Mergers: Atlas, Aurox deal gets Thumbs Up
The merger between small iron ore groups, Atlas Iron and Aurox Resources, seems to be heading towards fruition after an independent expert's report gave the deal a tick.
The report and other documentation were released yesterday.
The merger, by way of a scheme of arrangement, would see Atlas issue Aurox shareholders one share in Atlas for every three Aurox shares held.
Based on the July 1 Atlas share price, the last trading day before the date of the scheme booklet, it would represent a value of about 69c per Aurox share.
"The independent expert commissioned by Aurox has concluded that the scheme is fair and reasonable and in the best interests of Aurox shareholders," the companies said in a joint release to the ASX yesterday.
Aurox shareholders will meet on Friday August 6 to vote on the plan.
In the statement, Aurox directors said they believe that the proposed merger is "a compelling combination, and provides the opportunity for Aurox shareholders to participate in Atlas rapidly growing production profile".
That will "position the company as a significant iron ore producer, and retain exposure to the Balla Balla Project, but at the same time gain exposure to a portfolio of iron ore projects throughout the Pilbara," they said.
Directors said Aurox will "share in a larger, more diversified company, with existing DSO projects, significant exploration and production potential, two Pilbara magnetite projects and approximately 15,000 square km Western Australia landholding; benefit from optimisation of development schedules due to greater infrastructure capacity; gain exposure to a substantial growth profile with a pipeline of assets and opportunities and benefit from owning securities in an S&P/ASX 200 index company with strong trading liquidity, a strong balance sheet and a proven management and technical team".
Aurox shares fell 2c to 67.5c yesterday and Atlas Iron shares were also lower, off 4c at $2.09.
Both had been higher in early trading but fell as the market softened in the afternoon.