PERTH (miningweekly.com) – Gina Rinehart’s Hancock Prospecting has solidified its intentions for ASX-listed Atlas Iron, revealing a 4.2c-a-share takeover offer, or A390-million, for the Pilbara iron-ore miner.
Atlas told shareholders on Monday that the Hancock offer, which would open in about two weeks’ time, would be subject only to the condition that no prescribed occurrences occurred in relation to Atlas or its subsidiaries prior to the three business days after the end of the Hancock offer period.
The offer was not conditional on due diligence, financing, regulatory approvals or further internal approvals.
Atlas is currently the subject of a $280-million takeover target from fellow-listed Mineral Resources (MinRes), which is offering one new MinRes share for every 571 Atlas shares held. Based on the closing price of both companies’ share price before the offer, the offer valued Atlas shares at 3.02c a share, a 59% premium to the company’s last closing price.
Following the MinRes offer, iron-ore major Fortescue took an effective 19.9% sake in Atlas, warning MinRes that it would not support the takeover bid in its current form. The move prompted Hancock Prospecting to also reveal a 19.96% stake in Atlas, prompting speculation that there could be a bidding war for Atlas.
In its bidder’s statement, Hancock pointed out that its offer represented a 41% premium to the implied value of the MinRes proposal, as at the close of trading on June 15, and that the all cash offer provided Atlas with certainty regarding the value of the consideration which they were being offered.
“We see long-term synergies between the Atlas assets and the other iron-ore interest within the Hancock Group. There is potential to unlock value through the future development of Atlas resources as part of our wider system of operations,” said Hancock executive director Tad Watroba.
“If we obtain control of Atlas, we intend to conduct a strategic review to better understand the most appropriate time and means to develop and integrate Atlas into the existing operations of the Hancock Group.”
He pointed out that the Hancock Group iron-ore interest produce iron-ore products that were priced off the 62% index, noting that some of the Atlas deposits contained elements that had complimentary characteristics providing optionality and opportunity to improve the non-iron elements of ore quality further.
“The remainder of the Atlas resources could serve to extend the life of the existing Hancock iron-ore interests,” Watroba said.
Hancock holds a 50% interest in the 45-million-tonne-a-year Hope Downs project, with joint venture partner Rio Tinto, and a 70% interest in the Roy Hill project, which recently ramped up production to 55-million tonnes a year.
The company also holds various exploration projects in the Pilbara.
Atlas on Monday told shareholders that it would consider the impact of the Hancock offer on the scheme of arrangement with MinRes, including that company’s rights to match the Hancock offer.
In the interim, the company has advised its shareholders not to take any action in relation to the Hancock offer.