MENU

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.

Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


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

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.