Gina Rinehart winning the race for Atlas Iron with $390m takeover bid

Gina Rinehart Atlas Iron takeover bid ASX AGO
Gina Rinehart has launched a fresh takeover offer for Atlas Iron of A$390m at 4.2c per share.

Australia’s richest woman Gina Rinehart has taken a commanding lead in the race for junior miner Atlas Iron (ASX: AGO), launching a fresh takeover bid of 4.2c a share.

The A$390 million bid trumps an earlier all-scrip A$280 million bid by Mineral Resources (ASX: MIN), with investors much more likely to go for a cash offer without minimum acceptance conditions.

Atlas, which went into a trading halt on Monday, said Redstone Corp, a wholly owned subsidiary of Gina Rinehart’s Hancock Prospecting, said the offer is not conditional on due diligence, financing, regulatory approval or further internal approvals.

Atlas said its board would evaluate the bid and give shareholders a recommendation “in due course”.

Before the trading halt, Atlas shares were trading at 3.6¢ a share.

Mrs Rinehart last week joined those vying for control of the company, disclosing a 19.96 per cent stake in Atlas via Hancock Prospecting.

That blocking stake matched a 19.9 per cent stake by fellow iron ore billionaire Andrew “Twiggy’’ Forrest’s Fortescue Metals (ASX: FMG).

At this stage it is not known if Mr Forrest will hit back with a bid of his own but like Mrs Rinehart, he is keen to have a say in the future development of the Pilbara and port access for iron ore exports.

Atlas shares fell on export news

Shares in Atlas fell sharply last week, after it was notified that its North West Infrastructure (NWI) joint venture did not have priority rights to develop certain shipping berths at Port Hedland in Western Australia.

NWI, which is a joint venture with Brockman Mining and FerrAus, has the capacity to export 50 million tonnes per annum (mtpa) of iron ore from the South-West Creek project located at Port Hedland.

Export port capacity key to the takeover

Atlas holds an existing 13 million tonne-a-year port capacity at Utah Point in Port Hedland – a facility that was built to exclusively service junior iron ore miners.

It also has its foot on a potential further 30mtpa capacity through its 63 per cent interest in the North West Infrastructure joint venture.

On comeback trail after tough times

Atlas was forced to mothball its lower grade iron ore mines back in April 2015 because it was costing more to dig up the ore than buyers were willing to pay.

Since then Atlas has restructured and global iron ore prices have surged on the back of returning Chinese demand, which has led to the beginnings of a turnaround for Atlas, with its operations becoming cash flow positive, although not yet profitable due to steep price discounts for its lower grade iron ore.

The MinRes takeover would have expanded the amount of lower grade iron ore being exported from the Pilbara and reduced operating costs, something that may have harmed the interests of Fortescue and Mrs Rinehart.

Lithium offtake agreement signed

Atlas also today announced that it had signed an offtake agreement with Sinosteel to send direct shipping ore from its Pilgangoora lithium project.

Atlas’ lithium assets could be of interest to a takeover partner or could be sold off.

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