Rio Tinto PLC (LSE:LON:RIO) said it submitted an “improved non-binding proposal” to acquire the remaining stake in Turquoise Hill Resources Ltd (TSX:TSX:TRQ) that the miner does not already own.
According to a statement, the new proposal values the 49% minority stake in the Canadian mineral exploration company at roughly US$3.1bn (C$4.02bn), meaning shareholders would receive C$40 per share, representing an 18% premium to Rio Tinto’s initial offer.
Turquoise Hill last week rejected Rio's initial C$34 per share offer, saying it did not reflect the fundamental and long-term strategic value of the company’s majority ownership of the Oyu Tolgoi project in Mongolia.
Oyu Tolgoi, which is 66% owned by Turquoise Hill, is one of the world’s largest copper and gold deposits.
Rio Tinto said its increased offer represents a 56% premium to Turquoise Hill's share price on the Toronto Stock Exchange (TSX) on 11 March 2022, a day prior to the initial proposal.
It also represents a 109% premium to its closing share price on the TSX on 25 January, when the Oyo Tulgoi partnership was reset after the local government said the project could move forward.
"Rio Tinto believes this offer not only provides full and fair value for Turquoise Hill shareholders but is in the best interests of all stakeholders as we work to move the Oyu Tolgoi project forward,” said the FTSE 100 company's chief executive Jakob Stausholm.
“We will continue to take a disciplined approach to capital allocation and strongly encourage the board of Turquoise Hill to engage constructively, and to support and recommend in favour of Rio Tinto's improved proposal."
Since Rio made its initial proposal, Turquoise’s share price declined roughly 35% “in light of a deteriorating and more uncertain external environment”.
Additionally, Rio Tinto noted the Canadian exploration company’s recent earnings, where it pointed out it needed to raise proceeds of US$1bn to address its current funding requirements.