The company has announced a binding agreement for the sale to Glencore of its 82% interest in the Hail Creek operating mine and a 71.2% interest in the Valeria development for US$1.7bn.
Macquarie observes this deal continues the company’s recent track record of achieving solid results from asset sales. The broker expects the board will wait until a further agreement is reached on the divestment of Kestrel before announcing plans to return capital to shareholders.
Outperform rating and $94 target maintained.
Target price is $94.00.Current Price is $75.94. Difference: $18.06 – (brackets indicate current price is over target). If RIO meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges – negative figures indicate an expected loss).