Hancock secures 90% of Atlas

Gina Rinehart’s Hancock Prospecting plans to focus on how to integrate Atlas Iron’s operations into its existing business after acquiring more than a 90 per cent shareholding in the struggling iron ore miner.

Hancock subsidiary Redstone Corporation will be able to commence compulsory acquisition of the remaining Atlas shares after crossing the 90 per cent threshold.

Redstone is offering 4.6 cents per share after twice lifting its offer price to boost acceptances.

This values the target at $427 million.

Hancock’s success was almost assured after Fortescue Metals Group announced early this month it would sell its 11 per cent holding into the cash offer.

Hancock chief executive Garry Korte said he was delighted to have achieved a relevant interest in Atlas shares of more than 90 per cent. 

“We will now be turning our attention to how best to integrate the Atlas business into the broader iron ore interests within the Hancock Group,” he said.

Hancock has a 70 per cent interest in the Roy Hill project, which recently ramped up its production of iron ore to a rate of 55 million tonnes per annum. 

Roy Hill’s ore is exported through the South West Creek berth at Port Hedland, adjacent to an area where Atlas (via its interest in the North West Alliance) held rights to develop a new shipping berth.

It emerged during the Atlas takeover battle that the state government had withdrawn the North West Alliance's priority development rights, leaving uncertainty about Atlas' strategic value.

Atlas ore is currently exported via the Utah Point berth at Port Hedland but the small capacity of that facility means it will be of limited strategic value to Hancock.

There are also doubts about the viability of Atlas’ operations, given the low grade (and therefore low selling price) of its ore and the high cost of trucking it to port.

Redstone said today it would not extend its offer beyond the current close date of 5:00pm (Perth time) on Friday 12 October.

Atlas shareholders who accept the offer by this date will receive the cash consideration sooner than if they were to wait for their Atlas shares to be compulsorily acquired.