Atlas Iron has told suitor Mineral Resources (MinRes) it has three days to match or better the $390 million cash offer it received from Australia’s richest woman – Gina Rinehart.

The junior iron ore producer said it has assessed the offer from Ms Rinehart’s unlisted Hancock Prospecting and “determined that it could be expected to lead to a superior proposal when compared to the Mineral Resources Limited scheme proposal”.

MinRes has the right to match any competing offer under the deal it struck with Atlas in April.

Ms Rinehart is offering Atlas investors 4.2c cash per share – a nearly 17 per cent premium to the company’s closing share price on Friday.

MinRes’ offer, meanwhile, is all scrip and no cash and values Atlas shares at 3.02c each.

The bidding war sent Atlas shares up to a new 52-week high of 4.6c on Monday. Shares were trading at 4.5c this morning.

Atlas Iron (ASX:AGO) shares over the past year.
Atlas Iron (ASX:AGO) shares over the past year.

The $3.2 billion MinRes has until June 21 to make a counter offer.

But Atlas is still recommending shareholders accept MinRes’ bid – at least until the suitor has had a chance to match or better its offer.

“The Atlas board advises shareholders to take no action in relation to the Hancock offer until they receive further advice from the Atlas board,” the company said.

MinRes told investors late yesterday that it is “currently considering its position and will advise its intentions in due course”.

Atlas is predominately an iron ore producer with three operations in the north of the Pilbara in Western Australia.

Iron ore players have struggled since late 2015, when the price bombed below $US40 per tonne and companies were forced to mothball production.

Atlas said last month that it recorded an operating loss during the March quarter and if challenging market conditions persisted it would need to book a write-down of $75 to $100 million in its 2018 financial year report.

In March, the company inked a deal to export low-cost “DSO” lithium from Pilbara Minerals’ (ASX:PLS) Pilgangoora project in Western Australia to China to help boost its earnings.

DSO lithium requires only simple crushing before it is exported, which keeps costs low.

Atlas revealed yesterday that it had inked a deal to sell Chinese heavyweight Sinosteel 1.5 million tonnes of lithium.

Stockhead is seeking comment from Atlas.

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