Rio trumps Cameco bid for Canadian uranium junior

RIO Tinto will make a friendly $C578 million ($A554.8 million) cash offer for Canadian uranium junior Hathor Exploration, beating a hostile bid from Cameco.
Rio trumps Cameco bid for Canadian uranium junior Rio trumps Cameco bid for Canadian uranium junior Rio trumps Cameco bid for Canadian uranium junior Rio trumps Cameco bid for Canadian uranium junior Rio trumps Cameco bid for Canadian uranium junior

 

Kristie Batten

Rio and Hathor have entered into a support agreement for the offer and Hathor directors have signed lock-up agreements and will accept the offer in respect of their own shareholdings, representing around 4.6% of shares.

Under the agreement, Hathor would have to pay Rio a break fee of $20 million if an unsolicited superior proposal emerged.

The proposed offer of $4.15 per share represents an 11% premium to Cameco’s unsolicited bid and a 55.4% premium to Hathor’s closing price before Cameco made its bid in late August.

Overnight, Hathor, which only moved from the TSX-V to the main board of the Toronto Stock Exchange in April, jumped more than 9% to $4.40.

The Vancouver-based company has projects in the uranium-rich Athabasca Basin in Saskatchewan.

Its most advanced project, the high-grade Roughrider project, has resources of around 57 million pounds of uranium oxide. Preliminary studies have indicated capital costs of $468 million for a 10-year, 5Mlb per annum uranium operation with operating costs of $14.44 per pound of uranium.

Rio said the acquisition fit in with its strategy to invest in primary uranium-producing regions of the world to develop long-life, low-cost operations.

The company added that it would accelerate assessment of Hathor’s properties.

“This acquisition will allow us to build on the platform successfully laid out by Hathor and we will continue to draw on their expertise and commitment going forward. Canada is a country crucial to our business and growth plans and a location where Rio Tinto has a track record of delivering on major development projects to the benefit of the local community,” Rio Tinto Energy chief executive Doug Ritchie said.

Hathor said the offer provided the value to shareholders that Cameco’s offer didn’t.

“The strategic context of the Rio Tinto offer underscores the ‘best of breed’ global stature of the Roughrider uranium deposit relative to its peers of undeveloped uranium deposits around the world,” Hathor chief executive officer Dr Michael H Gunning said.

Meanwhile, Cameco said it was aware of the offer and would be reviewing its options.

Rio expects to mail the full details of the bid to Hathor shareholders next week.

Overnight, First Eagle Investment Management announced it had acquired a 5.7% stake in Hathor since the Cameco bid was first announced.

Rio said unnamed affiliates already held 5.7% of Hathor’s shares.

Shares in Rio were last trading 3.1% or $A2.03 down at $63.05 in Australia this morning.