The Rio Tinto Ltd (ASX: RIO) share price is up after revealing it has a sold a portion of its Winu copper-gold project in WA.
Rio Tinto is one of the world’s largest miners, with a focus on a few different commodities including iron ore, copper and aluminium.
The Winu project is a long-life copper-gold deposit discovered by Rio Tinto in 2017 that is “highly prospective” for expansion beyond the initial development.
Sale and joint venture partner
Rio Tinto and Sumitomo Metal Mining (SMM) have signed a term sheet for a joint venture for the Winu copper-gold project, located in the Great Sandy Desert region of Western Australia.
The signed term sheet includes exclusivity obligations to work towards a ‘definitive agreement’. Rio Tinto said it will continue to develop and operate Winu as managing partner and SMM will pay the ASX mining share $399 million for a 30% equity share of the project.
The payment includes $195 million upfront and $204 million in deferred amounts, depending on milestones and adjustments to be agreed.
Rio Tinto and SMM have also entered into a letter of intent to develop a “broader strategic partnership to work together to explore opportunities for commercial, technical and strategic collaboration across copper, other base metals and lithium.”
A pre-feasibility study for the Winu project with an initial development of processing capacity of up to 10mt per year is expected to be completed in 2025.
Management commentary
The Rio Tinto copper chief executive Katie Jackson 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.
Final thoughts on the Rio Tinto share price
I think this is a good move by Rio Tinto, as it de-risks the project by unlocking some of the value of it before it’s even operational.
Rio Tinto is an appealing ASX mining share, in my view, because of its diversified commodity portfolio and the growth projects it has in the pipeline. This doesn’t seem like a fantastic time to buy, with it rallying 13% since 4 September 2024. But, it could still be a solid long-term buy at this level, particularly if the copper price rises over the long-term.
However, there are other ASX dividend shares I’d rather buy which offer a more consistent payout.