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Atlas Iron Limited (ASX:AGO) And Warwick Resources (ASX:WRK) Agree To Merge
Atlas Iron Limited (ASX:AGO) And Warwick Resources (ASX:WRK) Agree To Merge
Perth, Sep 8, 2009 AEST (ABN Newswire) - Atlas Iron Limited (ASX:AGO) is pleased to announce that Atlas and Warwick Resources Limited (ASX:WRK) have reached agreement for Atlas and Warwick to merge by way of Schemes of Arrangement with Warwick shareholders and optionholders. Atlas will issue one Atlas share to Warwick shareholders for every three Warwick shares on issue. Atlas will also issue Atlas shares to Warwick optionholders on a ratio determined by the exercise price and expiry date of the respective options as set out in Annexure C. The Board of Warwick (other than Atlas' nominee) has unanimously recommended that all Warwick security holders support the Schemes.

Warwick shareholders and optionholders will participate in Atlas' fast growing production profile, mining and project execution expertise, existing DSO resources of 127MT at 56.7%Fe within 160 kilometres of Port Hedland, exposure to the Ridley Magnetite Project with a resource of 2BT at 36.5% Fe, substantial Pilbara land holding and expertise of the management and technical team.

Atlas is currently mining and exporting from its 100%-owned Pardoo Iron Ore Project, located 75 kilometres by road from Port Hedland in the Pilbara region of Western Australia and completed its first shipment of Pardoo Direct Shipping Ore in early December 2008. Atlas is planning to export 1 million tonnes during 2009 from its Pardoo Project, expanding to 2.4Mtpa following commissioning of the Utah Point port facility. When combined with additional export tonnages from its Wodgina and Abydos DSO Projects, the Company is targeting DSO exports at an annualised rate of 6 million tonnes in 2010, growing to 12 million tonnes by 2012.

In addition to the targeted 12Mtpa production profile from Atlas' existing DSO projects and production from the Ridley Magnetite Project, the combined Company will be targeting additional production of 14Mtpa from Atlas' and Warwick's SE Pilbara projects. Development of these projects is planned to coincide with the completion of two new Port Hedland berths planned for construction in South West Creek under the auspices of the North West Iron Ore Alliance. These berths are due to be completed in late 2013. Achieving this target DSO production rate will also be conditional on project related feasibility studies, environmental permitting, infrastructure access agreements and timely project construction.

On conclusion of this project development the combined Company will be targeting an export rate of 26 million tonnes of DSO per annum by the end of 2014.

"Larger export tonnages mean lower fixed costs, better buying power, a significant increase in cashflow, stronger returns for shareholders and a more substantial business for the long term," Atlas managing director David Flanagan said. "We also look forward to using a longer life production pipeline to make a lasting positive impact in the communities where we operate."

Atlas has completed technical due diligence on the Warwick tenements around Mt Newman and it is satisfied they have potential for commercial resources of iron ore consistent with Warwick's previously stated range (including existing resources of 26.4 million tonnes) of 139 to 247 million tonnes at 56% to 60% Fe.

Atlas believes Warwick shareholders and optionholders stand to benefit enormously from the merger. It will give Warwick shareholders and optionholders access to existing iron ore production and a rapidly growing production profile from a number of development projects, including the Wodgina DSO Project, Abydos DSO Project, Mt Webber DSO Project and Ridley Magnetite Project. Including existing resources Atlas has an exploration target (including existing resources of 127 million tonnes) of 180 to 245 million tonnes grading 55 to 60% Fe.

Atlas and Warwick have executed a Scheme Implementation Agreement (SIA) in relation to the merger, under which Atlas will acquire all of the issued securities in Warwick. Atlas is currently the largest shareholder of Warwick and holds 26,087,143 shares in Warwick representing 22.2% of the Warwick shares on issue.

Warwick Overview

Warwick is an iron ore explorer with a diverse asset portfolio near Newman in the Pilbara region of Western Australia, which is host to world class iron ore mines. Following the acquisition of iron rights on Hannans Reward Limited's [ASX:HNR] Jigalong project, Warwick's iron ore projects have a combined land area of over 5,000km2. The status of Warwick's iron ore projects (as reported by Warwick) near Newman is shown below:
Project          Ownership
Woggaginna      100% Warwick

JORC Inferred Resource  Exploration Target(1)
  -                     50-100Mt @ 57-60%

Project          Ownership
Jigalong        100% Warwick Fe rights

JORC Inferred Resource  Exploration Target(1)
-                       50-100Mt @ 57-59%

Project          Ownership
Western Creek   100% Warwick

JORC Inferred Resource  Exploration Target(1)
-                       13-21Mt @ 56-59%

Project          Ownership
Jimblebar Range 100% Warwick

JORC Inferred Resource  Exploration Target(1)
12.6Mt @ 57.5%            -

Project          Ownership
Caramulla South  100% Warwick

JORC Inferred Resource  Exploration Target(1)
13.8Mt @ 53.9%           -

       JORC Inferred Resource  Exploration Target(1)
Total     26.4Mt                113-221Mt
1. Warwick has not yet reported Mineral Resources at Woggaginna, Western Creek or Jigalong and any discussion in relation to targets and Mineral Resources is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

Details of the Merger

Under the terms of the proposed Scheme of Arrangement, Warwick shareholders will receive one (1) Atlas share for every three (3) Warwick shares they hold. Under a separate Scheme of Arrangement, Warwick optionholders will receive the consideration set out in Annexure C which was calculated by reference to the exercise price and expiry date of the respective options.

At the closing price of Atlas shares on 7 September 2009 of A$1.67 per share, this represents an offer price of 55.67 cents per Warwick share, representing a premium of 20% on the closing price of Warwick shares on 7 September 2009 of 46.5 cents per share, a 35.5% premium to the 10-day volume weighted average price (VWAP) of Warwick shares of 41.1 cents per share and 48.3% premium to the 30-day volume weighted average price (VWAP) of Warwick shares.

Warwick Board Recommendation

The Board of Warwick (other than Atlas' nominee) has unanimously recommended that, in the absence of a superior proposal, all Warwick security holders vote in favour of the Schemes. Warwick Board members intend to vote in favour of the Schemes in relation to their personal share and option holdings in Warwick, in the absence of a superior proposal.

Details of the Scheme Implementation Agreement

The Schemes are subject only to customary conditions such as:

- Approval being received from the security holders of Warwick and court approvals;

- Regulatory approvals;

- That the Independent Expert concludes that the Schemes are in the best interests of Warwick shareholders and optionholders, and does not change that conclusion; and

- Other conditions customary for a public transaction of this nature.

The parties have agreed that unless the SIA is terminated, Warwick will not solicit any competing proposal or participate in any discussions or negotiations in relation to any competing bid (unless failure to do so would involve a breach of the fiduciary duties of its Directors).

The Atlas Board will remain unchanged following the merger with Warwick. Atlas' corporate adviser in respect of the merger is Hartleys Limited and its legal adviser is Blake Dawson. The legal advisor to Warwick is Steinepreis Paganin.

Indicative Timetable

Security holders of Warwick will be asked to approve the Scheme of Arrangement at meetings which are expected to be held in November 2009.

Full particulars of the Schemes, transaction terms and recommendations will be provided to security holders though an Explanatory Booklet which will include an Independent Expert's Report in relation to the merger. It is expected that this booklet will be mailed to security holders in October 2009. Warwick share and option holders are not required to take any action at this stage in relation to the Schemes of Arrangement.

Atlas after the Warwick merger is completed

Following completion of the merger of Atlas and Warwick, key features of the combined Company will include the following.
Production Targets
6Mtpa rate in 2010,
9Mtpa rate in 2011
12Mtpa rate in 2012
26Mtpa rate in 2014(1)

Pilbara landholding
Over 15,000km2

DSO Resources
154Mt at 56.5% Fe

DSO Exploration Target
165 to 338Mt in range of 56% to 60% Fe(2)

Production Projects
Pardoo DSO Operation
Wodgina DSO Project commencing in Q1 2010

Development Projects
Abydos DSO Project
Mt Webber DSO Project

SE Pilbara Exploration Projects
Western Creek
Jimblebar Range
Caramulla South

Magnetite Project
Ridley Magnetite Project with Probable
Reserves of 970Mt at 36.3%Fe and
Resources of 2Bt at 36.3% Fe
1. This target is subject to completion of feasibility studies, permitting and execution of all necessary infrastructure agreements.

2. Neither Atlas nor Warwick have reported Mineral Resources on some of their DSO projects and any discussion in relation to exploration targets is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. This exploration target excludes the 154mt DSO mineral resource.


Atlas Managing Director David Flanagan said: "This transaction with Warwick brings with it a very large South East Pilbara iron ore tenement portfolio with exceptional resource potential. Developed in a project pipeline with our current North Pilbara Projects, we expect to be able to gain real operating synergies from this suite of projects and substantially increase production rates. The team at Warwick has done a fantastic job in securing this extensive landholding and building the resources and exploration targets at these projects. The next stage for Atlas will be to rapidly grow the resource inventory and bring them into production."

Warwick Chairman Will Burbury said: "Atlas has made a very attractive offer to Warwick shareholders which not only provides an immediate uplift in the value of Warwick shares but provides

our stakeholders the opportunity to participate in the continued development of our projects as well as exposure to existing production with a rapidly growing production profile, and the Atlas team's mining and marketing expertise and capability."

For the complete Atlas Iron ASX Announcement, please click the link below:

About Atlas Iron Limited

Atlas Iron ASX:AGOAtlas Iron Limited (ASX:AGO) is an independent Australian iron ore company, mining and exporting Direct Shipping Ore (DSO) from its operations in the Northern Pilbara region of Western Australia. Since listing on the ASX in late 2004, Atlas has grown rapidly and is now a member of the ASX100 index.



David Flanagan
Managing Director
Atlas Iron Limited
Tel: +61-8-9476-7900

Will Burbury
Warwick Resources Limited
Tel: +61-8-9227-6680

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