Struggling uranium seller Energy Resources Of Australia (ERA), the partly-owned subsidiary of Rio Tinto (RIO), has been left in a state of confusion after its three independent directors, including the chairman, quit at the weekend over a disagreement about the company’s future.
The resignations of chairman Peter McMahon and independent non-executive directors Helen Garnett and David Smith were made on Saturday, according to the statement from ERA early yesterday.
They came at the end of the week when ERA shares fell 73% after it bailed out of expanding its Northern Territory operations via a new underground project at the Ranger site.
The trio’s departures are linked to the a dispute between themselves and Rio over the future of the Ranger operation.
ERA 2Y – Embattled ERA loses half of the board
In its announcement earlier this month, announcing the axing of the Ranger Deeps project, the company said it wanted to continue the approval process on the offchance that the project might become viable in the future. Rio Tinto doesn’t want that to happen.
Rio has offered to cover any shortfall in rehabilitation costs for the sensitive site (which could be substantial) if ERA gives up ambitions to develop the expansion project in the future. The hint is that no extra money will be forthcoming if ERA’s funds are exhausted on rehabilitation work.
ERA has so far refused to accept Rio’s terms, and it seems the three independents departures is linked to this disagreement.
"The outgoing directors wrote to ERA on June 20, 2015, explaining that after taking into account a range of factors that have developed since ERA’s announcement of June 11, 2015, they have decided to resign from the ERA board," the company said in a statement.
Rio quoted the trio as saying, “Given the differing views on the future of the Ranger 3 Deeps project, it is difficult for ERA to pursue its stated approach without the support of its major shareholder, Rio Tinto”.
ERA’s chief executive Andrea Sutton will serve as interim chair of the board that now includes just three people – Ms Sutton, Joanne Farrell and Bruce Cox – and new independents will be sought.
The board is continuing talks with governments and traditional landowners in a bid to extend its lease at Ranger which is due to expire in 2021.
ERA shares rose 8% to 36.2 cents by the close yesterday.
