Australia's Mineral Resources drops out of race for Atlas Iron
Mining infrastructure supplier Mineral Resources (ASX: MIN) has bowed to Australia's richest woman, Gina Rinehart, in the battle for junior iron ore miner Atlas Iron (ASX: AGO), by saying Wednesday it would not make an offer to counter her A$390 million ($288 million) cash bid.
Fortescue Metals still has a 19.9%-stake in Atlas and has not yet disclosed whether it plans to launch a rival bid or sell its holding into Hancock’s offer.
Mineral Resources’ withdrawal means Atlas’ board is likely to recommend Rinehart’s Hancock Prospecting offer in the absence of a superior proposal. It also means all eyes are now on Fortescue Metals Group (ASX: FMG), which still has a 19.9%-stake in the junior miner and has not yet disclosed whether it plans to launch a rival bid or sell its holding into Hancock’s.
The acquisition would give Hancock, which owns the Roy Hill iron ore mine, a chance to use Atlas’ output for blending and to potentially extend the life of the company's existing mines.
Atlas' operations are in the iron ore-rich Pilbara region of Western Australia, where it also has undeveloped tenements that could be brought into production with a larger partner.
The junior miner also has land with potential highly sought after port access, which major miners would welcome as they expand output in coming years.
Atlas Iron was one of the first victims of a collapse in iron ore prices three years ago, which forced the company to mothball its mines as it was costing it more to dig up the ore than what buyers were paying for it at the time.