LOOKING to gain a foothold in the Canadian uranium market, mining giant Rio Tinto has acquired Canadian junior Hathor Exploration for C$654 million, after rival Cameco backed out of the bidding war.
In a statement to shareholders in early December, Rio said it had gained 70.2 per cent of Hathor’s shares and had satisfied all of the conditions of the takeover offer. For months, Rio and one of the world’s largest uranium producers, Canada-based Cameco, have been competing to acquire Hathor, which has projects in the uranium-rich Athabasca Basin in Saskatchewan.
In August, Hathor rejected an unsolicited C$3.75 per share bid from Cameco, because it believed the offer was opportunistic.
A few months later, Rio submitted a C$4.15 per share offer to the explorer, which Hathor’s board supported, but then in mid-November, Cameco countered Rio’s bid with a C$4.50 per share offer. Rio responded with its own increased offer of C$4.70 per share – prompting speculation of a bidding war. But on November 28, Cameco issued an announcement that reported it would not increase or extend its offer. “After careful consideration, we cannot justify increasing the price beyond our current offer and accordingly, we will let our offer lapse,” Cameco chief executive officer Tim Gitzel said. Mr Gitzel added that the lapsed bid would not adversely affect Cameco’s plan to double its annual uranium production to 40 million pounds by 2018. The Hathor acquisition fits with Rio’s
strategy to invest in the primary uranium producing regions of the world to develop long-life, low-cost operations.
Hathor’s projects include the wholly-owned Roughrider deposit in the Athabasca Basin, which is thought to be one of the richest undeveloped uranium deposits in the world. The basin currently provides 20 per cent of global uranium production.
Rio chief executive officer Doug Ritchie said the acquisition would allow the company to build on the platform successfully laid out by Hathor. “We will continue to draw on their expertise and commitment going forward,” he said.
“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.”
By Kate Christou