Mineral exploration company, RIO Tinto’s (ASX: RIO) shares uplifted by 2.062 percent today (i.e., 24 December 2018) after the company announced that it had completed the sale of its entire interest in the Grasberg mine in Indonesia for $3.5 billion. The binding agreement of this sale was announced in September 2018, and it was subject to various conditions like getting regulatory approvals. The company has received all the necessary regulatorily approval with regards to this sale.
At the time of 2018 full year result announcement, the Board will inform how the proceeds of the sales will be utilized. While commenting on the Sale transaction, Rio Tinto’s Chief Executive informed that this sale brings the total divestment proceeds received across the last two years to more than $11bn as the company continues to strengthen its portfolio. As per the announcement, at the end of FY17, losses attributable to Rio Tinto’s interest in the Grasberg mine in Indonesia were $169mn.
Earlier on 14 December 2018, the company completed the sale of its aluminum smelter at Dunkerque, France, to Liberty House for a total consideration of $500 Mn, proceeds of which will be returned to shareholders. In November 2018, the company entered into a binding agreement with China National Uranium Corporation Limited for the sale of its entire stake (68.62%) in Rössing Uranium Limited for a total consideration of $106.5 Mn.
In the first nine months of 2018, the company produced 251.2 million tonnes (mt) (Rio Tinto share 209.7 mt) from Pilbara operations. In the first half of FY 2018, the company reported an underlying EBITDA of $9.2bn and EBITDA margin of 43%. In 1H 2018, the company generated operating cash flow of $5.2bn and delivered underlying and net earnings of $4.4 billion and free cash flow of $2.9bn. In the first half of 2018, the capital expenditure of the company increased by 34% to $2.4 billion, and the company is expecting its Capital expenditure to be around $5.5 billion for the full year of 2018 and around $6.0 billion in 2019.
In the first half of FY18, the company repaid $2.1 billion of borrowings and reported cash and cash equivalents plus other short-term cash investments of $8.0bn. At the end of the first half of 2018, the company was having Total financing liabilities of $13.2 billion and net debt of $5.2 billion. As of 30 June 2018, the net gearing ratio of the company was 10% which is three percent higher than the net gearing ratio as at 31 December 2017.
In the last six months, the share price of Rio Tinto decreased by 8.95 percent as on 21 December 2018 and traded at a PE ratio of 10.370x. RIO’s shares traded at $77.220 with a market capitalization of circa $28.09 billion as on 24 December 2018 (AEST 4:00 PM).
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