Iron ore producer Hancock Prospecting bids for Atlas Iron

Australian iron ore producer Hancock Prospecting has made an all-cash bid to acquire Atlas Iron, the latter said on Monday June 18.

“The Redstone offer represents a 41% premium to the implied value of [Mineral Resources Limited’s] proposal as at close of trading on 15 June 2018,” Atlas Iron said.

Redstone Corp is a wholly owned subsidiary of Hancock Prospecting.

In April this year, Mineral Resources had announced that it had entered into a binding scheme implementation deed with Atlas Iron under which it agreed to acquire all of Atlas’s shares.

“The Hancock Group’s iron ore interests produce iron ore products that are priced at a 62% index. Some of the Atlas deposits contain elements that have complementary characteristics providing optionality and opportunity to improve the non-iron elements of ore quality further,” Tad Watroba, executive director of Hancock, said in the statement.

The remainder of the Atlas resources could serve to extend the life of existing Hancock iron ore interests, he added.

Atlas Iron’s current operations include the Abydos and Mt Webber iron ore mines in Australia.

The Hancock Group holds a 50% interest in the 45-million-tonnes-per-year Hope Downs Project in a joint venture with Rio Tinto and a 70% interest in the Roy Hill Project, which recently ramped up its production and shipments of iron ore to a rate of 55 million tpy.

China’s focus on environmental protection has affected miners producing low-grade iron ore that have had to offer price discounts on their products.

Earlier this year, Atlas Iron said that it planned to increase the production of iron ore lumps, “which attracts a premium over fines”, and to diversify its product mix by including lithium, which is riding a demand wave driven by the batteries sector, in its direct-shipping ore operations.

Metal Bulletin’s 62% Fe Iron Ore Index averaged $74.39 per tonne cfr China over the January-March period of this year, down 13% from $85.63 per tonne cfr over the same period of last year.

Metal Bulletin’s 65% Fe Iron Ore Index averaged $90.30 per tonne cfr China in the first quarter of 2018, down 8.9% from $99.11 per tonne cfr a year earlier.

But Metal Bulletin’s daily index for 58% Fe iron ore averaged just $41.89 per tonne cfr in the first three months of this year, down 31% from $60.42 per tonne cfr in the same period last year.