Atlas Iron equity eyed CITY BEAT: Michael Bennet From: The Australian January 07, 2010 2:25PM
ATLAS Iron today updated investors with some more information which could help to explain its share price's spike over the last month -- other than the well known expectations of higher iron ore benchmark prices.
The emerging Pilbara miner, led by the flamboyant David Flanagan, said today it has received strong interest from steel mills for offtake from its Wodgina project, with discussions advanced but not complete.
Atlas also revealed it has received strong interest, again, for a partner for its Ridley project, which is being handled by Goldman Sachs JB Were.
Again, the iron ore miner pointed out the Ridley talks are advanced but not yet complete.
Both deals are widely known to be in the works, with the update prompted by a speculative article in a newspaper suggesting the Ridley deal was close to being closed.
Flanagan told City Beat last month the sale would be done in the first half of 2010 and could involve an equity stake or the entire project.
Analysts believe Atlas would prefer to sell about 70 per cent of Ridley, which could fetch about $150 million, and that the talks with parties believed to be from China, Japan and Korea were likely focusing on the amount of equity.
Hartleys analyst Andrew Muir also speculated some parties could also be asking for equity in Atlas.
Atlas has risen 22 per cent from $1.86 on December 1 last year to a high of $2.27 today after bolting out of a trading halt following this mornings announcement.
Pilbara major Fortescue Metals, which yesterday rocketed 13 per cent to $5.20, continued its gains to $5.34 in intraday trade as punters back analysts predictions of up to a 30 per cent rise in this year's iron ore contracts.
Ridley could cost up to $3 billion to develop, with first production slated around 2014.
The project would, however, have a 20-year plus lifetime, which Mr Muir said would be appealing to Asian investors looking for equity in the Pilbara.
On Wodgina, Mr Muir said Atlas would likely sign multiple offtake agreements with Asian steel mills similar to its producing Pardoo project.
