PERTH (miningweekly.com) – The share price of iron-ore miner Atlas Iron dropped by nearly 16% on Thursday after the Western Australian government informed the company that it did not have “priority right” to develop new export berths.
Atlas told shareholders that the North West Infrastructure (NWI), of which the company was a founding member, had received notice from the Western Australian Transport, Planning and Lands Minister stating that NWI did not have a priority right to develop the Stanley Point Berth 3 and 4, in the port of Port Hedland.
Minister Rita Saffioti told the company that the berths had been set aside for junior miners, and that the Pilbara Ports Authority would assess any application by NWI to develop these berths on its merits.
The NWI was in 2009 conferred a 50-million-tonne-a-year channel capacity allocation to facilitate the development of a stockyard and two-berth facility at Stanley Point, with the consortium, in which Atlas holds a 63% stake, undertaking a detailed definition engineering and design costing study for this development.
The Western Australian government, at the start of 2017, also announced a five-year extension of NWI’s environmental approval for the facility in Port Hedland.
The government’s change of pace could prove troublesome for the suitors vying for the iron-ore miner.
Atlas is currently the subject of a 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.
However, iron-ore major Fortescue recently took a 19.9% stake in Atlas, warning MinRes that it would not support the takeover bid in its current form. Gina Rinehart’s Hancock Prospecting also disclosed that it holds a 19.96% stake in Atlas, prompting speculation that there could be a tug of war for Atlas.
However, with the state government’s stance on Atlas’ ability to develop the two berths changing, it meant that any potential buyers of Atlas would also be unable to develop the port capacity.
Furthermore, Atlas’ 13-million-tonne-a-year allocated capacity at Utah Point was also reserved for junior miners, meaning that iron-ore majors Fortescue and Hancock Prospecting, which holds a 70% interest in the massive Roy Hill mine, could likely not have access to the export facilities.
Atlas shares fell to a low of 3.6c a share on Thursday, down from a high of 3.9c a share.