Atlas Iron suffers cash drop

ATLAS Iron suffered a sharp drop in its cash position during the June quarter, boosting the case for investors to accept a $390 million takeover offer from Gina Rinehart’s Hancock Prospecting.

The latest quarterly report from Atlas showed that its cash on hand fell from $78 million at the end of March to just $57 million at the end of June as it continued to lose money on each tonne of its iron ore production.

The cash drop was exacerbated by the payment of a $3.12 million break fee paid to Chris Ellison’s Mineral Resources as was primarily the result of a $13.7 million “adverse working capital movement” largely stemming from the timing of shipments late in the quarter. The break-fee was triggered by Atlas’s decision to walk away from an agreed sale to MinRes in favour of the superior 4.2¢ a share offer from Hancock.