Rio Tinto PLC, the world's second-biggest mining company, offered to buy the Labrador Iron Ore Royalty Income Fund for $405-million to increase its control over Iron Ore Co. of Canada (IOC).
Rio offered $13.50 a unit for Labrador, 17 per cent more than the average closing price over the past 10 trading days, the London-based company said in a statement to the Australian Stock Exchange.
Labrador owns 18.9 per cent of Montreal-based IOC. Rio acquired 56.1 per cent of IOC, Canada's biggest iron-ore pellet producer, through its acquisition of Australia's North Ltd. earlier this year.
Labrador is an unincorporated, limited purpose trust fund. In addition to owning a stake in IOC, the fund is entitled to a 7-per-cent royalty on all of IOC's sales and a commission fee of 10 cents per tonne on all the company's products, Rio said in the statement.
Rio's offer is conditional on the company gaining regulatory approval and on it securing 75 per cent of the units being tendered.
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- LABRADOR IRON ORE ROYALTY INCOME FUND