Rio Tinto PLC Rio Tinto agrees sale of Hail Creek and Valeria (2587I)
March 20 2018 - 4:09AM
UK Regulatory
TIDMRIO
RNS Number : 2587I
Rio Tinto PLC
20 March 2018
Rio Tinto agrees sale of Hail Creek and Valeria to Glencore for
$1.7 billion
20 March 2018
Rio Tinto has entered into a binding agreement with Glencore for
the sale of its entire interests in the Hail Creek coal mine and
the Valeria coal development project in Queensland, Australia, for
$1.7 billion.
The sale includes Rio Tinto's 82.0 per cent interest in the Hail
Creek operating mine and its 71.2 per cent interest in the Valeria
project.
Rio Tinto chief executive J-S Jacques said "The sale of Hail
Creek and Valeria delivers compelling value for our shareholders
and continues our strategy of strengthening our portfolio, focusing
on highest returns, maintaining a strong balance sheet and
allocating capital to the highest value opportunities.
"We expect that Hail Creek will continue to perform strongly
under its new owner, securing long-term jobs and continuing its
contribution to the State of Queensland."
The transaction is subject to customary conditions precedent
being satisfied, including the receipt of regulatory approvals from
Australia's Foreign Investment and Review Board, the Queensland
Government and applicable foreign competition authorities.
Subject to all regulatory approvals and other conditions
precedent being satisfied, completion is expected in the second
half of 2018. The funds will be used for general corporate
purposes.
Rio Tinto anticipates that Australian income tax will be payable
on sale proceeds which are in excess of the cost base of the assets
at completion. The currently estimated tax payable is in the order
of $300 million, however the quantum of tax payable will depend on
the final proceeds (after taking into account working capital
adjustments), the tax cost base at completion and the total of
capital gains and losses realised by the Rio Tinto Australian tax
consolidated group as at 31 December 2018.
There is a separate process underway to sell Rio Tinto's
remaining Australian coal assets. Rio Tinto will update the market
on this process as appropriate.
About the Assets*
The Hail Creek Complex is located in the northern Bowen Basin,
120km south-west of Mackay, in central Queensland and comprises the
Hail Creek, Lake Elphinstone and Mount Robert tenements. Hail Creek
is a large scale open cut mining operation which commenced
production in 2003.
In 2017 the Hail Creek mine produced 9.4 million tonnes of
saleable coal, comprising 5.25 million tonnes of hard coking coal
and 4.13 million tonnes of thermal coal. At 31 December 2017, Rio
Tinto reported marketable reserves for Hail Creek of 142 million
tonnes and mineral resources of 601 million tonnes. The combined
mineral resources at Lake Elphinstone and Mount Robert were 193
million tonnes.
Valeria is a large undeveloped coal project located in the
central Bowen Basin, approximately 40km north-west of Emerald. The
Valeria tenements contain 762 million tonnes of coal mineral
resources. Once developed, Valeria is expected to produce high
energy, low ash thermal and coking coal products.
In the 2017 financial year Rio Tinto's attributable share of
Hail Creek made a pre-tax profit of US$357 million and, including
the Valeria resource, had gross assets of US$859.1 million at 31
December 2017.
*Note - production, ore reserves and mineral resources:
Production, marketable reserves and mineral resources tonnages
are shown on a 100 percent basis
The estimate of total marketable reserves for Hail Creek was
reported on page 228 of the Rio Tinto 2017 Annual Report, released
to the market on 2 March 2018 and available on www.riotinto.com.
The Competent Person responsible for this reserve estimate was Mr
Andrew Prentice AusIMM.
The estimate of mineral resources for Hail Creek, Lake
Elphinstone and Mount Robert was reported to the market on page 234
of the Rio Tinto 2017 Annual Report, released to the market on 2
March 2018 and available on www.riotinto.com. The Competent person
responsible for this resource estimate was Mr Angus McIntyre
AusIMM.
The estimate of mineral resources for Valeria was reported to
the market on page 234 of the Rio Tinto 2017 Annual Report,
released to the market on 2 March 2018 and available on
www.riotinto.com. The Competent person responsible for this
resource estimate was Dr Richard Ruddock AusIMM.
Rio Tinto is not aware of any new information or data that
materially affects the above estimates as reported in the 2017
Annual Report and confirms that all material assumptions and
technical parameters underpinning these estimates continue to apply
and have not materially changed. The form and context in which each
Competent Person's findings are presented have not been materially
modified.
Contacts
media.enquiries@riotinto.com
riotinto.com
Follow @RioTinto on Twitter
Media Relations, United Media Relations, Australia
Kingdom Jonathan Rose
Illtud Harri T +61 3 9283 3088
T +44 20 7781 1152 M +61 447 028 913
M +44 7920 503 600
David Outhwaite
T +44 20 7781 1623
M +44 7787 597 493
Investor Relations, Australia
Investor Relations, United Natalie Worley
Kingdom T +61 3 9283 3063
John Smelt M +61 409 210 462
T +44 20 7781 1654
M +44 7879 642 675 Rachel Storrs
T +61 3 9283 3628
David Ovington M +61 417 401 018
T +44 20 7781 2051
M +44 7920 010 978
Nick Parkinson
T +44 20 7781 1552
M +44 7810 657 556
Rio Tinto plc Rio Tinto Limited
6 St James's Square Level 7, 360 Collins Street
London SW1Y 4AD Melbourne 3000
United Kingdom Australia
T +44 20 7781 2000 T +61 3 9283 3333
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No. 719885 ABN 96 004 458 404
This information is provided by RNS
The company news service from the London Stock Exchange
END
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