Rio Tinto currently controls and operates the Oyu Tolgoi mine, located is 550 km (342 miles) south of Mongolia’s capital Ulaanbaatar via Turquoise Hill’s 66% stake. The government of Mongolia owns 34%.
Market observers believe Turquoise Hill’s investors could get a sweeter deal. Analysts at Scotiabank predict that the company’s shareholders will seek a materially higher offer from Rio Tinto than the C$34/share offer price, perhaps greater than C$50/share.
The world’s second largest miner has the financial resources to pay a higher premium. As of December Rio had $1.6 billion of net cash, while high iron ore prices are adding to that pile. The company’s willingness pay up is not so clear, which makes a transaction highly uncertain.
Acquiring the Vancouver-based miner would boost Rio Tinto’s copper output by 10% over the next five years, 17% on average over 10 years, and by more than 30% from 2032, according to…
