Atlas Iron Ltd. and Aurox Resources Ltd. announced on March 10 that they will merge in accordance with a scheme of arrangement.
Atlas is currently mining and exporting from its 100%-owned Pardoo iron ore project, located 75 km 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 Wodgina and Abydos, Atlas is targeting DSO exports at an annualized rate of 6 million mt in 2010, growing to 12 million mt by 2012.
Aurox is an iron ore explorer whose main focus is development of the Balla Balla project located in the West Pilbara, approximately 100 km west of Port Hedland. Balla Balla is a large homogenous titanomagnetite orebody with a mineral resource of 456 million mt and current ore reserve of 238 million mt. Aurox has secured an allocation at the Utah Point port of 6 million mt/y from March 2010, increasing to 10 million mt/y from 2015.
Atlas will issue Aurox shareholders one Atlas share for every three Aurox shares they hold upon implementation. Atlas will also make offers to Aurox option holders to issue Atlas shares to them on a ratio determined by reference to the respective exercise price and expiry date of their options. Aurox’s board has unanimously recommended that all Aurox security holders support the merger, in the absence of a superior proposal.
Atlas said it believes Aurox stakeholders stand to benefit from the merger, which will give Aurox shareholders and option holders exposure to Atlas’ existing iron ore production and a growing production profile from its DSO development projects and Ridley magnetite project. Atlas said it has a DSO exploration target (including existing resources of 187 million mt) of 430 to 750 million mt grading 57% to 60% Fe.