Australia鈥檚 Federal Court has the government鈥檚 decision to not extend Rio Tinto-owned Energy Resources of Australia鈥檚 (ASX: ERA)聽lease for a high-grade uranium deposit in the country鈥檚 Northern Territory.
ERA had applied in March for a 10-year lease renewal for Jabikula, surrounded by the Kakadu National Park. The asset is considered one of the world鈥檚 largest untapped deposits of high-grade uranium.
The Northern Territory government, however, had declined to renew ERA鈥檚 Jabiluka lease, which prompted Boss Energy [ASX: BOE]聽to retract an offer to pay ERA A$550 million ($360 million) for the site.
Shares of ERA soared on the announcement, a small win in the battle to keep the lease, as the ruling sets a status quo on the licence until further court orders.聽The stock closed up more than 14% to A$0.016, leaving the uranium miner with a market capitalization of A$496.12 million ($326m).
鈥淭he matter has been listed for a case management hearing before the court on Aug. 19 to set a timetable for the hearing of ERA鈥檚 case,鈥� the company .
Earlier this week, the uranium miner said it had initiated legal action against Australia鈥檚 resources minister and other officials, following the non-renewal of its lease for Jabikula 鈥� a project long opposed by the Mirarr people.
The Mirarr, the traditional owners of lands in聽Australia鈥檚 north, are against mining activities in the region, and organized protests in the late 1990s and early 2000s.聽
Rio Tinto (ASX: RIO), which owns roughly 80% of ERA but does not operate it,聽has backed their position聽in recent years as it works to repair its ties with indigenous groups after聽destroying sacred rock shelters at Juukan Gorge聽in Western Australia in 2020 for an iron ore mine expansion.
Hustle and bustle
Activity in the Australian uranium market has spiked over the past year, with developers such as Boss Energy (ASX: BOE), Bannerman Energy (ASX: BMN) and Deep Yellow (ASX: DYL) seeing their value soar.
Paladin Energy (ASX: PDN), a Western Australia-based uranium miner, recently announced a聽proposed acquisition聽of Canadian competitor Fission Uranium (TSX: FCU). If successful, the combined company would produce 10% of global uranium output.
In contrast, ERA鈥檚 value has steadily dropped since the Ranger uranium mine, located near Jabiluka, stopped producing聽in 2021, after 40 years of operations.聽
Rehabilitation costs for the site have聽surged to A$2.2bn ($1.4bn)聽over the past year and the company is expected to run out of funds by year-end. With no other significant assets, raising capital would be a very difficult task.
Australia is home to almost one-third of the world鈥檚 identified uranium reserves, yet the mining of this resource is permitted in only two of its eight states and territories 鈥� South Australia and the Northern Territory.聽
The country鈥檚 only operating uranium mines are BHP鈥檚 Olympic Dam, which generates uranium as a secondary product of its copper mining activities and Boss Energy鈥檚 Honeywell mine. Together, they account for around 9% of the global reported production.