Rio Tinto is after a full stake in Canada’s Turquoise Hill Resources after proposing to acquire the remaining 49 per cent interest the major miner doesn’t currently own.
The transaction would see Turquoise Hill minority shareholders receive $C34 ($37) per Turquoise Hill share, valuing Turquoise Hill’s total minority shares at approximately $US2.7 billion ($3.76 billion).
This represents a 32 per cent premium on Turquoise Hill’s closing share price on the Toronto Stock Exchange on March 11.
It comes after Rio Tinto, Turquoise Hill and the Government of Mongolia came to a comprehensive agreement to resolve historical issues and reset their relationship concerning the Oyu Tolgoi copper-gold mine in Mongolia.
The Government of Mongolia had flagged concerns that development capital needed to commence underground mining was too high and had “eroded the economic benefits”.
But it’s now full steam ahead at Oyu Tolgoi, as underground operations commenced in late January.
“Rio Tinto strongly believes in the long-term success of Oyu Tolgoi and Mongolia and delivering for all stakeholders over the long-term,” Rio Tinto chief executive Jakob Stausholm said.
“That is why we want to increase our interest in Oyu Tolgoi, simplify the ownership structure and further strengthen Rio Tinto’s copper portfolio. We believe the terms of proposal are compelling for Turquoise Hill shareholders.”
The transaction is subject to regulatory approval and will need a nod from the majority of Turquoise Hill minority shareholders. Rio Tinto made no assurances that a transaction would result from these discussions.
If the transaction is successful, Rio Tinto would own a 66 per cent stake in Oyu Tolgoi with Mongolia holding the remaining 34 per cent interest in the mine.
With underground operations now commenced at Oyu Tolgoi, Rio Tinto hopes for first sustainable production in the first half of 2023.