ATLAS IRON LIMITED‌‌‌

ACN 110 396 168

NOTICE OF GENERAL MEETING

The General Meeting of the Company will be held at the Mantra on Murray, 305 Murray Street, Perth, Western Australia on Wednesday, 27 April 2016 at 9.00am (WST).

NOTICE OF GENERAL MEETING

Notice is hereby given that the general meeting of shareholders of Atlas Iron Limited ("Company" or "Atlas") will be held at the Mantra on Murray, 305 Murray Street, Perth, Western Australia on Wednesday, 27 April 2016 at 9.00am (WST) ("Meeting").

The Explanatory Memorandum to this Notice provides additional information on matters to be considered at the General Meeting. The Explanatory Memorandum, Notes and the Proxy Form form part of this Notice.

Terms and abbreviations used in this Notice, the Notes, the Explanatory Memorandum and the Proxy Form are defined in Schedule 1: Definitions.

AGENDA

1. Resolution 1 - Approval to issue New Shares and New Options under the Financial Restructuring

   "That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, the issue of a minimum of 6,229,503,121 New Shares and 4,513,986,297 New Options and a maximum number of New Shares and New Options as is determined by applying the formula described in section 2.2(a) of this Notice, on the terms and conditions set out in the Explanatory Memorandum such that, excluding any Atlas securities held by the TLB Lenders prior to the issue of New Shares and New Options, the TLB Lenders will, immediately post the Financial Restructuring, hold approximately 70% of the Company's total Shares and total Options then on issue, and the issue of any Shares on exercise of the New Options, be approved."

   Short Explanation

   Approval is sought under the ASX Listing Rules to enable the Company to issue securities to the TLB Lenders (of which there are approximately 70 as at the Last Practicable Date). Atlas has signed the RSA with a majority of the TLB Lenders who hold more than 75% of the debt owed by Atlas to the TLB Lenders under the Term Loan B, and agreed an interim amendment to the existing Syndicated Facility Agreement that governs the Term Loan B ("Amendment"), on the material terms and conditions described in Schedule 3 to this Notice (collectively called "the Agreements"). Under the Agreements, Atlas will (among other things) pay down the TLB in an aggregate amount of US$10 million (US$7.5 million of which has already been paid on 24 December 2015 and US$2.5 million on implementation of the Financial Restructuring) and, subject to receipt of the Shareholder approval sought by this Resolution 1, issue New Shares and New Options to the TLB Lenders in exchange for the TLB Lenders retiring ~US$121.1 million (approximately A$168.2 million assuming an exchange rate of USD$0.72 = A$1.00) of the TLB debt.

   
   

   Pursuant to the Financial Restructuring, the TLB Lenders will be issued that number of New Shares and New Options such that, immediately post the Financial Restructuring and excluding any Atlas securities held by the TLB Lenders prior to the issue of New Shares and New Options, they will hold approximately 70% of the Company's total Shares and Options on issue. No one TLB Lender is expected to hold in excess of 20% of the total Shares on issue after the issue of their New Shares.

   
   

   The Financial Restructuring will be implemented by way of a creditors' scheme of arrangement, pursuant to Part 5.1 of the Corporations Act. Accordingly, the issue of the New Shares and the New Options is subject not only to the Shareholder approval sought by this Resolution, but is also subject to, among other things:

   
   

   • the Court convening a meeting of the TLB Lenders to consider the Creditors' Scheme;

     
     

   • a majority of TLB Lenders present and voting at the Scheme Meeting (in person or by proxy) holding at least 75% of the total debt owed by the Company to the TLB Lenders under the Term Loan B voting in favour of the Creditors' Scheme; and

     
     

   • the Court approving the Creditors' Scheme.

The Creditors' Scheme is itself conditional on Shareholder approval of Resolution 1 being obtained.

Directors' Recommendation

The Directors believe that Resolution 1 is in the best interests of the Company and its Shareholders, and unanimously recommend that Shareholders vote in favour of the Resolution.

The Directors believe that there is a high risk that Atlas will fail to comply with the Asset Coverage Ratio when it is next tested on 30 June 2016. Failure to comply constitutes an event of default under the Syndicated Facility Agreement, entitling the TLB Lenders to instruct the agent to demand that Atlas repay the amount it owes to the TLB Lenders immediately and to appoint receivers and managers to the secured assets of Atlas. It is the Directors' view that, were such an event of default to occur, the TLB Lenders would take this course of action and Atlas would be unable to repay the debt.

The Directors also believe that, should the appointment of a receiver and manager result in the sale of Atlas' business as a going concern or on a piecemeal basis, the proceeds of a sale on either such basis would be insufficient to repay the debt to the TLB Lenders.

In such a scenario, the Shareholders would receive nothing.

Furthermore, even if the Asset Coverage Ratio were to be satisfied when it is next tested on 30 June 2016 in circumstances where the Creditors' Scheme is not implemented on its terms, it remains the case that, in the Board's view, the Directors are required to pursue a refinancing or restructuring of TLB debt so that the Company can continue to operate as a going concern and meet its obligations under the TLB at maturity.

The detailed reasons for the Directors' beliefs and this recommendation, and the alternatives to the Creditors' Scheme that were considered by the Directors, are set out in sections 2.3 and 2.4 of this Notice.

If Resolution 1 is not approved by Shareholders, in addition to the matters outlined above, the Company's financial position is expected to become very uncertain and the Directors would need to carefully consider the Company's available options. Implications for the Company if Resolution 1 is not approved are described more fully in section 2.4 of this Notice and may include the following (among other things):

1. The Company may consider appointing a voluntary administrator immediately after this Meeting, which could result in the TLB Lenders and other secured creditors appointing a receiver or receiver and manager in relation to the Company's secured assets.

   
   

2. The Company would need to urgently seek funding from alternate sources to repay some or all of the TLB debt. At the date of this Notice, the Company has not received any offers to fund the repayment of TLB debt and there is a high risk that this would not be possible in the months after the date of the Meeting, should the iron ore pricing environment continue to be volatile and deteriorate. Furthermore, the Company's ability to raise sufficient funds by way of asset sales or capital raisings is similarly uncertain, and will continue to be constrained by the volatile iron ore pricing environment and by the outlook for equity capital markets (in particular for resource companies) throughout 2016.

   
   

3. The Asset Coverage Ratio is tested on 30 June and 31 December each year. The Company considers that there is a high risk that it will fail to satisfy the Asset Coverage Ratio covenant in the future if:

   
   

   • Shareholder approval is not granted; or

     
     

   • the Creditors' Scheme is not approved by the requisite majorities of TLB Lenders or by the Court, or is otherwise not implemented,

     
     

     and an alternative source of funding acceptable to the TLB Lenders is not found and implemented promptly in place of the Financial Restructuring.

     
     

     As mentioned in this Notice, the Shareholder approval sought at the Meeting (allowing the Company to issue the New Shares and New Options to the TLB Lenders) is a condition precedent to implementation of the Creditors' Scheme.

     
     

     Failure to satisfy the Asset Coverage Ratio covenant constitutes an event of default under the Syndicated Facility Agreement, which in turn entitles the TLB Lenders to instruct the agent under the Syndicated Facility Agreement to demand immediate repayment of the TLB debt from the Company and to, among other things, appoint a receiver and manager to the Company's secured assets.

     
     

     
     

     Voting Exclusion Note

     Under ASX Listing Rule 14.11, and in consultation with ASIC, the Company will disregard any votes cast on the Resolutions as follows:

     
     

     RESOLUTION	PERSONS EXCLUDED FROM VOTING
     Resolution 1 - Approval to issue New Shares and New Options (ASX Listing Rule 7.1)	A person who: and their respective associates.

     • may participate in the proposed issue of New Shares and New Options and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed; or

     • is a member of Key Management Personnel (which includes the Directors),

     
     

     However, in accordance with the ASX Listing Rules, the Company need not disregard a vote if it is cast by:

     
     

     • a person as proxy for a person who is entitled to vote in accordance with the directions to vote on the Proxy Form; or

       
       

     • the person chairing the Meeting as proxy for a person who is entitled to vote in accordance with a direction on the Proxy Form to vote as the proxy decides.

The Chair intends to vote all undirected proxies (where permitted) in favour of Resolution 1.

If you do not wish to appoint the Chair to vote on Resolution 1 in the manner indicated above, the Company encourages you to complete the voting directions in respect of Resolution 1 in Section B of the Proxy Form.

By Order of the Board

Tony Walsh Company Secretary 21 March 2016