Miner Rio Tinto made a third offer to buy the remaining stake in its rival company, Turquoise Hill Resources, gaining more control over the Oyu Tolgoi project in Mongolia.
Rio Tinto (GB:RIO) has agreed to buy the 49% stake in Canada-based mining company Turquoise Hill Resources (NYSE:TRQ) (GB:0MV4) in a deal valued at £2.9 billion or C$43 per share in cash. The company already owns a 51% stake in Turquoise.
With this deal, which is expected to close by the year’s end, Rio will gain more control over the Oyu Tolgoi project in Mongolia. The company is looking forward to a direct partnership with the government of Mongolia after acquiring the full stake in Turquoise.
Oyu Tolgoi is among the leading copper-gold mines across the world and has the capacity to generate results for around 100 years. This is a significant opportunity for Rio, which is considering shifting its focus from iron ore toward other metals.
Also, as the world moves towards electric options to stay away from fossil fuels, the prospects of copper demand are very high.
Is Rio Tinto a buy?
According to TipRanks’ analyst rating consensus, Rio Tinto stock has a Moderate Buy rating. This is based on ratings from 15 analysts, out of which seven are Hold, six are Buy, and two are sell recommendations.
The RIO target price is 5,517.8p, which shows an increase of 17.3% on the current price. The Rio analyst price target has a high and low forecast of 6,700p and 4,300p, respectively.
Conclusion
The acquisition will enable Rio Tinto to enhance efficiency and smoothen the operations at the Oyu Tolgoi project, generating more value.
