Fortescue has cleared a major step in its bid for Red Hawk Mining.
Red Hawk announced yesterday its largest shareholder had accepted Fortescue’s offer to become a majority stakeholder.
Fortescue now owns 78 per cent of the company. A cornerstone of the iron ore major’s plan hinges on a quick sale, which saw it sweeten the pot with an offer to pay a 48 per cent premium should Red Hawk accept its offer by February 4.
Fortescue agreed to waive the bid condition 14 days after acquiring a relevant interest in at least 50.1 per cent of Red Hawk shares. Then the offer will be unconditional and shareholders who have accepted it will be paid within 10 business days.
Red Hawk has now played ball, which will see Fortescue honour the premium and pay our $254 million for the company.
“The board continues to unanimously recommend that Red Hawk shareholders accept the offer at either the base offer price or, if relevant, the Increased offer price, in the absence of a superior proposal and subject to the independent expert continuing to conclude that the offer is fair and reasonable, or not fair but reasonable,” Red Hawk said.
“Further, Red Hawk is pleased to advise that each of the Red Hawk directors who hold or control Red Hawk Shares intends to accept the offer in respect of all the Red (Hawk) shares they hold or control.”
The subject of Fortescue’s interest in Red Hawk is its ownership of the undeveloped Blacksmith iron ore project in Western Australia.
Blacksmith lies just 60km north of Rio Tinto’s Tom Price and 30km west of Fortescue’s Solomon iron ore project, which is one half of the Western Hub operation that boasts a yearly output of more than 100 million tonnes of iron ore.
The total Blacksmith mineral resource estimate is 243 million tonnes at 59.3 per cent iron grade.
