Rio Tinto, Mitsui bid A$75M for Pilbara iron ore project

Rio Tinto (NYSE, LSE, ASX: RIO), Mitsui & Co. and Nippon Steel have made a A$75-million (C$65-million) bid for CZR Resources’ (ASX: CZR) undeveloped Robe Mesa iron ore project in Western Australia’s Pilbara region.

The offer strengthens Rio Tinto and Mitsui partnership in the iron ore-rich region and follows Mitsui’s recent $5.34-billion (C$7.43-billion) acquisition of Rio’s Rhodes Ridge project. 

CZR’s board has already accepted the proposal, which outbids a competing offer from Fenix Resources (ASX: FEX).

Fenix, led by former rugby player John Welborn, must now either match or improve its bid if it wants to secure the 98.4-million-tonne Robe Mesa project. Its earlier all-scrip offer valued CZR at A$61 million in February based on a trading price of A30.5¢ cents per Fenix share. The bid would have increased to A98¢ per CZR share if 75% of shareholders had accepted by the March 21 deadline — a condition that was not met. Fenix shares have since dropped to A28¢.

Exclusivity payment

The Rio-led offer includes a A$650,000 exclusivity payment and targets only the Robe Mesa tenements. CZR, backed by Australian billionaire prospector Mark Creasy, would retain its other assets, including a 50% stake in the Ashburton Link export project, the Croydon gold project near De Grey’s Hemi discovery, the Buddadoo polymetallic project, and exploration ground at Shepherd’s Well and Yarrie.

CZR called the Rio-led bid “superior,” noting its higher value and the flexibility it provides to fund development of its remaining assets. Creasy, who owns 52% of CZR and already holds a 15% stake in Robe Mesa, said he would support the deal unless a better one emerged.

CZR shares rose 9.38% on Friday to close at A30¢ apiece, valuing the company at A$69.8 million. Fenix shares fell to A30¢, leaving it with a market capitalization of A$204 million.