PERTH (miningweekly.com) – Mining major Rio Tinto has made a non-binding proposal to acquire the remaining 49% interest in Turquoise Hill Resources for $2.7-billion.

Under the terms of the proposed transaction, Turquoise Hill minority shareholders will receive C$34 in cash per Turquoise Hill share, representing a premium of 32% to Turquoise Hill’s last closing share price on the Toronto Stock Exchange.

Rio’s bid for Turquoise Hill follows a recent agreement between the two partners and the government of Mongolia to move the Oyu Tolgoi copper project forward, reset the relationship between the partners and approve the start of underground operations.

Rio in January announced the restart of underground operations at Oyu Tolgoi after reaching an agreement with the Mongolian government, and first sustainable production from the underground operation is expected in the first half of 2023.

The capital forecast for the project is $6.925-billion, including $175-million of known Covid-19 impacts to the end of 2022.

Rio said on Monday that the transaction would simplify the Oyu Tolgoi ownership structure, strengthen Rio’s copper portfolio, and reinforce its long-term commitment to Mongolia. In addition, the proposed transaction provides Turquoise Hill minority shareholders with the ability to realise compelling, immediate and certain value for their shares at a time when uncertainties inherent in the development of the underground operations and funding of such development remain.

“Rio Tinto strongly believes in the long-term success of Oyu Tolgoi and Mongolia, and delivering for all stakeholders over the long-term. That is why we want to increase our interest in Oyu Tolgoi, simplify the ownership structure, and further strengthen Rio Tinto’s copper portfolio. We believe the terms of proposal are compelling for Turquoise Hill shareholders,” Rio CEO Jakob Stausholm said.

“The proposed transaction would enable Rio Tinto to work directly with the government of Mongolia to move the Oyu Tolgoi project forward with a simpler and more efficient ownership and governance structure. With our relationship reset and the underground operations commenced, this transaction demonstrates our clear and unequivocal long-term commitment to Mongolia.”

By 2030, the Oyu Tolgoi is expected to be the fourth largest copper mine in the world. It is a complex greenfield project comprising an underground block cave mine and copper concentrator as well as an openpit mine which has been successfully operating for almost ten years. It is also one of the most modern, safe, sustainable and water-efficient operations globally, with a workforce which is more than 96% Mongolian.

The transaction, which is expected to be conducted by way of a Canadian plan of arrangement, will be subject to customary closing conditions, including approval by a majority of the votes cast by Turquoise Hill minority shareholders.