M&A

Hancock makes cash offer for Atlas

GINA Rinehart's Hancock Prospecting has made a A4.2c per share cash takeover offer for Atlas Iron.

 Gina Rinehart at Roy Hill's berths in Port Hedland

Gina Rinehart at Roy Hill's berths in Port Hedland

Atlas shares closed at 3.6c on Friday and traded as high as 4.6c last Wednesday amid corporate interest by Mineral Resources, Hancock and Fortescue Metals Group.

Hancock said its offer represented a superior value proposal for Atlas shareholders relative to the previously announced scrip takeover by Mineral Resources, representing a 41% premium to the implied value of the MinRes proposal as of close of trading on Friday.

The offer has no minimum acceptance condition and is not conditional on due diligence, financing or regulatory approvals.

While the off-market offer will open in about two weeks' time, Hancock subsidiary Redstone Corporation, will be able to purchase shares on market from today.

Hancock revealed today that Redstone was incorporated in April with the principal purpose of making the Atlas offer.

Hancock already owns 19.96% on Atlas after acquisitions earlier this month.

Hancock executive director Tad Watroba said the Atlas assets has long‐term synergies with other iron ore assets in Hancock's portfolio.

"There is potential to unlock value through the future development of Atlas resources as part of our wider system of operations," he said.

"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.

"The Hancock Group iron ore interests produce iron ore products that are priced off the 62% index. Some of the Atlas deposits contain elements that have complementary 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 existing Hancock iron ore interests."

Hancock said it intended to maintain the status quo, including current operations and employees, in the short-term but did not rule out suspending production or divesting non-core assets following the review.

There was no reference to port infrastructure in the 49-page bidder's statement.

Hancock owns 70% of the 55 million tonne per annum Roy Hill mine, a 50% stake in Rio Tinto's 45Mtpa Hope Downs mine, and the undeveloped Mulga Downs iron ore project.

Atlas said it would evaluate the offer, and its impact on the MinRes scheme of arrangement.

The company has told shareholders to take no action until the board weighs up the offer.

FMG CEO Elizabeth Gaines noted the takeover announcement.

"We will continue to assess our strategic options and do not propose to make any further comment at this time," she said.

Shares in Atlas closed 22.2% higher at 4.4c, slightly above the offer price.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

editions

MiningNews.net Research Report 2024

Access a multi-pronged tool to identify critical risks and opportunities in Australia’s mining industry.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.