The deal between Rio Tinto and China National Uranium will give the private Asian company a 68.62-percent stake in Rössing Uranium.
Multinational miner Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) will sell its complete stake in Rössing Uranium to private entity China National Uranium (CNUC) for as much as US$106.5 million.
The binding agreement between Rio Tinto and CNUC will give the private Asian company a 68.62-percent stake in Rössing Uranium.
Rössing Uranium is based in Namibia and owns the Rössing mine, which has been in operation since 1976 and is considered the longest-running open-pit uranium mine in the world.
In addition to being one of the oldest uranium mines, Rössing is also the most prolific producer, with 2017 output of 4,652,000 pounds. To date, it has produced more uranium than any other mine on Earth.
“Rio Tinto has a long history in Namibia and I would like to thank the many people across Rio Tinto and the communities in which we operate who have contributed to the success of Rössing,” Jean-Sebastien Jacques, Rio Tinto CEO, said in a press release.
“I wish them continued success under new ownership. Rio Tinto will work closely with CNUC to ensure a smooth transition and ongoing sustainable operation at Rössing,” he continued.
After the transaction, which is subject to an initial cash payment of US$6.5 million and a contingent payment based on the uranium spot price of up to US$100 million, Rio will only operate one uranium mine in Australia.
The Ranger mine, located in Australia’s Northern Territory, is operated by Rio subsidiary Energy Resources of Australia (ASX:ERA).
Ranger is Australia’s longest-running uranium mine, and one of only three uranium mines in the world that has produced more than 120,000 tonnes of uranium oxide.
The company will also retain its ongoing uranium exploration project in Canada.
“The sale of our interest in Rössing once again demonstrates our commitment to strengthening our portfolio and focussing on our core assets, which deliver sector leading returns in the short, medium and long term,” added Jacques.
Rio Tinto shares sat flat on Monday (November 26), trading at AU$74.05.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.