The BDO-prepared report came down in favour of the merger, recommending the merger as “fair and reasonable” to Aurox holders.

Overall, the report was strongly in favour of the merger, with the only concerns relating to the dilution of Aurox shareholders in the merged company.

Aurox holders will control only 12.3% of the combined entity, or 11.8% if all current Atlas options are exercised.

But the report said the positives considerably outweighed the issues and pointed to benefits such as being a part of a larger and growing company, increased share liquidity and the potential cost synergies of the merger, as well as the strength of Atlas’s management team.

The offer was also judged to be fair, according to BDO.

The three for one merger offer was a 143% premium to the 30-day volume-weighted average trading price of Aurox shares when the offer was launched on March 5, valuing Aurox shares at 74c.

Recent falls in value of Atlas shares, along with the rest of the market, have shifted that valuation down, according to BDO, but the deal still offers a significant premium to Aurox shareholders.

The three for one offer valued Aurox shares at 69c at the beginning of July, the close-off date for the independent expert’s report, a 128% premium to the company’s 30-day VWAP prior to the offer being launched.

That values Aurox at around $135.3 million, the vast majority of which will be assigned to Aurox’s Balla Balla iron ore project.

The independent expert’s report assigned a value of between $8.67 million and $11.86 million to Aurox’s other exploration projects, which include the Yalgoo projects and the Indee Southwest copper-gold project.

The highest valuation, $5.25-7.08 million, was given to the Wagdingarra prospect within the Yalgoo copper-gold tenement group.

Based on comparative values of other Western Australian iron ore projects recently partnered, the BDO report put a valuation of $60-80 million on the Balla Balla project – based on the price paid per tonne of iron ore in other deals.

Those deals – Centrex Metals, Gindalbie Metals, China Metallurgical Group Corporation and CITIC Pacific Group – have paid between 14c and 59c per tonne of resources and reserves, with an average price per tonne of 25c.

The total valuation of Aurox’s resource assets comes in at $68.67-91.86 million – meaning Atlas is offering at least a 43% premium over the direct worth of the company’s resource base.

In a statement today, Aurox’s directors reiterated the deal still had their full support, pointing to the independent expert’s report as confirmation of their position.

Aurox said the proposed merger was a “compelling combination”, with shareholders likely to benefit from Atlas’s expected strong growth.

Atlas shares were 1c down this morning at $2.12, with Aurox up 0.5c to 70c in early trading.