Rio Tinto Offer for Labrador Iron Ore Royalty Income Fund

Business Wire, Dec 15, 2000

Business Editors

LONDON--(BUSINESS WIRE)--Dec. 15, 2000

Rio Tinto (NYSE:RTP) announced today that it intends to make a cash offer to purchase all of the units of Labrador Iron Ore Royalty Income Fund (the Fund) for C$13.50 per unit.

Taking into account the Fund's anticipated fourth quarter distribution, this offer represents a premium of approximately 17 per cent to the average closing price over the last ten trading days of C$11.85. The total value of the offer is C$405 million.

Leigh Clifford, Chief Executive of Rio Tinto, said, "The acquisition of the Fund will provide Rio Tinto the opportunity to consolidate its position in Iron Ore Company of Canada (IOC) and this offer represents an opportunity for all the Fund unitholders to realize a significant cash premium to the prevailing market price for their units."

The offer, which is being made through Rio Tinto's wholly owned subsidiary, Rio Tinto Canada Inc., will be conditional upon at least 75 per cent of the units being tendered to the offer and will be subject to customary conditions, including the receipt of all regulatory approvals.

It is anticipated that the Fund Trustees will obtain, within the next four to six weeks, an independent valuation of the Fund in accordance with the rules of the Ontario Securities Commission. Rio Tinto will mail its offer document to unitholders as soon as possible thereafter.

Rio Tinto is one of the world's leading mining groups with interests in a diversified range of minerals and metals. The Group has interests in 40 countries with around 40,000 employees. Rio Tinto has a 56.1 per cent interest in IOC, Canada's largest iron ore pellet producer.

The Fund is an unincorporated, limited purpose trust that, through its wholly-owned subsidiary Labrador Mining and Exploration Company Limited, owns an 18.9 per cent equity interest in IOC. In addition, the Fund is entitled to a 7 per cent royalty on all sales of IOC and a commission fee of C$0.10 per tonne on all iron ore products sold by IOC.