AUROX Resources and Atlas Iron have agreed to merge via a scheme of arrangement.

Aurox said in a statement today that Aurox shareholders would receive one Atlas share for every three Aurox shares.

The merger implies a price for each Aurox share of 74 cents based on Atlas' last closing price of $2.21, representing a premium of 173 per cent, Aurox said.

"The Aurox board unanimously recommends Aurox shareholders vote in favour of the merger in the absence of a superior proposal,'' Aurox said.

The Aurox board said that its members intend to vote in favour of the scheme in relation to their own holdings in Aurox, in the absence of a superior proposal.

Aurox said a merger would enable Aurox shareholders to participate in Atlas' rapidly-growing production profile, which would position the company as a globally-significant iron ore producer.

Aurox shareholders would retain exposure to the Balla Balla project and also gain exposure to a large portfolio of "quality'' iron ore projects throughout the Pilbara.

The merged entity would be among the top 200 listed on the Australian Securities Exchange, with a substantial growth profile and pipeline of assets.

Aurox managing director Charles Schaus said the proposed merger was an outstanding opportunity for the Aurox shareholders to join with and participate in an impressive diversified iron ore growth company.

"The high premium offered by Atlas is a great deal for Aurox shareholders,'' Mr Schaus said.

"It reflects the high potential of the Balla Balla project, Aurox's access to infrastructure and regionally significant water resource.

"The merged groups port capacity of up to 33mtpa (million tonnes per annum) will allow the company to generate substantial synergies from production and development schedule optimisation.

"With iron ore prices expected to increase significantly in the coming year, this merger will give Aurox shareholders the opportunity to share in the benefits from immediate cashflows.''
 

Source: The Australian