Mineral Resources Limited [ASX: MRL] experienced a drop of almost 7% yesterday.
Shares are currently trading at $16.05, down from $17.24, prior to the trading halt on Thursday.
The Perth-based mining company has a broad portfolio including substantial lithium resources, with a market cap of $3.09 billion.
Why the share price decline?
The share price dropped after the company announced the acquisition of Atlas Iron yesterday — an iron ore company with operations in the Northern Pilbara region.
The directors of Atlas have unanimously recommended that shareholders vote in favour of the scheme, suggesting it is in the best interest of Atlas shareholders.
Atlas Managing Director, Cliff Lawrenson, said:
‘The combination with MinRes will not only protect, but also enhance the Atlas business. The combined organisation will have the scale and financial security to support current operations, as well as providing access to capital to contemplate further development opportunities.’
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What’s next for Mineral Resources Ltd?
Atlas is a strategic asset to Mineral Resources, the combined business will mean a lower per tonne cost for iron ore — ensuring they are able to compete in the global market for low grade iron ore.
‘The amalgamation of MRL’s existing Pilbara iron ore assets with those of Atlas will enable us to exploit greater synergies and economies of scale which will drive down costs to ensure the consolidated iron ore business is sustainable in the new environment of lower global prices for low grade iron ore.’
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PS: Mineral Resources Limited has had significant growth over the past couple of years, along with many other Australian mining companies. The S&P 300 Metals and Mining Index have also doubled since early 2016. According to our research analyst, Jason Stevenson, this is only the start. If you’re interested in learning more, check out his free report ‘Top 10 Mining Stocks for 2018’. You can download this free report here.