Rio Tinto International Holdings Ltd. made an offer on Monday to buy and privatize the 49 percent stake in Turquoise Hill Resources Ltd. it doesn’t already own.
The proposal values the minority stake in the company at approximately $3.4 billion.
Under the offer, Rio Tinto, which already owns a 51 percent stake in the company, would pay $34 per share for the approximately 99 million shares held by Turquoise Hill’s minority shareholders.
Shares of the company closed at $25.68 on the Toronto Stock Exchange on Friday.
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Turquoise Hill has a 66 percent interest in the Oyu Tolgoi copper and gold mine in Mongolia. Erdenes Oyu Tolgoi LLC, a Mongolian state-owned company, holds the remaining 34 percent of the shares.
Rio Tinto said the deal would simplify the mine’s ownership structure and strengthen its copper portfolio.
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“Rio Tinto firmly believes in the long-term success of Oyu Tolgoi and Mongolia and the long-term performance for all stakeholders,” said Jakob Stausholm, Rio Tinto’s chief executive, in a statement.
“The proposed transaction would allow Rio Tinto to work directly with the government of Mongolia to advance the Oyu Tolgoi project with a simpler and more efficient ownership and governance structure.”
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Turquoise Hill said its board will set up a special committee of independent directors to consider and review the proposal.
“Turquoise Hill shareholders are not required to take any action regarding the proposal at this time,” the company said in a statement.
The bid follows an agreement in January between the Company, Turquoise Hill and the Government of Mongolia to advance the Oyu Tolgoi project, reformulate the relationship between the partners and permit the commencement of underground operations.
In its outlook for this year, Turquoise Hill has said that it expects Oyu Tolgoi to produce 110,000 to 150,000 tonnes of copper and 115,000 to 165,000 ounces of gold in concentrates from processing open pit and underground development materials and stockpiles in 2022.
It has been said that 2022 gold and copper production is expected to be lower than 2021 as the next cut is mined and low grade stockpile material is processed.
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