Rio Tinto International Holdings Ltd. made an offer Monday to buy the 49 per cent stake in Turquoise Hill Resources Ltd. it does not already own and to take it private.
The proposal values the minority stake in company at about $3.4 billion.
Under the offer, Rio Tinto, which already owns a 51 per cent stake in the company, would pay $34 per share for the roughly 99 million shares held by Turquoise Hill’s minority shareholders.
Shares in the company closed at $25.68 on the Toronto Stock Exchange on Friday.
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Turquoise Hill owns a 66 per cent stake in the Oyu Tolgoi copper and gold mine in Mongolia. Erdenes Oyu Tolgoi LLC, a Mongolian state-owned entity, holds the remaining 34 per cent interest.
Rio Tinto said the deal would simplify the ownership structure of the mine and strengthen its copper portfolio.
“Rio Tinto strongly believes in the long-term success of Oyu Tolgoi and Mongolia, and delivering for all stakeholders over the long-term,” Rio Tinto chief executive Jakob Stausholm said in a statement.
“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.”
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Turquoise Hill said its board of directors would establish a special committee of independent directors to review and consider the proposal.
“Turquoise Hill shareholders do not need to take any action with respect to the proposal at this time,” the company said in a statement.
The offer follows an agreement between the company, Turquoise Hill and the Mongolian government in January to move the Oyu Tolgoi project forward, reset the relationship between the partners and approve the start of underground operations.
In its outlook for this year, Turquoise Hill has said it expects Oyu Tolgoi to produce 110,000 to 150,000 tonnes of copper and 115,000 to 165,000 ounces of gold in concentrates in 2022 from processing of open pit and underground development material as well as stockpiles.
It has said gold and copper production is forecast to be lower in 2022 compared with 2021 due to stripping of the next cutback and processing lower grade stockpile material.