Rio Tinto starts acquisition of a mine in Uganda

In March 2007, Rio Tinto paid the first US$1.6 million to acquire a vermiculite deposit in Uganda in March 2007, a potential world class, long life resource thought to be the largest of its kind in the world.

The Group already produces the mineral at the Palabora copper mine in South Africa which is currently the largest commercial vermiculite operation.

The development of a mine by Rio Tinto at Namekara will be subject to the results of a study into the magnitude of the resource which will progress during 2007. On closing the transaction in March, Rio Tinto paid the first US$1.6 million of the US$5 million purchase price to the vendor, a Canadian company, IBI Corp. Payment of the balance of the purchase price in a year's time is subject to the results of the order of magnitude study.

IBI said it is happy with the transfer as "Rio Tinto is better equipped to take the mine to its full potential". Existing staff are being reemployed and provided with training. "It has been a pleasure dealing with Rio Tinto - they are good people, so it is a win win scenario," said Hans Hansen, managing director of IBI.

If developed, Namekara will allow the Group to maintain and eventually augment supplies of vermiculite to meet demand from its established customer base.

Namekara is on Uganda's eastern border with Kenya and product would have to be shipped to the coast at Mombasa. The mine would become part of Rio Tinto Minerals in the Industrial Minerals product group.

Vermiculite is a mineral used in agriculture and construction materials and has several energy saving applications. The mineral flakes produced by mining are "exfoliated" at the user's plant by heating to produce expanded concertina shaped particles.

The particles are many times the volume of the original mineral and very low in density, making vermiculite an ideal absorption and carrier media for garden and agricultural applications, to improve adhesion of plasterwork in construction, as an insulation product and in catalytic converter assemblies