Mineral Resources bows out of the race for Atlas Iron as Gina closes in
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Mineral Resources says it won’t make a counter bid for junior rival Atlas Iron after Gina Rinehart’s Hancock Prospecting stumped up a higher offer.
Atlas struck a “friendly” deal with $3 billion MinRes in April, but Gina Rinehart’s unlisted Hancock Prospecting outmanoeuvred the suitor this week with a much better $390 million all cash bid.
Andrew Forrest’s Fortescue Metals Group (ASX:FMG) also increased its stake in Atlas in an attempt to block the MinRes takeover – which was an all-scrip and no cash deal.
Atlas told investors yesterday it had given MinRes three days to match or better Ms Rinehart’s offer – it had the right to match any competing offer under its agreement with Atlas.
The bidding war sent Atlas shares up to a new 52-week high of 4.6c on Monday. Shares were trading at 4.4c on Wednesday afternoon.
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.