Rinehart joins Forrest in battle for control of Atlas
Summary: The battle for control of Atlas Iron has taken another surprise twist with mining mogul and Australia’s richest woman Gina Rinehart taking a 19.6 per cent stake in the junior iron ore miner.....
It is understood a substantial shareholder notice will be lodged with the ASX soon.
A spokesperson for Ms Rinehart’s private company Hancock Prospecting said the company would not be commenting on commercial matters surrounding the purchase.
The latest development follows news last week that Andrew Forrest’s Fortescue Metals Group had emerged with a 19.9 per cent stake in Atlas, and threatened to torpedo a $300 million all-scrip takeover deal agreed to by the junior iron ore miner’s board and Chris Ellison’s Mineral Resources.
Fortescue told the market it did not support the MinRes deal “on its current terms, but reserves the right to do so”.
MinRes responded by releasing Atlas from “no-shop, no-talk, no-due diligence” clauses in the takeover agreement between the two companies.
The move aimed to be a circuit breaker to what was likely to be an impasse to the company’s existing one-for-571 share deal.
The move by MinRes allows Atlas to begin negotiations with Fortescue for an alternative bid or any other interested third party such as Hancock Prospecting.
It is still unclear whether the Fortescue or Hancock stakes are precursors to rival offers for Atlas or whether they are strategic blocking stakes merely aimed at preventing a deal being done by others.
Both companies could stand to lose from an expansion of low-grade iron ore exports out of the Pilbara, which MinRes is likely to achieve if it gets hold of Atlas’ assets.
Analysts have speculated Fortescue’s and potential Hancock’s interest in Atlas stems from its coveted 13 million tonne-a-year port capacity at Utah Point and potentially another 30Mtpa capacity from its 63 per cent interest in the North West Infrastructure joint venture which is eyeing a new berth at South West Creek.
However MinRes noted on Friday that Utah Point had been built exclusively for junior miners, a point on which both major State political parties agreed.
Atlas, which Mr Ellison describes as being in “palliative care”, revealed in April that its operations lost money in the March quarter.
And the Cliff Lawrenson-led miner last month warned of a $75 million to $100 million impairment in its full-year accounts as it continued to battle steep discounts for its low-grade ore combined with higher operating costs.
Atlas shares closed up 0.2¢, or 5 per cent, at 4.2¢ today.
MinRes shares tumbled $1.23, or 6.6 per cent, to $17.29 while Fortescue fell 7¢, or 1.49 per cent, to $4.64.