ERA Shares Collapse After Halting Mine Expansion

ERA shares plunged 48% this morning after it announced late on Thursday evening that it was abandoning its Ranger 3 Deeps expansion plan at its Northern Territory mine. The news is a rejection of the pro-nuclear power push from sections of the Abbott government (its mates in business among), the media (The News Corp papers, led by The Australian).

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ERA – Credit Suisse rates the stock as Underperform

ERA’s $500m raising will only see 25% going towards Ranger Deeps development and another 19% to further exploration, the broker notes. The rest is about clean-up and water management, with the broker suggesting majority owner Rio Tinto ((RIO)) is staking its reputation and potentially iron ore and coal mining licences on the success or otherwise of that clean-up. Rio thus has the most to gain from the rights issue and hence is acting as sub-underwriter.

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Uranium Jumps on ERA's Woes

The global significance of Energy Resources of Australia’s (ERA) Ranger uranium mine and its uncertain potential for expansion was driven home last week in the spot uranium market. ERA announced it would have to close its processing plant for three months and the spot price responded with a US$3 jump to US$72/lb.

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ERA Lifts Guidance But Uncertainty Remains

Last week FNArena noted Energy Resources of Australia (ERA) posted better than expected quarterly production numbers (see The Mystery That Is ERA ) but as the story pointed out, the lack of earnings guidance and details as to actual sale prices from the company made it very difficult for analysts to assess what the production result meant in terms of profits for the company.

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