Posted in | News | Uranium | Mining Business

Rio Tinto Makes All-Cash Offer for Hathor Exploration

Oct 27 2011

Rio Tinto through an indirect wholly-owned Canadian subsidiary, and Hathor Exploration Limited have agreed that Rio Tinto will make an offer to acquire all of the common shares of Hathor for C$4.15 in cash per common share.

The value of the Rio Tinto offer is approximately C$578 million on a fully-diluted basis. Rio Tinto and Hathor have entered into a support agreement (the "Support Agreement") for the Rio Tinto offer.

Rio Tinto to make an all-cash offer for all the common shares of Hathor for C$4.15 per common share, representing a premium of more than 55 per cent to Hathor's unaffected closing price on 25 August 2011.
Hathor's board unanimously recommends shareholders accept the Rio Tinto offer.
Hathor directors and senior management have entered into lock-up agreements with Rio Tinto and have agreed to tender all of their common shares to the Rio Tinto offer.
The acquisition of Hathor bolsters Rio Tinto's global uranium strategy and complements its current exploration programmes in Saskatchewan and its uranium operations elsewhere in the world.
The technical foundation established by Hathor coupled with Rio Tinto's world-class expertise and anticipated investment will unlock the full potential of the exploration properties for the benefit of Saskatchewan and Canada.

The Rio Tinto offer represents a premium of approximately 11 per cent to Cameco's unsolicited offer for Hathor of C$3.75 per common share and a premium of 55.4 per cent to Hathor's closing share price of C$2.67 on the Toronto Stock Exchange (the "TSX") on 25 August 2011.

Rio Tinto's strategy is to invest in the primary uranium producing regions of the world to develop long-life, low-cost operations. The acquisition of Hathor provides a quality opportunity to expand the Rio Tinto presence in the Athabasca Basin which currently provides approximately 20 per cent of global uranium production.

Rio Tinto's expertise in exploration, innovative mining techniques, technology and commitment to sustainable development will complement and build upon the strong technical foundation established by Hathor at Roughrider - an emerging significant high-grade deposit. Rio Tinto intends to accelerate the investigation and assessment of the exploration properties to unlock their full potential, consistent with its global safety and community standards. Rio Tinto's investments in Saskatchewan will support the diversification and development of the regional economy, building on its significant presence in Canada.

Rio Tinto Energy chief executive Doug Ritchie said "The medium and long-term outlook for the uranium market is positive, with uranium assuming a significant role in the world's primary energy needs. 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."

Hathor chief executive officer Dr. Michael H. Gunning said "The superior Rio Tinto offer provides fair value to Hathor shareholders over Cameco's current hostile, unsolicited takeover offer.

"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."

The Special Committee of Hathor reviewed the terms and conditions of the Rio Tinto offer and considered a number of factors, including a verbal opinion from Canaccord Genuity Corp., financial advisor to Hathor, and Scotia Capital Inc., financial advisor to the Special Committee, before concluding the offer is superior to the existing offer from Cameco and fair to Hathor shareholders.

Hathor's board of directors, after receiving the recommendation of the Special Committee, has unanimously determined that the Rio Tinto offer is in the best interests of Hathor's shareholders and unanimously recommends that shareholders accept the Rio Tinto offer.

The directors and senior management of Hathor have entered into lock-up agreements with Rio Tinto and have agreed to tender all of their common shares to the Rio Tinto offer. The common shares subject to the lock up agreements equal 6,351,400 or approximately 4.6 per cent on a fully diluted basis.

The Support Agreement provides that board of directors of Hathor may under certain circumstances terminate the Support Agreement in favour of an unsolicited superior proposal, subject to the payment of a break fee of C$20 million and subject to a right by Rio Tinto to match such superior proposal.

Full details of the Rio Tinto offer will be included in a takeover bid circular that is expected to be mailed to Hathor shareholders early in the week of 24 October 2011. The Rio Tinto offer will be open for a period of not less than 35 days and the Rio Tinto offer will be subject to certain customary conditions, including there having been validly deposited and not withdrawn at the expiry time of the Rio Tinto offer that number of Hathor common shares which together with any common shares beneficially owned by Rio Tinto or its affiliates, constitutes at least 66? per cent of the outstanding common shares of Hathor on a fully diluted basis and receipt of all required regulatory approvals. Affiliates of Rio Tinto hold 7,890,200 common shares of Hathor or approximately 5.7 per cent on a fully diluted basis. The Rio Tinto offer is not subject to any financing conditions. If the Rio Tinto offer is successful, Rio Tinto intends to take steps available to it under corporate and securities laws to acquire any remaining outstanding Hathor common shares.