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Print[Ferro-Alloys.com] Anglo-Australian mining giant Rio Tinto plc (RIO: Quote,RIO.L, RIO.AX) agreed Sunday to sell its 80 percent stake in Northparkes gold and copper mine in Australia to China Molybdenum Co., Ltd. (CMOC) for $820 million. The deal, subject to approval of CMOC shareholders, is expected to close by the end of 2013.
Rio Tinto said it has received binding commitments from two of CMOC's major shareholders, holding 69 percent of CMOC shares, to support the deal, which is sufficient for the relevant shareholder resolutions to be passed.
The deal is part of Rio Tinto's larger strategy of divesting non-core assets in order to achieve its cumulative cost savings target of $5 billion over the next two years.
"The sale of Northparkes represents great value for our shareholders and demonstrates our continued focus and discipline in the way we allocate capital across the Group," Rio Tinto CFO Chris Lynch said in a statement.
The world's second largest miner had put the Northparkes mine on the chopping block in April and hired Macquarie Group Ltd. to assist in the sale process. Rio Tinto acquired the Northparkes mine as part of the $3.5 acquisition of North Ltd. in 2000.
Rio Tinto is also seeking to sell other assets including its Pacific aluminum operations in Australia and a Canadian iron ore division. Last month, Rio Tinto decided to retain its diamond business after failing to find a buyer.
Northparkes is a copper and gold mine located in Central West New South Wales, Australia, 27 kilometers from the thriving and progressive town of Parkes. Northparkes is a joint venture between Rio Tinto (80%) and the Japan's Sumitomo Group (20%).
The mine produced 53,800 metric tons of copper and 72,000 troy ounces of gold in 2012. The mine exports most of the copper concentrate it produces to Japan, China and India.
"Northparkes is a successful business but is not of sufficient size to be a good fit with our strategy. We believe it will have a strong future under its new ownership. Rio Tinto will continue to manage Northparkes to the highest safety and environmental standards during the transition to the new owner," Lynch stated.
Meanwhile, the closure of the deal is subject to Rio Tinto's joint venture partner Sumitomo, agreeing to waive or fail to exercise pre-emption rights under the original joint-venture agreement. Sumitomo has the first right to match any bid as per the agreement. It will also have to meet foreign investment criteria and other regulatory criteria.
China Molybdenum is primarily engaged in the mining and processing, smelting, downstream processing, trade, research and development of molybdenum, tungsten and precious metals. It is the world's fourth largest molybdenum and second largest tungsten concentrate producer in the world, and an emerging precious metals producer in China.
"The agreed sale of Northparkes follows our recently completed divestment of the Eagle nickel project in the United States while the Palabora sale is now unconditional and expected to close on 31 July. As always, any decision to sell is driven by our focus on delivering the best value for our shareholders," Lynch added.
RIO closed Friday's regular trading session at $45.40, up $0.26 or 0.58% on a volume of 2.37 million shares
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