Rio Tinto Ltd (ASX: RIO) shares are having a good start to the day.
In morning trade, the mining giant's shares are up 1.5% to $120.60.
Why are Rio Tinto shares rising?
Today's gain may have been driven by the release of an announcement out of the miner before the market open.
Although that announcement is classed as not being market sensitive, there's still a lot to like in it.
According to the release, Rio Tinto and Sumitomo Metal Mining (SMM) have signed a term sheet for a joint venture to deliver the Winu copper-gold project. It is located in the Great Sandy Desert region of Western Australia.
The company notes that under the term sheet, which includes exclusivity obligations to work towards a binding definitive agreement, Rio Tinto will continue to develop and operate Winu as managing partner and SMM will pay Rio Tinto US$399 million (A$615 million) for a 30% equity share of the project.
This includes US$195 million upfront and US$204 million in deferred considerations. The latter are contingent on milestones and adjustments to be agreed.
Rio Tinto highlights that the Winu project is an attractive low-risk, long-life copper-gold deposit that it discovered in 2017. It is highly prospective for expansion beyond the initial development and located in proximity to Rio Tinto's Pilbara iron ore assets.
In light of the latter, the two parties have also entered into a letter of intent to develop a broader strategic partnership. This will see them work together to explore opportunities for commercial, technical, and strategic collaboration across copper, other base metals, and lithium.
What's next?
Rio Tinto and SMM advised that they will now work to finalise definitive agreements for the Winu project joint venture in the first half of 2025, along with formalising the broader strategic partnership.
Rio Tinto will also continue to focus on its partnership with the Nyangumarta Traditional Owners. This includes progressing project agreement negotiations.
A pre-feasibility study for the Winu project with an initial development of processing capacity of up to 10 mtpa is expected to be completed in 2025, along with the submission of an Environmental Review Document.
Rio Tinto's chief executive of copper, Katie Jackson, was pleased with the agreement. She said:
We share a long history with Sumitomo Metal Mining as partners and deeply value the commitment they will bring to the Winu project. This is a unique opportunity to derisk our investment, as we work with an experienced partner. We look forward to working more broadly as strategic partners to find new ways to deliver value across the metals and minerals supply chain.
Progress in 2024 including the attractive partnership proposal from Sumitomo Metal Mining has cemented the path forward for Winu to deliver profitable growth. We will continue to advance the Winu project in close partnership with the Nyangumarta Traditional Owners and the Karlkayn airstrip with the Martu Traditional Owners, in a way that benefits all parties.
Rio Tinto shares remain down 5% over the past 12 months.
