Rio Tinto has signed a binding agreement to sell its 80 per cent stake in Northparkes copper and gold mine to China Molybdenum (CMOC) for $820m, as part of its plan to reduce surging debts and improve balance sheet.
Located in central New South Wales, Australia, Northparkes mine originally opened in 1994 as an open pit mine but three years later underground mining operations commenced.
Northparkes mine owns approximately 10,314 ha of land, of which the mining lease covers 1,630 ha. The sale, which is subject to approval of Rio Tinto’s joint venture partners: Sumitomo Metal Mining and Sumitomo Corporation Mineral Resources, CMOC shareholders, as well as regulatory authorities, is expected to close by the end of 2013.
Chris Lynch, CFO of Rio Tinto, said: “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.
“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.
“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.”
Meanwhile, Rio Tinto has received binding commitments from the two major shareholders of CMOC that hold 69 per cent shares to support the transaction.
China Molybdenum (CMOC) is primarily engaged in the mining and processing, smelting, downstream processing, trade, research and development of molybdenum, tungsten and other metals.
Last month, Rio Tinto agreed to sell its Eagle project to Lundin Mining Corporation for $325m, and decided to retain its diamonds businesses after concluding a strategic review.