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Shares in Rio Tinto (ASX:RIO) subsidiary Energy Resources of Australia (ASX:ERA) fell hard today as the Takeovers Panel called time on a bid to stop a potential $880 million entitlement offer that could give the mining giant as much as 99.25% control of the yellowcake stock.

ERA has just $86 million in available cash and was on track to go broke without a new capital injection.

It needs the dosh to fund a now ~$2.4 billion clean up of the shuttered Ranger uranium mine, which ERA has pledged with Commonwealth support to rehabilitate to match the surrounding Kakadu National Park.

But Rio has been in competition with minorities for years who want the company to develop its Jabiluka underground deposit.

Two key holders, Zentree Investments and WA stockbroker Willy Packer’s Packer and Co., complained that the 19.87 for 1 renounceable entitlement offer would enable Rio, which owns 86.3% of ERA, to take its stake beyond 90% and compulsorily acquire the rest of its stock at just 0.2c a pop.

Between them Zentree holds 3.04% of ERA and Packer boasts 8.82%.

The Takeovers Panel today said there was no reasonable prospect it would make a declaration of unacceptable circumstances, though its reasons for decision have not yet been made public.

“The Applicants submitted (among other things) that the offer is only designed to increase Rio’s voting power and to allow Rio to compulsorily acquire the remaining shares in ERA in circumstances that contravene the purposes set out in section 602 of the Corporations Act 2001 (Cth),” Takeovers Panel acting CEO Andrew Bubniw said in a statement on the decision by sitting president Teresa Dyson, Timothy Longstaff and James Stewart.

“The Panel considered, among other things, that ERA’s Independent Board Committee took appropriate steps to endeavour to mitigate the potential control effect of the equity raise having regard to the Panel’s guidance and in the context of the circumstances facing ERA.

“The Panel was not minded to second guess the Independent Board Committee’s decisions regarding the proposed equity raise, including in relation to ERA’s need for funds, the timing or quantum of this need, the assessment of alternate funding sources and strategies, and the structure of the rights issue.”

Jabiluka

ERA, with Rio’s backing, has pledged not to develop Jabiluka under a veto right issued to the Mirarr traditional people under the Jabiluka lease.

An application to renew the lease was dumped by the NT Government a couple months’ back in a process now being challenged by ERA in the courts.

The decision scotched an attempt by South Australian producer Boss Energy (ASX:BOE) to acquire the project, on the proviso that it won the support of traditional owners and would set up a trust giving them a free-carried 10% interest in the mine.

Zentree and Packer had accused Rio of ‘taking advantage’ of the ongoing litigation regarding Jabiluka to launch the offer when ERA’s future prospects “are entirely uncertain”.

They had wanted Rio restrained from votes on independent directors at general meetings among other restrictions to prevent the mining giant hitting the compulsory acquisition threshold.

Elsewhere in the large cap market, Mineral Resources (ASX:MIN) rose 5.4% after announcing it had received $1.1bn from Morgan Stanley in the first instalment of a $1.3bn deal to trade a 49% stake in the haul road for its 35Mtpa Onslow Iron project.

The other $200m will be transferred if Onslow hits a 35Mtpa run rate in any quarter before June 30, 2026.

The sale will help address balance sheet concerns for the iron ore and lithium producer, which will cancel an undrawn bridge facility of US$750m after the sale.

The broader materials sector (+2.88%) is still on cloud 9 after the Chinese Government’s big stimulus announcement yesterday, with iron ore prices up from ~US$89/t to ~US$96/t in just two sessions.

High grade Canadian miner Champion Iron (ASX:CIA) was the biggest beneficiary among the large caps, up 13.45% today, while Fortescue (ASX:FMG) rose 4.72% after announcing a US$2.8bn deal for Liebherr to supply 475 zero emissions machines for its iron ore mines.

FMG is planning to have no emissions attributable to the company’s iron ore operations by 2030, an ambitious target given it has pledged not to purchase offsets as part of the “Real Zero” plan.

Around two thirds of the current mining fleet will be replaced by 360 battery electric trucks, 55 electric excavators and 60 battery power dozers.

There was some comedy as well, with an early announcement on FMG’s Liebherr deal containing an eyebrow raising quote from Rio CEO Jakob Stausholm apparently praising one of his biggest competitors scrapped and expunged from the record.