* Acquisition will give Atlas prized ore export capacity
* Offer values Aurox shares at A$0.74 each
(Adds details, quote, shares, background)
SYDNEY, March 10 (Reuters) - Australian iron ore producer Atlas Iron (AGO.AX: Quote, Profile, Research) is seeking to acquire Aurox Ltd (AXO.AX: Quote, Profile, Research) in a A$143 million ($130.8) scrip offer to secure additional port capacity as it beefs up production to meet Chinese demand.
Aurox said its board will vote in favour of the deal, which implies a value of A$0.74 per Aurox share -- a 172 percent premium to its closing price on Tuesday.
Aurox shares surged 148 percent to trade at A$0.67 at 0001 GMT while Atlas Iron shares fell 3.2 percent to A$2.14.
Aurox holds prized allocations at Australia's increasingly congested main iron ore export terminal at Port Hedland to ship 6 million tonnes a year, increasing to 10 million tonnes from 2015 and 12 million tonnes after that.
The world's single largest iron ore deposit, Australia's 500,000 square kilometre Pilbara district, is undergoing an unprecedented rate of mine development by BHP Billiton (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research), Fortescue Metals (FMG.AX: Quote, Profile, Research), Atlas and other companies, taxing limited export berthing space at the port.
Atlas plans to export 3 million tonnes of ore to Chinese steel mills in 2010, rising to 12 million by 2012.
"This merger creates one company with an outstanding rapidly growing production profile supported by port capacity in one of the world's greatest bulk export ports," Atlas Managing Director Dave Flanagan said in a statement.
Plans are underway to triple berthing capacity at the Port Hedland inner harbour terminal to 440 million tonnes annually within four years to accommodate growing freighter.
BHP is the port's biggest user and last year it shipped more than 100 million tonnes. It plans to mine 155 million tonnes annually by 2011 and 200 million by 2015.
Fortescue is the second biggest user, aiming to ship up to 55 million tonnes this year. (Reporting by James Regan; editing by Balazs Koranyi)
AXO Price at posting:
66.0¢ Sentiment: Hold Disclosure: Held
