Atlas Iron Limited (ASX:AGO) And Aurox Resources Limited (ASX:AXO) Agree To Merge
Perth, Mar 10, 2010 AEST (ABN Newswire) - Atlas Iron Limited (
ASX:AGO) and Aurox Resources Limited (ASX:AXO) (PINK:AUOXF) are pleased to announce that Atlas and Aurox have reached agreement for Atlas and Aurox to merge by way of scheme of arrangement. Atlas will issue Aurox shareholders with one Atlas share for every three Aurox shares they hold upon implementation. Atlas will also make offers to Aurox optionholders to issue Atlas shares to them on a ratio determined by reference to the respective exercise price and expiry date of their options.
The Board of Aurox has unanimously recommended that all Aurox security holders support the merger, in the absence of a superior proposal.
Upon completion of the merger, Aurox shareholders and optionholders will participate in Atlas':
- fast growing production profile;
- mining and project execution expertise;
- existing DSO resources of some 187Mt;
- exposure to the Ridley Magnetite Project with a resource of 2Bt at 36.5% Fe, in respect of which Atlas is in advanced stages of working through proposals with interested parties to determine the preferred partner;
- substantial Pilbara land holding;
- higher level of liquidity as a larger capitalised stock; and
- depth and expertise of its management and technical team.
Atlas is currently mining and exporting from its 100%-owned Pardoo Iron Ore Project, located 75 kilometres by road from Port Hedland in the Pilbara region of Western Australia. In addition, Atlas is progressing development at its Wodgina and Abydos DSO Projects. When combined with additional export tonnages from its Wodgina and Abydos DSO Projects, Atlas is targeting DSO exports at an annualised rate of 6 million tonnes in 2010, growing to 12 million tonnes by 2012.
Atlas believes Aurox shareholders and optionholders stand to benefit enormously from the merger. It will give Aurox shareholders and optionholders exposure to Atlas' existing iron ore production and a rapidly growing production profile from a number of DSO development projects, including the Wodgina DSO Project, Abydos DSO Project and Mt Webber DSO Project, and the Ridley Magnetite Project. Atlas has a DSO exploration target (including existing resources of 187 million tonnes) of 430 to 750 million tonnes grading 57 to 60% Fe (see Atlas Competent Persons statements in Annexure A).
Aurox Overview
Aurox is an iron ore explorer whose main focus is development of the Balla Balla Project located in the West Pilbara, approximately 100km west of Port Hedland. The Balla Balla Project is a large homogenous titanomagnetite ore body with a mineral resource of 456Mt and current ore reserve of 238Mt. Significantly, Aurox has secured an allocation at Utah Point of 6mtpa from March 2010, increasing to 10mtpa from 2015. There is capacity to increase Aurox's allocation to 12mtpa if the use of the Aurox reclaimer results in an increased throughput for the Utah Point berth by more than 2mtpa. The status of Aurox's Balla Balla project (as reported by Aurox) is shown below:
-----------------------------------------------------Project Ownership JORC Inferred JORC Ore Resource Reserves-----------------------------------------------------Balla Balla 100% Aurox 456Mt@45% Fe 238Mt@44.7% Fe-----------------------------------------------------
Details of the Merger
Atlas and Aurox have executed a Scheme Implementation Agreement (SIA) in relation to the merger, under which Atlas will acquire all of the issued shares in Aurox. Under the terms of the proposed Scheme, Aurox shareholders will receive one (1) Atlas share for every three (3) Aurox shares they hold.
At the closing price of Atlas shares on 8 March 2010 of $2.21 per share, this represents an offer price of 73.67 cents per Aurox share, representing a premium of 172.85% on the closing price of Aurox shares on 8 March 2010 of 27 cents per share, a 158.49% premium to the 10-day volume weighted average price (VWAP) of Aurox shares of 28.5 cents per share and a 143.14% premium to the 30-day VWAP of Aurox shares of 30.3 cents per share.
Aurox Board Recommendation
The Board of Aurox has unanimously recommended that, in the absence of a superior proposal, all Aurox security holders vote in favour of the Scheme. The Aurox Board members intend to vote in favour of the Scheme in relation to their personal share holdings in Aurox, in the absence of a superior proposal.
Atlas' Loan to Aurox
Atlas has agreed to extend an unsecured, interest-bearing loan of up $7.7million to Aurox in order to enable Aurox to redeem the outstanding convertible notes which are due to mature on 30 June 2010.
The loan will be repayable on the earlier of 4 months from the date of draw down and 20 business days after termination of the SIA.
Details of the Scheme Implementation Agreement (SIA)
The Scheme will be subject to customary conditions such as:
- Approval being received from the shareholders of Aurox and court approvals;
- Regulatory approvals;
- That the Independent Expert concludes that the Scheme is in the best interests of Aurox shareholders, and does not change that conclusion; and
- Other conditions customary for a public transaction of this nature.
The parties have agreed that unless the SIA is terminated, Aurox will not solicit any competing proposal or participate in any discussions or negotiations in relation to any competing bid (unless failure to do so would involve a breach of the fiduciary duties of its Directors). See Annexure B for further details.
The Atlas Board will remain unchanged following the merger with Aurox. Atlas' corporate adviser in respect of the merger is Hartleys Limited. Aurox's corporate adviser in respect of the merger is Sigiriya Capital.
Indicative Timetable
Shareholders of Aurox will be asked to approve the Scheme of Arrangement at a meeting which is expected to be held in late May 2010.
Full particulars of the Scheme, transaction terms and recommendations will be provided to Aurox shareholders though an Explanatory Booklet which will include an Independent Expert's Report. It is expected that this booklet will be mailed to Aurox shareholders in late April 2010. Aurox shareholders are not required to take any action at this stage in relation to the Scheme of Arrangement.
Atlas after the Aurox merger is completed
Following completion of the merger of Atlas and Aurox, key features of the Combined Company will include the following:
--------------------------------------------------------------Production Targets 6Mtpa DSO rate in 2010, 9Mtpa DSO rate in 2011 12Mtpa DSO rate in 2012 26Mtpa DSO rate in 2014(1) Additional 10Mtpa Balla Balla Magnetite Additional 15Mtpa Ridley Magnetite Additional 2-4 Mtpa DSO Midwest--------------------------------------------------------------Pilbara landholding Approximately 15,000km2--------------------------------------------------------------Port Access Up to 15Mtpa in Utah and Up to 18Mtpa in SW Creek--------------------------------------------------------------DSO Resources 187Mt at 56.6% Fe (see Annexure A)--------------------------------------------------------------DSO ExplorationTarget 430 to 750Mt in range of 57% to 60% Fe(2)--------------------------------------------------------------Production Projects Pardoo DSO Operation Wodgina DSO Operation(commencing Q2 2010)--------------------------------------------------------------Development Projects Abydos DSO Project Mt Webber DSO Project--------------------------------------------------------------SE PilbaraExploration Projects Hickman Woggaginna Jigalong Western Creek Jimblebar Range Caramulla South--------------------------------------------------------------Magnetite Projects Ridley Magnetite Project with Probable Reserves of 970Mt at 36.3% Fe and Resources of 2Bt at 36.3% Fe Balla Balla Project with Total Reserves of 238Mt at 44.7% Fe and Resources 456Mt at 45% Fe--------------------------------------------------------------
(1) This target is subject to completion of feasibility studies, permitting and execution of all necessary infrastructure agreements.
(2) Refer to all Competent Person statements listed in Annexure A
(3) DSO-Refers to direct shipping grade iron ore
For the complete Atlas Iron ASX Announcement, please click the link below:
http://www.abnnewswire.net/media/en/docs/62418-ASX-AGO-483337.pdf
About Atlas Iron Limited
Atlas Iron Limited (ASX:AGO) is an independent Australian iron ore company, mining and exporting Direct Shipping Ore (DSO) from its operations in the Northern Pilbara region of Western Australia. Since listing on the ASX in late 2004, Atlas has grown rapidly and is now a member of the ASX100 index.
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