Atlas backs revised Hancock bid

The board of Atlas Iron has unanimously recommended a revised bidder’s statement from Hancock Prospecting, while also announcing the suspension of production at its Mt Dove iron ore mine due to challenging market conditions.

Gina Rinehart-led Hancock lodged a supplementary bidder’s statement for its $390 million takeover offer of Atlas on Tuesday, after Fortescue Metals Group submitted an application to the Takeovers Panel questioning the veracity of the deal.

The new statement touched on some of the matters raised by Fortescue, but remained open-ended on Hancock’s intentions, beyond its plans for a strategic review of Atlas Iron’s operations.

In a statement to the ASX, Atlas said the board had unanimously recommended shareholders accept the offer in the absence of a superior proposal.

“Atlas will prepare and lodge its target’s statement with ASX and ASIC in the coming weeks,” the company said.

“The Atlas board advises shareholders to take no action in relation to the Hancock offer until they have received the target’s statement and the independent expert’s report.”

Meanwhile, the junior miner also said it had been forced to make production changes at its iron ore operations due to soft market conditions.

"In June 2017, Atlas announced a decision to increase production at its Mt Webber mine from 7 to 9 mtpa, with the incremental production to be processed at the company’s recommissioned Mt Dove site," Atlas said.

“Tonnes processed at Mt Dove have a higher C1 cash cost than tonnes processed at Mt Webber due to higher haulage and rehandling costs.

“In light of challenging market conditions, Atlas will suspend iron ore processing at Mt Dove and reduce its mining rate at Mt Webber to ~7 mtpa with effect from late July 2018.”

“Atlas is constantly monitoring market conditions and will seek to ramp up iron ore production with a short lead-time if economics permit.”

The company said its 2018 financial year guidance remained unchanged.

Atlas also advised that its IT systems had been disrupted by a security breach, which had caused some data corruption.

“Work on data recovery is ongoing,” the company said.

“These system issues have had no impact on production activities.”

Shares in Atlas remained flat at 4.3 cents each at 1.15pm AEDT.