Mining giant Rio Tinto takes on Saskatoon-based Cameco and makes a bid for uranium junior Hathor

Global mining powerhouse Rio Tinto PLC has just announced a friendly $578 million CAD bid for junior uranium company Hathor Exploration Ltd. staging a battle against Saskatoon-based uranium giant Cameco for a promising uranium property in Saskatchewan adjacent to Cameco's existing mine.

London-based Rio, the world’s second-largest mining company, said Wednesday it is offering $4.15 per share for Hathor, a 55 per cent premium to the company’s closing price on Aug. 25, the day before Cameco made a hostile bid for $3.75 per share. It’s also the first bid for a Canadian company Rio has made since it bought Montreal-based Alcan in 2007.

Hathor shares, which had been trading above Cameco’s offer price since the bid was made, jumped more than 10 per cent on Wednesday to a high of $4.47, suggesting investors expect Cameco may come in with a higher offer.

Hathor has urged its shareholders to reject the offer from Cameco, calling it “predatory” and opportunistic given depressed uranium prices in the wake of Japan’s nuclear disaster earlier this year. Spot uranium prices have fallen about 25 per cent to around $53 (U.S.) per pound, followed by a drop in equities in the sector, since Japan's earthquake and ensuing nuclear crisis struck in mid-March.

Vancouver-based Hathor, whose flagship asset is the Roughrider deposit in northern Saskatchewan, said its board unanimously recommends the Rio offer instead.

“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,” Hathor chief executive officer Mike Gunning said in a statement Wednesday. “The superior Rio Tinto offer provides fair value to Hathor shareholders over Cameco’s current hostile, unsolicited takeover offer.”

“The acquisition of Hathor provides a quality opportunity to expand the Rio Tinto presence in the Athabasca Basin which currently provides approximately 20 per cent of global uranium production,” Rio stated.

“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,” Rio Tinto Energy chief executive Doug Ritchie stated.

Rio also said last month that it would form a joint-venture with North Atlantic Potash Inc., the Canadian subsidiary of Russia's JSC Acron, to explore for the fertilizer ingredient in nine areas of Saskatchewan.

Source: (in part) Globe & Mail