Could Rio Tinto make a play?Rio Tinto, the company which regards...

Could Rio Tinto make a play?

Rio Tinto, the company which regards the Robe River region as its iron ore backyard is currently mining the southern portion of the Robe Mesa with exploration crews reportedly moving steadily closer to the boundary its shares with CZR.

Last reports indicate that there are seven drilling rigs active on Rio Tinto’s side of the mesa which is understood to contain a uniform ore grade on either wide of the border.

In theory, Rio Tinto with a fully mobilised exploration team and heavy-duty mining equipment at the ready could make CZR a cash offer to buy the northern portion of the Robe Mesa and continue mining.

Whatever the outcome it is likely that CZR’s share of the Robe Mesa, and its greater Yarraloola project is worth somewhat more than the company’s current stock market value of just $22 million.

Even if Rio Tinto offered A$10/t for the 8.2Mt in the current reserve on CZR’s side of the boundary it would generate $82 million (close to four times the value of the company today), but with a new resource number on the way and with iron ore sticking at US$150/t any offer would have to be a lot higher to get CZR to consider a quick sale.