Rio Tinto plc (LON: RIO) have seen their shares spike on Friday morning after the firm pledged to raise funds to clean up a uranium mine.
Shares of the London listed miner spiked 1.38% to 4,148p on Friday. 15/11/19 10:42BST.
The mining sector has become increasingly competitive, with firms such as Serabi Gold (LON: SRB) reporting strong third quarter figures. Additionally, Hochschild Mining (LON: HOC) have remained confident in future outlook after a mixed trading update.
Rio Tinto said they will take part and underwrite a fundraise by invest Energy Resources of Australia (ASX: ERA).ERA are looking to clean up and close the Ranger uranium project in the Northern Territory of Australia.
Rio own a 68% stake in ERA and will look to assist them in the clean up and eventual closure of the Ranger operation.
ERA has been looking to raise AUD476 million, or $323.4 million, to go towards the plan, but the firm has been unable to secure third-party underwriting support, so Rio Tinto will step in to “ensure ERA has the funds it needs”.
Bold Baatar, Rio Tinto’s head of Energy & Minerals, said: “We take mine closure very seriously and ensuring ERA is able to fund the closure and rehabilitation of the Ranger project area, through participating in this entitlement offer, is a priority.
“We have committed to supporting this offer with the objective of ensuring ERA is in a position to rehabilitate Ranger to a standard that will establish an environment similar to the adjacent Kakadu national park.”
ERA are set to end the Ranger project by January 2021, and clean up the side within five years of this date.
FTSE100 (INDEXFTSE: UKX) listed Rio Tinto have pledged to subscribe to $221 million rights of ERA and will fully underwrite $326 million of equity fundraising if no other party does.
“We have committed to supporting this offer with the objective of ensuring ERA is in a position to rehabilitate Ranger to a standard that will establish an environment similar to the adjacent Kakadu National Park,” said Bold Baatar, Rio Tinto’s group executive for energy & minerals.
