Reuters reported that Cameco Corporation has backed out of a bidding war for Hathor clearing the way for Rio Tinto's CAD 654 million friendly offer and sending shares of the Canadian uranium explorer tumbling.

For weeks, Rio Tinto and Cameco have been locked in a battle to acquire Hathor which controls the advanced exploration stage Roughrider project in the uranium rich Athabasca region of Saskatchewan in Western Canada.

Rio, one of the world's largest mining companies and Cameco, Canada's largest uranium producer, see demand for reactor fuel growing even though the nuclear industry is under pressure in the aftermath of the Fukushima disaster in Japan. But the latest, CAD 4.70 per share offer by the Anglo and Australian mining giant was too rich for Cameco which is known for its disciplined approach to acquisitions.

Mr Tim Gitzel CEO of Cameco said that "After careful consideration we cannot justify increasing the price beyond our current offer and accordingly, we will let our offer lapse."

Analysts said that Cameco might have justified a higher bid on strategic grounds in terms of keeping Rio out of the Athabasca basin. That said paying more for Hathor would have diluted for Cameco results on most metrics.

Mr David Talbot analyst of Dundee Securities said that by backing away, Cameco has conveyed a strong message to the market. Most importantly, it can't be pushed into doing something it doesn't feel comfortable doing. The company remained disciplined, sticking to its corporate culture.

(Sourced from Reuters)