TORONTO (miningweekly.com – It is "highly likely" that Cameco will return with a higher bid for Hathor Exploration, after the uranium junior agreed to a friendly C$578-milliontakeover deal with diversified miner Rio Tinto, Versant Partners analyst Rob Chang said on Wednesday.
"They probably will put something higher up," he told Mining Weekly Online.
Rio Tinto trumped Cameco's August 26 $520-million, or C$3.75 a share, hostile bid by 11% with its C$4.15 cash offer.
“The acquisition of Hathor provides a quality opportunity to expand the Rio Tinto presence in the Athabasca basin which currently provides approximately 20% of global uranium production,” the company said.
Rio Tinto offered C$4.15 a share, in cash, compared with Cameco's C$3.75 bid unveiled on August 26.
Rio Tinto energy chief Doug Ritchie said the deal would allow the company to grow its business in uranium and Canada.
“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," he commented in a statement.
Hathor earlier this month formally rejected Cameco's hostile bid, saying it significantly undervalued the company and its prospects.
CEO Mike Gunning said that Rio Tinto's offer represented "fair value".
"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," he added in a statement.
Hathor's management and directors, representing 4.6% of the TSX-listed firm's fully diluted shares, had entered lock-up agreements with Rio Tinto, which had already built a 5.7% stake in the company.
The junior agreed to a C$20-million break fee.
Share prices of uranium producers and explorers fell by over 50% after the March Japanese nuclear disaster, and have struggled to recover since. The general stock market rout of the past three months has caused further declines.
Cameco CEO Tim Gitzel had on Monday written to Hathor's shareholders, encouraging them to tender their shares to his company's offer, as no alternative bid had yet emerged.
Hathor had said when it first became the subject of a hostile bid that it was in talks with large mining companies and Asian utilities regarding a potential alternative deal.
The company's shares gained 9% on Wednesday to close at C$4.40 apiece.