Rio Tinto offshoot Energy Resources of Australia (ERA) is expecting it to cost way more than expected to close the “Ranger” uranium mine in the Northern Territory.

The preliminary findings from a project closure feasibility study estimated the cost to rehabilitate the mine would jump by $296m to $808m.

Investors didn’t much like the news, sending ERA (ASX:ERA) shares down 7 per cent to an intra-day low of 26.5c.

ERA is 68.4 per cent owned by mining giant Rio Tinto (ASX:RIO), with the remaining stake publicly owned.

The company blamed the blowout on costs associated with tailings transfer to Pit 3, additional water treatment and related infrastructure, and revegetation requirements.

There were also higher forecast costs relating to site services and owners’ costs, and an increase in contingency.

Energy Resources says it is now reviewing all its funding options and is working with Rio to ensure it can meet its rehabilitation commitments.

Energy Resources of Australia (ASX:ERA) shares over the past year.
Energy Resources of Australia (ASX:ERA) shares over the past year.

At the end of November, the company had cash in the bank of $338m and $75m cash held in trust for rehabilitation.

ERA expects to have the feasibility study and rehabilitation cost finalised in the first quarter of next year.