
The deal also gives Rio first rights to all of Eclipse's other tenements in the Northern Territory.
Rio's exposure to Ranger and Jabiluka is through its 68 per cent stake in ASX-listed uranium exporter Energy Resources of Australia (ERA).
Mining has ceased at Ranger, and ERA has in recent years investigated whether an underground expansion of Ranger could be viable.
Both Rio and the traditional owners of the land, the Mirarr people, have signalled they do not want any further mining to occur at Ranger, and would instead prefer for a full rehabilitation of the site to be conducted.
But other shareholders of ERA, including the second biggest holder Richard Magides, have in the past year flagged interest in pursuing lease extensions and further mining at Ranger.
The fact that Rio is pursuing the Eclipse acreage on its own, rather than through the ERA vehicle which has a large presence in the area, adds fuel to perceptions that Rio does not want ERA to conduct any future mining in the region.
Rio and ERA have promised to not mine Jabiluka until the Mirarr give their consent. The Mirarr consider Jabiluka to be a sacred site and say they will never allow it to be mined.
Aside from ERA and the deal with Eclipse, Rio has exposure to uranium through the Rossing mine in Namibia and the undeveloped Roughrider uranium deposit in Canada.
Uranium is the main feestock for nuclear power plants, and prices for the commodity have been depressed since the Fukushima nuclear disaster in 2011 prompted Japanese regulators to take its entire nuclear power fleet offline.
While a small number of Japanese plants have restarted, the vast majority remain idle, and the progressive restart of the fleet is progressed slower than expected.
Spot uranium prices were fetching just $US28 per pound in recent weeks.
Reported from AFR
| August 23, 2016
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