ASX Announcement 4 April 2016‌‌

Update on Debt Restructure: Creditors' Scheme documentation and information for shareholders

The Financial Restructuring and proposed Creditors' Scheme

On 23 December 2015, Atlas Iron Limited (ASX:AGO) (Atlas or the Company) announced it had entered into a Restructuring Support Agreement (as subsequently amended) (RSA) with some of the lenders to its US dollar dominated Term Loan B Syndicated Facility Agreement (SFA), (Lenders) and agreed an interim amendment to the SFA (the Agreements). The Agreements are aimed at achieving a Financial Restructuring of Atlas.

As mentioned in Atlas' half year report for the period ended 31 December 2015 and as described in Atlas' notice of shareholders' meeting sent to shareholders on 24 March 2016 (Notice of Shareholders' Meeting), the Financial Restructuring will be implemented by way of a creditors' scheme of arrangement under the Corporations Act 2001 (Cth) (Creditors' Scheme). If the Financial Restructuring is implemented the following key outcomes will result:

• Atlas will have reduced its term loan debt from US$267 million to US$135 million and extended the maturity date from December 2017 to ~April 2021;

• Atlas will have reduced its annual cash interest expense by over 65% as result of the lower debt balance and reduced cash interest rate;

• Atlas will repay a further amount of US$2.5 million of the debt owing under the SFA (having already paid down an initial amount of US$7.5 million in the December 2015 quarter);

• Atlas will issue fully paid ordinary shares (New Shares) and options to acquire fully paid ordinary shares in Atlas (New Options) to the Lenders such that, once the New Shares and New Options have been issued, the

  ~71 Lenders will hold 70% of all Atlas shares and options then on issue; and

• The parties will enter into an amended SFA where the six monthly Asset Coverage Ratio covenant will be replaced with a minimum cash balance covenant requiring Atlas to have a minimum of A$35 million at the end of each month.

On 1 April 2016, the Federal Court of Australia made orders for the convening of a meeting of the Lenders to consider and, if thought fit, approve the Creditors' Scheme and approve distribution to the Lenders of an explanatory statement in connection with the Creditors' Scheme (the Explanatory Statement) (see further details below).

Shareholder approval

Atlas completed dispatch of the Notice of Shareholders' Meeting on Thursday, 24 March 2016. The Notice of Shareholders' Meeting convenes a meeting of Atlas' Shareholders to consider and, if thought fit, approve the issue of the New Shares and the New Options to the Lenders, for the purposes of ASX Listing Rule 7.1.

As set out in the Notice of Shareholders' Meeting, Shareholder approval is a condition precedent to the Creditors' Scheme being implemented; so the Creditors' Scheme (and the Financial Restructuring contemplated by it) cannot proceed without it. This meeting of Shareholders will be held at 9.00am (Perth time) on Wednesday, 27 April 2016 at the Mantra on Murray, 305 Murray Street, Perth, Western Australia. The Notice of Shareholders' Meeting sets out the current financial circumstances of Atlas, the options that your Directors considered in seeking to restructure the debt owing under the SFA, and the reasons why the Financial Restructuring is being pursued at this time.

Atlas Iron Limited

ABN 63 110 396 168

Raine Square, Level 18

300 Murray Street Perth WA 6000

PO Box 7071

Cloisters Square Perth WA 6850

P: +61 8 6228 8000

F: +61 8 6228 8999

E: [email protected]

W: www.atlasiron.com.au

As described in the Notice of Shareholders' Meeting, your Directors recognise that there will be a considerable dilution of Shareholders' interests in the Company as a result of the Financial Restructuring. However, in the circumstances prevailing in the lead up to and as at the date of entry into the Agreements, your Directors believe that they were, and continue to be, required to take this decisive action and believe that the Financial Restructuring is in the best interests of the Company and shareholders.

Shareholders are encouraged to read the sections in the Explanatory Statement to the Creditors' Scheme and the Notice of Shareholders Meeting on information about the effect of the Creditors' Scheme on any Subordinate Claims. Further detail is provided in sections 1.5.1(f) and 2.5(c) of the Notice of Shareholders' Meeting.

Further information about the Creditors' Scheme

The Notice of Shareholders' Meeting contains considerably more information than required under the ASX Listing Rules, and your Directors believe it contains all material information which Atlas Shareholders require to vote on the ASX Listing Rule 7.1 resolution on a fully informed basis.

However, in the interests of ensuring that Shareholders are provided with all reasonable information in connection with the Creditors' Scheme and the Financial Restructuring contemplated by it, the following documents described below (see attached) are now available on the ASX company announcements platform and on Atlas' website. Shareholders may also request hard copies of these documents (and any other ASX announcements that relate to the Financial Restructuring and which are released before the date of the Shareholders' meeting), and will be provided with such hard copies by the Company free of charge;

• Independent Expert's Report to Creditors: As mentioned in the Notice of Shareholders' Meeting, an independent expert's report has been prepared by PPB Advisory for the purposes of the Creditors' Scheme. PPB Advisory has also prepared a supplementary independent expert's report to track updates in certain underlying information since its original report was prepared. (Together, the original and supplementary independent expert's reports are referred to as the PPB Report). The PPB Report has been prepared for the benefit of the Lenders in the regulated context of the Creditors' Scheme. Accordingly, it opines on a number of matters that may not be strictly relevant to Shareholders; including the likely outcome for Atlas if the Creditors' Scheme is not implemented and the expected amount (called a "dividend" in the PPB Report) that would be paid to the Lenders if the Creditors' Scheme is implemented as proposed.

• Explanatory Statement: The Explanatory Statement sets out the prescribed information about the Creditors' Scheme that the Corporations Act requires Atlas to address to the Lenders. The Explanatory Statement contains a number of annexures, some of which are not being made publicly available on the ASX company announcements platform and the Atlas website. However, the Scheme of Arrangement itself (which is an annexure to the Explanatory Statement) is being made publicly available (see attached) and sets out the formal, contractual terms on which it is proposed that Atlas and the Lenders agree to pursue and implement the Creditors' Scheme.

Both the Notice of Shareholders' Meeting, and the additional documentation outlined above, provide summaries of the terms and conditions of the Creditors' Scheme and the Financial Restructuring contemplated by it.

While the Directors believe that the Notice of Shareholders' Meeting contains all material information which Atlas Shareholders require to vote on the ASX Listing Rule 7.1 resolution on a fully informed basis, the additional information on the Creditors' Scheme detailed above (see attached) is being provided to Shareholders so as to minimise any potential for information asymmetry between Shareholders and the Lenders and to ensure that Shareholders are appropriately engaged in the Financial Restructuring process (given its importance to the Company and its stakeholders).

However, Shareholders should be aware that the PPB Report and Explanatory Statement were prepared for the benefit of the Lenders in the regulated context of the Creditors' Scheme, and so do not directly contemplate or address the interests of Shareholders. The Notice of Shareholders' Meeting, however, is addressed to Shareholders and has been prepared with their interests and information requirements directly in mind.

Updated indicative timetable

Set out below is an updated indicative timetable for the key outstanding conditions to the Creditors' Scheme.

The dates in the above timetable remain indicative only and subject to change.

The Directors again thank Shareholders for their continued support.

Atlas will continue to keep Shareholders and the market informed as the Creditors' Scheme progresses.

Important Notice

This announcement does not constitute an offer to acquire or sell or a solicitation of an offer to sell or purchase any securities in any jurisdiction. In particular, this announcement does not constitute an offer, solicitation or sale to any

U.S. person or in the United States or any state or jurisdiction in which such an offer, tender offer, solicitation or sale would be unlawful. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), and neither such securities nor any interest or participation therein may not be offered, or sold, pledged or otherwise transferred, directly or indirectly, in the United States or to any U.S. person absent registration or an available exemption from, or a transaction not subject to, registration under the United States Securities Act of 1933.

Explanatory Statement‌

pursuant to Section 412 of the Corporations Act 2001 (Cth) For the Creditors' Scheme of Arrangement between:

Atlas Iron Limited

ABN 63 110 396 168

(defined as the "Scheme Company")

and the

TLB Scheme Creditors

(as defined in the Scheme)

and the

Subordinate Claim Holders

(as defined in the Scheme)

In order for the Scheme to proceed, it must be approved by the Lenders. Approval will be sought at the Scheme Meeting that will commence at 10.30 am on 22 April 2016 at Ashurst, Level 11, 5 Martin Place, Sydney in New South Wales, Australia. Further details of the Scheme Meeting and on how to vote at the Scheme Meeting, as well as information about the proposed Scheme, are set out in this Explanatory Statement.

THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION.

You are encouraged to read it in its entirety, take professional advice, and consult with your professional advisers when making any decisions in connection with the Scheme, including deciding whether or not to vote in favour of it.