Over the weekend reports about the possible takeover were leaked and Riversdale has since confirmed it has received a consideration of $A15 a share from the world’s second-largest miner.
Shares in Riversdale spiked 10% on the news this morning.
However, in a statement released by Riversdale executive chairman Michael O’Keeffe, the company stressed there was no certainty that Rio, or any other party, would proceed with any takeover proposal.
“These discussions were undertaken in confidence and Rio advised the company that it is not in a position to submit a proposal for the potential acquisition of the company,” O’Keeffe said.
Rio Australia spokeswoman Karen Halbert told Bloomberg yesterday the company did not comment on market speculation, but has since issued the same statement as Riversdale to the market.
Talk is now growing of a possible counter-bid from Vale, given that it already has a firm foothold in Mozambique, the location of most of Riverdale’s coal.
In a morning note by UBS Resources Glyn Lawcock said news of the Riversdale takeover made sense.
“We know Rio thinks Mozambique coal is real, and Vale is committing to a billion dollar infrastructure spend in the country,” Lawcock said.
“It makes sense for a major to put their foot on Mozambique.”
Riversdale’s main projects are based in Mozambique and South Africa, and several are jointly owned with Indian conglomerate Tata Steel, which also has a 24% stake in the coal company.
It also has $A500 million in its war chest after a successful capital raising earlier in the year.
With resources in Mozambique of 13 billion tonnes, 4Bt occurs in the Benga concession [reserves of 502 million tonnes] of which Tata has a 35% interest.
Production is planned to start in the second half of next year with approvals secured for a 20Mtpa run-of-mine operation.
A feasibility study into its development is underway.
The balance [9Bt] occurs within the Zambeze prospect where Riversdale is looking to sell up to a 40% interest to China’s Wuhan Iron and Steel (group) Corporation [WISCO] for $US800 million.
In return, WISCO would receive up to 40% of the offtake, as well as 10% from Benga, at market prices.
However, this deal is yet to be finalised, with the memorandum of understanding recently expired.
At Riversdale’s annual generating meeting in October, O’Keeffe said the parties remained fully committed and engaged to concluding definitive agreements as soon as possible.
A number of conceptual mine plans have been reviewed and developed into a prefeasibility study for Zambeze , with results due to be put to the company’s board shortly for approval.
If given the thumbs up, a definitive feasibility study would then be undertaken.
Shares in Riversdale were up 10.64% in morning trade to $15.60, while shares in Rio Tinto were up 0.27% to $86.65.
