Rio offloads Mt Davies JV

Rio Tinto (ASX: RIO) and JV partner Metals X (ASX: MLX) have agreed to end their relationship at the Mt Davies tenement in South Australia.

Since 2008, Metal’s X has been making submissions for approvals on the project and is now finalising its final submissions for environmental approval. Metals X CEO Peter Cook believes the acquisition will provide strong revenue for company despite depressed nickel prices and will “definitely be developed at some time in the future”.

Metal X will pay Rio $500,000 and 870,000 fully paid ordinary shares but is subject for approval by a number of groups, including the SA government.

Despite its small size, the sale is part of a long list of potential assets to be cut by Rio in a bid to save on costs. After another tough blow to profit in its most recent half-year, shareholders are calling on management to take action.

Foolish takeaway

Rio remains a troubled business. Rising debt levels, less demand for its product and an over-reliance on iron ore makes it a much riskier play than diversified miners like BHP (ASX: BHP). With interest rates so low, investors could perhaps turn away from Rio’s shares (which only yield 2.8%) and towards less riskier opportunities with good growth prospects and higher yields.

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Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.   

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