The battle for Hathor Exploration Ltd. raged on late Thursday, Nov. 17, when Rio Tinto Group raised its offer for the Canadian uranium miner to about C$654 million ($637.3 million), topping an already improved C$625 million offer from Cameco Corp.

Rio Tinto, which has the support of the target's board, will offer C$4.70 per share, a 4.4 % premium to Cameco's C$4.50 bid, which was made on Nov. 14. The new offer is 76% higher than Hathor's closing share price on Aug. 25, the day before Cameco unveiled its first offer of C$3.75.

"Hathor's board...has unanimously determined that the increased Rio offer is in the best interests of Hathor's shareholders and reaffirms its support for Rio Tinto's increased offer," the target said.

Hathor's shares closed Thursday at C$5.05 as investors bet that Cameco, the world's largest uranium miner, would return with another improved offer.

Hathor's Saskatchewan-based Roughrider project is one of the world's largest undeveloped uranium deposits. Hathor said in September that the deposit was worth between C$769 million and C$1.5 billion on a pretax net present value basis. That valuation was dismissed by Cameco as overly optimistic.

Rio Tinto's acquisition of Hathor would enable the world's No. 2 mining company to expand its existing uranium business into the northern hemisphere for the first time. The London and Melbourne, Australia-headquartered mining company already operates the world's second and third largest uranium mines, in Australia and Namibia respectively, and accounts for about 16% of the global supply of the element, placing it just behind Cameco in terms of market share.

Cameco's flagship Macarthur River mine, which accounted for about 61% of its total output of 22.8 million pounds of uranium in 2010, is located close to Hathor's Roughrider project. That proximity would afford it operational savings if it secures Hathor and could allow it justify a higher bid than Rio Tinto, according to some analysts.

Cameco has the financial muscle to further increase its offer. The company had about C$1.2 billion in cash and short-term investments as well as C$1.2 billion of borrowing capacity at the end of June.

Hathor is debt free and had C$26 million of cash and equivalents at the end of September.

The value of uranium assets dipped following Japan's Fukushima nuclear reactor disaster in March, but prices for the ore are expected to rise over the long term, buoyed by demand from China and India.

Global production of uranium is currently running at a deficit to consumption. In 2010 nuclear power plants used about 180 million pounds of the fuel, while mines produced about 140 million pounds. The shortfall was filled by reserves and the use of blended uranium from dismantled nuclear warheads, dubbed the "megatons to megawatts program". That program is expected to end in 2013.