From a closing price of C$18.10 (A$20.77) on Monday, Rio shares were trading at C$26.25 this morning on a turnover of 16.17 million shares. This volume was up dramatically compared to turnover at the beginning of the week.

The staggering gain has eroded the 35% premium built into the C$24.50 price (C$1.5 billion total consideration) Noranda is offering for all Rio Algom shares (to a 7% deficit). Rio has about 60.6 million shares outstanding of which Noranda already owns 9%.

Rio’s major attraction for Noranda is its South American assets – however, it does also have significant interests in Canada and the United States.

The acquisition would double Noranda’s annual copper mine production from 250,000 tonnes to 500,000t by 2005, immediately boost its copper reserves by 73% and better balance its copper mining and metallurgical assets.

Rio wholly owns the Cerro Colorado copper mine in northern Chile; is a joint owner of the Antamina project in Peru, along with Noranda, Teck and Mitsubishi, which will be the largest copper-zinc mine in the world when completed next year; has a 25% interest in the Alumbrera copper-gold mine in Argentina; and has a 33.6% holding in the Highland Valley Copper mine in British Columbia.

In a separate agreement, Noranda said it will sell a 50% interest in Rio Algom’s assets to Corporacion Nacional del Cobre (Codelco) immediately upon closing the deal. The two companies would then jointly manage the assets.

Codelco, 100% owned by the Chilean government, is the world’s largest copper producer and controls about 20% of the world’s proven and probable copper reserves.