Rio Tinto Shares: Two New Deals – What Lies Behind Them

Last Updated: 5. Dezember 2023By

Rio Tinto’s management has made important decisions in recent days that investors should definitely be aware of. This reveals the future strategy of the mining giant once again.

The focus of the first measure is on diamonds. What many may not even know: Rio Tinto is an important diamond producer.

Fort ร  la Corne: Rio Tinto gives up control of diamond project Now Rio Tinto has further thinned out the business area. Specifically, the raw material giant has decided to divest its 75% stake in the diamond project in the Fort ร  la Corne concession area in the Canadian province of Saskatchewan. The shares are to go to the previous joint venture partner Diamond Corp., which will now fully own the mine. In return, Rio Tinto will acquire 19.9% of the shares in the company Diamond Corp.

Background: The project was launched in 2014 and is considered a very promising deposit of high-quality diamonds. According to an economic evaluation from 2018, the site could produce a total of 66 million carats within 38 years.

Rio Tinto and its partner Diamond Corp. had a dispute in 2020. The exploration company had effectively accused the raw material giant of using its market power to unlawfully boot the smaller partner out of the ambitious project. In 2021 the two companies finally agreed, whereupon Rio Tinto launched a separate review of the project and initially put it on hold. In the first quarter of 2023, the mine then went into care and maintenance mode. Diamond Corp. anyway wants to get the project back on track – as the sole mine owner, but with the backing of the new major shareholder Rio Tinto.

Copper and gold: raw material giant increases stake in junior miner Meanwhile, the mining company also announced changes elsewhere. Rio Tinto has increased its stake in the also based in Canada Western Copper and Gold Corporation. Specifically, the company will buy about 3.47 million common shares through its subsidiary Rio Tinto Exploration Canada (RTEC) at a price of 1.73 CAD each. This amounts to a total of about 6 million CAD. The share of Rio Tinto thus increases to 9.7%.

Western is pushing ahead with the copper-gold mine Casino in the Yukon Territory in the northwest of Canada. Casino is considered one of the most ambitious raw material projects in the world. The mineral resources sleeping there are said to contain 14.8 million ounces of gold and 7.6 billion pounds of copper. In addition there are considerable amounts of the by-products silver and molybdenum.

The junior miner now wants to use the financial injection from Rio Tinto to accelerate the project. Specifically, the local infrastructure and certain study areas are to be driven forward, among other things. This should support the regulatory processes in order to finally obtain approval for the development phase of the Casino project. In return, Rio Tinto can intensify its influence on the exploration company and the mining project, for example by sending observers and committee members.

Rio Tinto share: my conclusion for you Above all, the second deal in my opinion underpins the future strategy of Rio Tinto. Group CEO Jakob Stausholm had repeatedly pointed to the raw material potential around the energy transition in recent months. The manager immediately announced measures to look for new copper opportunities in addition to lithium. In this context, the recent increase in participation in Western Copper and Gold can be understood.

Rio Tinto is already one of the most important copper players in the world today and is excellently positioned as such to support the expansion of ecological technologies such as wind and solar power and electric mobility. I think the Rio Tinto share is and remains therefore highly interesting for patient investors.