Iron ore explorer Atlas Iron Ltd
(ASX:AGO) and minerals explorer Warwick Resources Ltd
(ASX:WRK) have agreed to merge.
Under the agreement Atlas is offering one Atlas share to Warwick shareholders for every three Warwick shares.
The offer represents a 48 per cent premium to Warwick shareholders based on the price of Warwick shares over the past 30 days.
Atlas says the combined company will reap substantial benefits from higher tonnage production including lower costs, increased buying power and greater marketing strength.
Atlas managing director David Flanagan says the transaction with Warwick brings with it a very large south east Pilbara iron ore tenement portfolio with exceptional resource potential.
Atlas and Warwick have executed a scheme implementation agreement in relation to the merger, under which Atlas will acquire all of the issued securities in Warwick.
Warwick’s board recommends Warwick shareholders vote in favour of the merger.
Atlas Iron has posted losses in the last four years, and Warwick Resources is yet to post a net profit.
