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Report: Gina Rinehart's Hancock acquires 19.6% stake in Atlas Iron

Gina Rinehart's Hancock Prospecting Pty. Ltd. acquired a 19.6% stake in junior miner Atlas Iron Ltd., just a week after Fortescue Metals Group Ltd. snapped up a 19.9% share, The Australian reported June 12, citing anonymous sources.

Rinehart's company would not like to see control of Atlas Iron to go to Fortescue Metals, according to the report.

Atlas Iron holds two iron ore projects in the Pilbara region of Western Australia as well as two undeveloped projects and an interest in the Utah Point port.

Fortescue said June 7 that it had acquired a 19.9% stake in Atlas Iron after acquiring common shares representing a 15.0% stake at 4 Australian cents per share and an economic interest representing a 4.9% stake.

Australian analysts recently told S&P Global Market Intelligence that they were surprised by the move but agreed that it is a smart play to keep low-grade iron ore competitor Mineral Resources Ltd. in check while effectively laying down "working capital" for growth options in lithium and base metals.

Atlas Iron is undergoing an all-scrip merger with Mineral Resources, under which Atlas shareholders will receive 1 Mineral Resources share for every 571 shares held.

Fortescue has said that under the current terms, it will not support the proposal. Mineral Resources aims to export its cheaper product through Atlas Iron's Utah Point terminal, which could result in a drop in the iron ore price.