Rio Tino has submitted an all-cash bid of $2.7 billion to acquire complete ownership of the Turquoise Hill project.
The company has reportedly offered minority shareholders $34 per share, which would represent a premium of 32% to Turquoise Hill’s last closing share price on the Toronto Stock Exchange.
Rio Tinto noted that the transaction would bring the Oyu Tolgoi project forward, simplify the mine’s ownership structure, reinforce the company’s commitment to Mongolia and reinforce its copper portfolio.
The mining group also hoped that the exchange would reset relations between the partners and help approve commencement of underground projects.
The move followed news last week that Rio Tinto would no longer be using Russian fuel supplies for its Oyu Tolgoi mine, after global companies withdrew from the country in protest of its assault on Ukraine.
Rio Tinto will file its proposal to the Turquoise Hill Board with the Securities and Exchange Commission (SEC).
The proposed bid will be subject to approval by a majority vote collection by the Turquoise Hill minority shareholders.
The transaction will reportedly not be submitted to any financing condition or due diligence.
“Rio Tinto strongly believes in the long-term success of Oyu Tolgoi and Mongolia, and delivering for all stakeholders over the long-term,” said Rio Tinto CEO Jakob Stausholm.
“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 Proposed Transaction would enable Rio Tinto to work directly with the Government of Mongolia to move the Oyu Tolgoi project forward with a simpler and more efficient ownership and governance structure.”
“With our relationship reset and the underground operations commenced, this transaction demonstrates our clear and unequivocal long-term commitment to Mongolia.”
Rio Tinto’s share price was down 0.5% at 111.2p in early morning trading on Monday.