Fortescue swoops on Red Hawk, targeting Blacksmith iron-ore project
Australian resources heavyweight Fortescue has made a move to expand its iron-ore footprint, launching an off-market takeover bid for Red Hawk Mining on Tuesday.
The ASX-listed company, founded by Andrew Forrest, has offered Red Hawk shareholders A$1.05 a share, with an increased offer of A$1.20 a share if Fortescue acquires 75% or more of the company within seven days.
Fortescue highlighted that its base offer represents a 29% premium to Red Hawk’s 30-day volume-weighted average price, while the increased offer reflects a 48% premium. This revised offer values Red Hawk at A$253-million on a fully diluted equity basis.
Red Hawk owns the Blacksmith iron-ore project, located 30 km west of Fortescue’s Solomon operations in the Western Hub. The undeveloped project boasts a mineral resource estimate of 243-million tonnes at an average grade of 59.3%.
In a statement, Red Hawk chairperson Cheryl Edwardes confirmed the board’s unanimous support for the offer, describing both the base and increased prices as attractive and in the best interest of shareholders.
“Whilst we firmly believe that the Blacksmith project has the potential to be a major iron-ore project, there is significant cost, time and risk associated with developing a project of this scale, particularly in the context of an uncertain broader global economic outlook. As such, the board believes that the offer provides shareholders with a compelling opportunity to de-risk their investment and realise certain value at an attractive premium to historical trading levels leading into the announcement of the offer,” Edwardes said.
A prefeasibility study completed in April 2024 demonstrated the Blacksmith project’s strong potential, with a projected 23-year mine life and robust financial metrics. The study estimated a pre-tax net present value of A$523-million and an internal rate of return of 31%. The project is expected to produce five-million tonnes a year of direct shipping ore, with an estimated capital payback period of just 3.3 years from production start.
The Fortescue offer opened on January 18 and will close on March 3.
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