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‘Unlocks hidden value’: Rio Tinto share price slides despite $525 million payday

What has Rio Tinto just sold?
The post ‘Unlocks hidden value’: Rio Tinto share price slides despite $525 million payday appeared first on The Motley Fool Australia. –

The Rio Tinto Limited (ASX: RIO) share price is in the red today.

The mining giant’s share price is currently trading at $96.04, a 1.29% fall. For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) is down 1.29% today.

Rio Tinto is not the only ASX mining giant falling today. BHP Group Ltd (ASX: BHP) shares are also down 1.43%, while Fortescue Metals Group Limited (ASX: FMG) shares are 1.84% in the red.

Let’s take a look at what’s happening at Rio Tinto.

Rio completes royalty sale

Rio Tinto has finalised the sale of the Cortez Royalty in Nevada for $525 million in cash to RG Royalties LLC. RG Royalties is a wholly-owned subsidiary of Royal Gold Inc (NASDAQ: RGLD).

This is a 1.2% production royalty on the Cortez gold mine, operated by Nevada Gold Mines and the Formile project.

Nevada Gold Mines is a joint venture between Barrick Gold Corp (NYSE: GOLD) and Newmont Corporation (NYSE: NEM), while the Formile project is 100% owned by Barrick Gold.

Commenting on the news, Rio Tinto chief financial officer Peter Cunningham said:

This transaction unlocks hidden value from our portfolio and releases cash immediately.

Rio Tinto had held the royalty as part of the sale of its 40% interest in the Cortez Gold Complex to Barrick Gold in 2008.

Last week, Rio Tinto reported revenue had fallen 10% to US$29,775 million in its half year results. Underlying EBITDA fell 26% for the six months ended 30 June. Rio declared a dividend of 276 US cents per share, lower than expectations.

Rio Tinto share price snapshot

The Rio Tinto share price has fallen nearly 28% in the past year, while it has shed more than 4$ year to date.

For perspective, the S&P/ASX 200 Materials Index has fallen nearly 16% in the last year.

Rio Tinto has a market capitalisation of nearly $36 billion based on the current share price

The post ‘Unlocks hidden value’: Rio Tinto share price slides despite $525 million payday appeared first on The Motley Fool Australia.

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More reading

Is the iron ore price entering a bear market?
Why is the Fortescue share price sliding on Tuesday?
Guess which 2 ASX 200 shares have some of the highest dividend yields right now
Own Rio Tinto shares? Why CEO has ‘no particular concern’ over China and iron ore price
‘Not immune’: How Rio Tinto shares are feeling the sting of inflation

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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