Ride gets rougher as Rio Tinto bids for Hathor

20 October 2011

Rio Tinto has announced that it is making a cash offer for Canadian uranium exploration company Hathor Exploration, would-be developer of the Roughrider project. Hathor's board is recommending its shareholders accept the offer over an unsolicited bid from Cameco.


Roughrider drill
Drilling at Roughrider (Image: Hathor)
Rio Tinto's offer of C$4.15 ($4.08) per common share values the company at some C$578 million ($569 million) on a fully-diluted basis. The offer represents an 11% premium to Cameco's C$3.75 ($3.70) per share offer lodged in August.


Hathor's board, which urged its shareholders not to accept Cameco's offer, has unaminously recommended acceptance of the Rio Tinto bid. Its directors and senior management have entered into "lock-up" agreements with Rio Tinto and agreed to tender all of their common shares to the Rio Tinto offer. Hathor CEO Michael Gunning said the "superior" Rio Tinto offer "provides fair value to Hathor shareholders over Cameco's current hostile, unsolicited takeover offer."
Rio Tinto and Hathor announced the agreement in a joint statement released only days after Cameco president and CEO Tim Gitzel mailed a letter urging Hathor shareholders to accept Cameco's offer and pointing to Hathor's inability, up to that point, to attract a better alternative offer.
Hathor's exploration properties are focused in the Athabasca Basin in northern Saskatchewan, the origin of some 20-30% of world uranium production over the past 35 years. According to Rio Tinto, acquisition of Hathor provides it with a "quality opportunity" to expand its presence in the Athabasca Basin, in line with a strategy of investing in primary uranium producing regions to develop long-life, low-cost operations.
Hathor's flagship project, the high-grade Roughrider deposit, is estimated to contain 17.2 million pounds U3O8 (6600 tU) in indicated resources and 40.7 million pounds U3O8 (15,650 tU) in inferred resources. It lies some 25 km from Cameco's existing Rabbit Lake uranium mill. Any developer of the deposit would likely face the potentially expensive choice of building their own mill or using Cameco's facilities. Half of the output from Cameco's forthcoming Cigar Lake mine had been earmarked for processing at Rabbit Lake, but Cameco recently announced that it is intending to mill all the Cigar Lake ore at its McClean Lake mill instead, freeing up capacity at Rabbit Lake.
A takeover bid circular for Rio Tinto's offer is due to be mailed out in the week of 24 October and the offer will remain open for at least 35 days. Cameco has formally acknowledged the announcement of the Hathor-Rio Tinto agreement, and says it will "update shareholders when appropriate" with respect to its own offer which is due to expire on 31 October.

Researched and written

by World Nuclear News


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