Takeover Speculation, page-15

From today's SMH:

Foster Stockbroking reckons Atlas Iron is an obvious takeover candidate following this week’s $250 million bid from BC Iron for Iron Ore Holdings. This follows the successful Aurizon-Baosteel bid for Aquila Resources in May.
“What was pertinent for both bids was that the targeted companies possessed assets requiring significant capital investment, but were being heavily discounted by the market,” the broker writes in a research note to clients.
“Atlas Iron is another Pilbara player where the market seems to give little plausibility on its expansion plans being crystallised.”
Atlas Iron has recently established itself as a 12 million tonne a year producer from the Pilbara, of late completing its Stage 1 development at Mt Webber. The company’s Stage 2 completion is expected in the December 2014 quarter, by which time Atlas will be targeting production of 15 million tonnes a year.
“To go beyond 15Mtpa production, Atlas most likely needs a partner that can assist in providing an infrastructure solution, particularly concerning rail, to unlock its sizeable resources,” Foster Stockbroking reckons.
Potential interested parties in Atlas Iron would likely include Fortescue Metals Group and Hancock – which have their own rail networks – X2 Resources, Anglo American, “and Glencore – who may seek to establish Pilbara operations, and other China steelmakers similar to Baosteel, who would be keen for off-take.”
The analysts at Foster Stockbroking say Atlas Iron’s depressed share price offers an opportunistic entry. ”The company is an attractive entry into the play on iron ore prices turning around, while crystallisation of an infrastructure solution would certainly enhance costs efficiencies.”

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