Fortescue to Acquire Red Hawk Mining, Take Control of Blacksmith Iron Ore Project

Global mining company Fortescue (ASX:FMG,OTCQX:FSUMF) on Tuesday (January 28) announced plans to acquire Red Hawk Mining (ASX:RHK) through its wholly owned subsidiary FMG Pilbara.

The offer price is set at AU$1.05 per share, a “significant and attractive premium."

Fortescue said this amount may increase to AU$1.20 per share should FMG Pilbara acquire a relevant interest in 75 percent or more of Red Hawk’s shares within seven days.

Red Hawk's board has unanimously recommended that the offer be accepted as it is “fair and reasonable.”

“Red Hawk’s cash balance as of December 31, 2024 was AU$1.3 million," the company said.

"If shareholders do not accept the offer, then there is a strong possibility that Red Hawk will need to conduct an equity raising in the near term and shareholders may be diluted," Red Hawk added.

Fortescue said the cash consideration under the offer “delivers immediate value to Red Hawk shareholders and provides certainty, noting the significant risks to the development of greenfield iron ore projects.”

Included in Red Hawk’s assets is the Blacksmith iron ore project in Western Australia's Pilbara region. The asset is located 30 kilometres west of Fortescue’s Solomon operations.

Blacksmith holds a current resource estimate of 243.4 million tonnes at 59.3 percent iron.

According to a prefeasibility study released in May 2024, the project has the capacity to deliver 5 million tonnes per annum of direct-shipping ore product for a mine life of over 20 years.

Red Hawk and FMG Pilbara have entered into a bid implementation deed outlining the terms and conditions of the offer.

The deed contains customary deal protection mechanisms, including "no shop," "no talk" and "no due diligence" restrictions, along with notification and matching rights in the event of a competing proposal.

Unless extended or withdrawn, the proposal will be open for acceptance until 7:00 p.m. AEDT on March 3, 2025.

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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.