Rio Tinto has signed a binding agreement to take full ownership of Turquoise Hill Resources by acquiring the remaining 49% stake in the latter in a deal worth $3.3bn.
As per the terms of the deal, the mining major will pay C$43 ($32.7) per share in cash to Turquoise Hill’s minority shareholders.
Turquoise Hill’s independent directors have unanimously recommended the company’s minority shareholders vote in favour of the transaction. The deal has the backing of the directors and the company’s senior officers.
Based in Canada, Turquoise Hill has a 66% stake in the Oyu Tolgoi copper-gold mine in Mongolia. The remaining 34% stake in the Mongolian mine is held by the state-owned Erdenes Oyu Tolgoi.
Rio Tinto copper chief executive Bold Baatar said: “Rio Tinto will work in direct partnership with the Government of Mongolia and Erdenes Oyu Tolgoi to realise the full potential of the Oyu Tolgoi project for the benefit of all stakeholders.
“This Transaction rewards all minority shareholders with an exceptional premium of 67% for their shares and brings the financial certainty necessary to ensure the Oyu Tolgoi project can be developed without having to ask minority shareholders to contribute further significant funds.”
Earlier this year, Rio Tinto and Turquoise Hill reached an agreement with the Mongolian government to proceed with the $6.93bn Oyu Tolgoi underground project.
According to Rio Tinto, full ownership of Turquoise Hill provides certainty for the financing requirements of the Oyu Tolgoi project, while easing any further funding risks for shareholders.
The deal will be carried out through a Canadian plan of arrangement. It will need the approval of 66.67% of the votes cast by all Turquoise Hill shareholders, including Rio Tinto, and the approval of a simple majority of the votes cast by Turquoise Hill’s minority shareholders.
Rio Tinto chief executive Jakob Stausholm said: “This Transaction will simplify governance, improve efficiency and create greater certainty of funding for the long-term success of the Oyu Tolgoi project.
“Rio Tinto’s offer guarantees Turquoise Hill’s minority shareholders outstanding value through a significant all-cash premium for their shares. After extensive negotiations, the terms of the transaction are final and there will be no further price increase.”
The transaction, which is subject to court approvals and other conditions, is anticipated to close in Q4 2022.
