Atlas, Aurox Merger Clears Final Hurdle

Atlas, Aurox Merger Clears Final Hurdle

The merger between Australian iron ore miners Aurox Resources and Atlas Iron have cleared its final regulatory hurdle on Thursday when the country’s Federal Court approved the $A143 million deal.

As a result of the approval, shares in Aurox will cease to be traded on the Australian Securities Exchange on Friday with shares in the merged entity set to be traded from Monday.

Under the merger deal, shareholders in Aurox will receive one Atlas share
for every three Aurox shares held, a deal that values Aurox at 74 cents a share, a 173 premium to Aurox’s share price prior to the deal being announced on 9 March 2010.

The merged entity will have up to 33 million tonnes per year of allocated port capacity in Western Australia’s Pilbara region.

Atlas commenced DSO mining at its Wodgina iron ore project in the Pilbara region
on 20 June. Atlas plans to export iron ore from Wodgina and its Pardoo project in the Pilbara at an annualised rate of 6 million tonnes by the end of the year and 12 million tonnes by 2012.

The company is also developing the Balla Balla project in the West Pilbara area with a mineral resource of 456 million tonnes and ore reserves of 238 million tonnes.

The company will also benefit from Aurox’s allocation of 6 million tonnes a year at the Utah Point berth at Port Hedland.

Atlas Iron Receives Approval For Wodgina

Mining Expected to Commence in June

Australian iron ore junior, Atlas Iron, has secured government approval for its Wodgina iron ore project in Western Australia.

With all environmental approvals complete, Atlas expects to move its mining fleet to the site with mining expected to commence in June this year.

"To take a project from an iron ore discovery to an iron ore mine in less than 18 months is simply remarkable," managing director David Flanagan said in a statement on Friday.

"We are now well positioned to benefit from very strong demand, high iron ore prices moving forward, and to meet our target export rate of six Mtpa by December 2010."

The Wodgina project will start at a production rate of two-million tons a year, with the initial mining from the Anson deposit. The mine is expected to produce a quality, low-alumina fines only product, which would be trucked to the nearby Port Hedland for export.

The company has also commenced drilling at its Wodgina North iron ore prospect which has an exploration target of between 20 million and 40 million tons at 57 per cent to 60 per cent iron.

"In the event that drilling is successful, Atlas will move to fast rack feasibility studies targeting a production expansion of Wodgina during late calendar year 2011," it said.

Atlas Set To Announce $60 Million Placing

Working Capital Needed To Fast-Track Projects

Australian iron ore junior, Atlas Iron placed its shares in a trading halt today pending an announcement regarding a capital placing.

Atlas looks set to raise $60 million to fast-track production plans to cash in on the rising price of iron ore price.

It is understood the miner wants to greatly increase its annual iron ore target of 6 million tonnes with the spot price now around $US190 a tonne.

Funds from the placement are expected to provide the additional working capital to ramp up output at its flagship Pardoo project and also to fast-track plans to bring its Wodgina and Abydos mines into production. Wodgina is due to start production in the second quarter of 2010, with shipments starting later in the year.

Shares in Aurox Resources, which Atlas recently agreed to takeover in a $143 million scrip bid were also brought to a trading halt.

Perth-based broker Hartleys is advising Atlas on the raising.

Atlas Iron Expects 90 Per Cent Price Hike

Iron Ore Increase In Line With Majors

Australian miner, Atlas Iron, says it expects to achieve an increase in its iron ore of about 90 per cent in its iron ore prices compared to last year’s benchmark prices the company said in a statement on Wednesday. The company says this is in line with pricing outcomes achieved by the iron ore majors.

Atlas also said it is experiencing strong demand for its iron ore, both from existing and potential new customers.

The Perth-based iron ore company also said it aims to start mining at its Wodgina direct shipping ore project late in the second quarter of the 2010 calendar year and to export its first shipment from the project late in the third quarter or early in the fourth.

The upgrade of its Pardoo direct shipping ore project is now complete and it is aiming to ramp up production to 2.4 million tonnes a year from 1.2 million tonnes in the third quarter.

Atlas also expects its merger with Aurox Resources to go ahead. Documents will be despatched to Aurox shareholders in late-April to enable them to vote on the merger by late-May. The Aurox board have recommended acceptance of the bid.

Atlas Iron To Buy Aurox, Develops Iron Ore Pricing Mechanism

Australian iron ore producer, Atlas Iron has agreed to buy fellow Australian iron ore producer, Aurox Resources Ltd. for A$143 million (US$131 million) in shares to increase its ore resources and port capacity. Aurox’s board have unanimously recommended the offer.

Shares in both companies had been suspended yesterday pending a price-sensitive announcement. Aurox shares rose by 172 percent to 73.5 cents in after Perth-based Atlas offered one of its shares for every three of Aurox. The bid values Aurox at 73.67 cents each compared with its closing price of 27 cents on March 5.

The deal will give Atlas up to 12 million tons a year in port capacity at the Port Hedland terminal as well as the Balla Balla magnetite project in the West Pilbara region.
“It is all about resource quality, infrastructure access and economies of scale,” Atlas Iron Managing Director David Flanagan said in a statement to the Australian stock exchange.

Meanwhile, in a separate development, Atlas has announced that it will start selling its iron ore to Asian steel mills next month using a new mechanism combining both cash and benchmark prices.

About 70 percent of its production will be sold on a so-called “mutual fairness” basis. This is where mills pay the midpoint between the annual contract and the cash price, when the spot price is 20 percent above the benchmark. “We are definitely seeing a lot of upward pressure on pricing,” Mr Flanagan said today although he added that he doubted his firm was the only one with such a mechanism “There are hundreds of steel mills out there and surely Atlas can’t be the only one seeking that exposure to the spot market.”

Losses Narrow At Atlas Iron

Australian iron ore junior, Atlas Iron, narrowed its first half loss in the six-months to December after a sharp rise revenue.
Net loss for the six months to December 31 was $24.4 million, down from $42.2 million for the same period in 2008 while revenue leapt to $41.7 million, from $3.5 million previously.

Mine development costs for the first half were $38.9 million, up from $25.4 million in the previous year.
Atlas shipped 1.08 million tonnes of iron ore from its Pardoo mine in Western Australia's Pilbara region, to steel makers in China between December 2008 when production commenced and December 2009. The company expects to increase production to 2.4 million tonnes per year by the middle of 2010.

Atlas has also commenced construction at its Wodgina mine in the Pilbara. Production is expected to commence in April or May of this year.

Atlas’s shares were suspended on Tuesday pending a price-sensitive announcement. It was reported earlier in the week that India’s NMDC was leading a bid to take a stake of up to 70 per cent in the Pardoo project.

Atlas Iron, Aurox Resources Suspend Share Trading

Western Australian iron-ore miner, Atlas Iron requested on Tuesday that trading in its shares on the ASX be temporarily be halted pending a “potential material transaction.” Aurox Resources has also placed its share trading on a temporary halt, again pending a price sensitive transaction. Shares in both firms are expected to resume trading on Wednesday.


Last month the two firms entered into an agreement regarding Aurox’s port capacity allocation at the Utah Point port facility, currently under construction in Western Australia in which Atlas loaned Aurox A$13.8 million in exchange for being able to use Aurox’s surplus facilities at Utah Point when it become available in March 2012.

In exchange for a A$13,8-million loan, Atlas would be able to use Aurox’s surplus berth, ship loading and stockpiling capacity at the Utah Port point facility, that will become available in March of 2012.

It was reported on Monday that India's NMDC was leading a consortium that was looking to take a 70 per cent stake in Atlas's Pardoo project.

Atlas Hails Second Iron Ore Shipment

Australian iron ore miner Atlas Iron Limited has announced that its second commercial shipment of iron ore will depart today from Fortescue Metal Group’s Herb Elliot Port in Port Hedland, West Australia.

The iron ore is from the company's Pardoo Project in the Pilbara region and comprises 64,300 tonnes from the Connie deposit.

The shipment will be transported on the Panamax vessel “YM Virtue” to Atlas's customer, a large Chinese steel mill.

The company's managing director, David Flanagan, hailed the shipment as “another important milestone for Atlas in its evolution from explorer to iron ore producer.”