Rio offer sees rival back out of Hathor war

Cameco said yesterday it is backing out of a bidding war for Hathor, after Anglo-Australian miner Rio Tinto sweetened its bid for the Canadian uranium explorer to C$654m (£406.7m).
By The Newsroom
Published 29th Nov 2011, 10:45 BST

“After careful consideration we cannot justify increasing the price beyond our current offer and accordingly, we will let our offer lapse,” said Tim Gitzel, chief executive of Cameco, Canada’s largest uranium miner.

Allowing the bid to lapse won’t set back Cameco’s plan to double annual uranium production to 40 million pounds by 2018, Mr Gitzel said.

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Cameco and Rio have been locked in a battle to acquire Hathor, which controls the large exploration-stage Roughrider project in the uranium-rich Athabasca region of Saskatchewan in Western Canada. Both companies see demand for uranium growing despite the pressure on the nuclear industry in the aftermath of the Fukushima disaster in Japan.

The Roughrider project is located just 25 km (15 miles) southeast of Cameco’s Rabbit Lake mill and has the potential to produce at least 5 million pounds of uranium a year.

Cameco made a hostile C$520m bid for Hathor in August, after talks aimed at a friendly deal fell apart over price. Rio emerged as Hathor’s white knight in October with a C$578m bid.

Earlier this month, Cameco raised its bid to C$625m, but Rio was quick to counter with a C$4.70 a share bid worth C$654m, leading many analysts to speculate that Cameco would back out of the race, as the price was already more than 25 per cent higher than its original bid.