Rio Tinto Limited (ASX: RIO) is in the business of finding, exploring, mining and processing of mineral resources primarily in North America and Australia. Rio’s share prices increased by 3.077% on 20 September 2018 after the company disclosed the details of how it is planning to return approximately $3.2 billion of post-tax coal deposit proceeds to its shareholders. These proceeds were derived from the sales of Hail Creek and Valeria, Kestrel and Winchester South. The sale of Aluminum Dunkerque smelter in northern France is yet to be completed and Norway’s Hydro has canceled the plans to buy its ISAL smelter in Iceland. The company is planning to conduct an off-market share buyback worth about A$2.7 billion ($1.9 billion) and further on market purchases of Rio Tinto plc shares. This return of $3.2 billion proceeds to its shareholders demonstrates company’s commitment to capital discipline. The timings and form of shareholder return in respect of further proceeding are going to be announced with 2018 full year results. The participation in the Buy-back is not compulsory for the shareholders.
In the first half of FY 2018 Rio delivered $0.3 billion free cash flow from productivity. The company is reshaping the portfolio by divestments of $5 billion. The company’s EBITDA was $9.2 billion in the first half of FY2018. Company’s total cash returns to shareholders are $7.2 billion which includes interim results of $3.2 billion and disposable proceeds of $4 billion. The gross debt of the company has been reduced by $2.1 billion in 1H 2018. The net earnings of the company were US$4,380 million in 1H 2018
The share prices traded at $77.720 at a market capitalization of $$31.1 Bn as of 20 September 2018(AEST 2:06 PM).
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