Energy Resources of Australia (ERA) has announced the signing of a new sales and marketing agreement which will see ERA and Rössing Uranium Limited (Rössing) production combined to create a multi-sourced marketing pool.
Under the agreement, Rio Tinto Uranium (RTU), a wholly owned subsidiary of Rio Tinto plc, will purchase uranium oxide produced by ERA's Ranger and Rössing (a mine in Namibia majority-owned by Rio Tinto) to market and on-sell to third-party customers.
The price that ERA receives for uranium oxide will reflect RTU's price, less a marketing fee. Previously, RTU provided marketing services to ERA under an agency-based arrangement, while sales contracts were between ERA and the customer.
The new agreement also provides working capital and logistical benefits to ERA, the latter being achieved by ERA and Rössing delivering uranium oxide to customers that are geographically closer to their respective locations.
The agreement has been under negotiation since January 2013, ERA said.
ERA chairman Peter McMahon said: "This agreement creates value for all shareholders and represents superior value to our existing marketing arrangements and other marketing options we considered.
"This new agreement gives us a stronger marketing proposition because Ranger's uranium supplies become part of a multi-source pool through RTU."
The agreement is subject to conditions precedent, which include export and regulatory approvals. Subject to the satisfaction of all conditions precedent, implementation of the agreement is scheduled to commence on 1 July 2014.
ERA's Ranger mine is located eight kilometres east of Jabiru and 260 kilometres east of Darwin, located in Australia's Northern Territory.
Photo: Rossing uranium mine in Namibia