Rio Tinto Bids for Hathor

Oct. 19, 2011

Hathor Exploration (HAT-TSX / $4.03, Market Cap: $505.4M)

Fission Energy (FIS-TSXV / $0.62, Market Cap: $62.5M) BUY (Speculative): Target $1.50

Sir Rio of Tinto

Rio Tinto (RTP-NYSE) has made a $4.15/share all-cash offer for Hathor Exploration (HAT-TSX). The deal represents a premium of 55% to Hathor’s trading price prior to Cameco’s (CCO-TSX) bid on August 26, 2011. The total value of the offer is $578 M on a fully diluted basis and is at an 11% premium to Cameco’s offer of $3.75/share. The deal is subject to a $20M break fee with Rio Tinto maintaining the right to match a superior offer.
The deal is unanimously recommended buy Hathor’s board of directors, whom along with senior management have entered into lock-up agreements with Rio Tinto to tender all their shares to the white knight’s offer. Affiliates of Rio Tinto already own 5.7% of Hathor on a fully diluted basis.
We view this development as a positive for Fission Energy as its Waterbury Lake property is located directly adjacent to Hathor’s Roughrider Zone. It’s J-Zone East is the likely western extension of the Roughrider Zone and a series of highly mineralized zones are lined up in a string of pearls formation west of Roughrider that are closer to surface.

Fission’s J-Zone and J-East (not labelled but visible) in Relation to Roughrider

Source: Hathor Exploration

Rob Chang

Equity Research Analyst, Metals & Mining