PERTH (miningweekly.com) – Australian iron-ore miner Atlas Iron on Wednesday announced that it would merge with Aurox Minerals –a deal which would see it secure additional port capacity at Hedland, in Western Australia.

The two ASX-listed companies plan to implement the merger by executing a scheme implementation agreement.

Under the agreement, Aurox shareholders would receive one Atlas Iron share for every three Aurox shares held, valuing the company at around A$143-million, and Atlas Iron at around A$990-million, at the last trade.

The deal comes only months after Atlas Iron merged with Warwick Resources.

Warwick delisted from the ASX on December 21.

Atlas Iron said in a statement that it would secure an additional 10-million to 12-million tons a year long-term capacity in port Hedland, by merging with Aurox. Aurox also owned the 456-million tons Balla Balla magnetite deposit, in Western Australia.

Aurox, in turn, told its shareholders that the merger would provide them with the opportunity to participate in Atlas Iron’s rapidly growing production profile, which would position the company as a globally significant iron-ore producer.

The merged company would have a 187-million ton direct shipping ore (DSO) resource, exploration targets of between 430-million tons and 750-million tons from 57% to 60% iron, two Pilbara magnetite projects and a 15 000 km2 Pilbara landholding.

The combined company would further have a DSO production target of 26-million tons a year by 2014.

Aurox MD Charles Schaus described the proposed merger as an “outstanding opportunity” for the Aurox shareholders to join with, and participate in, a diversified iron-ore growth company.

“The high premium offered by Atlas is a great deal for Aurox shareholders. It reflects the high potential of the Balla Balla project, Aurox’s access to infrastructure and regionally significant water resource,” Schaus said.

He added that the merged group’s port capacity of up to 33-million tons a year would allow the company to generate substantial synergies from production and development schedule optimisation.

With iron-ore prices expected to increase significantly in the coming year, this merger will also give Aurox shareholders the opportunity to share in the benefits from immediate cash flows, he said.

The merger agreement would be subject to the customary conditions, such as Aurox shareholder approval, regulatory and court approvals. Aurox shareholders were expected to meet in late May.

Aurox share prices jumped to around A$0,73 during trading on Wednesday, compared with an opening price of A$0,66 a share, while Atlas Iron shares jumped to A$2,31 a share, compared with an opening price of A$2,10 a share.