Feb 22 2008
Rio Tinto has reached agreement on the second sale under its planned programme to divest at least US$15 billion of assets. The Group has signed an agreement to sell its interest in the Cortez gold mine in Nevada, USA to a subsidiary of its joint venture partner, Barrick Gold Corporation.
The Cortez gold mine is a joint venture between Rio Tinto subsidiary Kennecott Explorations (Australia) Ltd (40 per cent) and Barrick subsidiary Barrick Cortez, Inc. (60 per cent). The property is located in Crescent Valley, 75 miles south west of Elko, Nevada and is a complex of several open pit mines. The Cortez joint venture is operated by Barrick Cortez, Inc.
The sale price includes a cash consideration of US$1.695 billion. In addition, Rio Tinto will benefit from a deferred bonus payment in the event of a significant discovery of additional reserves and resources at the Cortez gold mine and will also retain a contingent royalty interest in the future production of the property. There is no financing condition and closing of the transaction is expected to occur in March 2008.
“Just last week we announced the sale of Greens Creek silver, gold, zinc and lead mine in Alaska for US$750 million, so we are on track to achieve almost one quarter of our target of realising asset sales of US$10 billion in 2008. This illustrates that high quality assets will continue to attract financially strong strategic buyers,” said Guy Elliott, chief financial officer of Rio Tinto.
In November 2007, Rio Tinto announced the results of its overall strategic review of the Group’s asset portfolio following its acquisition of Alcan. Options are also being explored to divest Rio Tinto Energy America (coal), Rio Tinto Minerals’ talc business and borates business, Rio Tinto Alcan Packaging, Rio Tinto Alcan Engineered Products, Rio Tinto’s interest in the Northparkes copper mine in Australia and Rio Tinto’s Sweetwater (USA) and Kintyre (Australia) uranium assets.