Gina Rinehart’s Hancock Prospecting has raised the stakes in the contest for control of Atlas Iron, with an all-cash takeover bid that values the junior miner at $390 million.

Hancock subsidiary Redstone has offered 4.2 cents per share for Atlas, trumping the proposed $280 million all-scrip bid by ASX-listed Mineral Resources announced in April.

Redstone’s offer represents a 44 per cent premium on the stock’s value before Ms Hancock and Andrew Forrest’s Fortescue Metals Group this month each took a near-20 per cent stake, apparently in response to Mineral Resource’s bid.

Atlas on Monday said it will now consider the proposal along with Mineral Resources’ right to respond with an increased offer.

Atlas shares jumped more than 20 per cent after the Hancock bid was announced, apparently in anticipation of an escalating bidding war.

The Atlas board had previously supported the Mineral Resources offer and a vote on the deal had been expected in July.

Late on Monday Mineral Resources released a statement noting the Hancock bid and saying the company is considering its position.

Hancock executive director Tad Watroba said Atlas’ assets offered potential long-term benefits alongside other assets in Hancock’s portfolio.

“There is potential to unlock value through the future development of Atlas resources as part of our wider system of operations,” Mr Watroba said in the bidder’s statement.

“If we obtain control of Atlas, we intend to conduct a strategic review to better understand the most appropriate time and means to develop and integrate Atlas into the existing operations of the Hancock Group.”

Atlas’s assets include a stake in a joint venture that holds rights to potentially valuable undeveloped port capacity in Port Hedland.

The Western Australian government last week said any development application would be judged on merit as the berths are set aside for junior miners, which potentially rules out Hancock and Fortescue.

Announcing its increased shareholding on June 7, Fortescue said it did not intend to support the takeover offer by mid-tier player Mineral Resources, but gave no indication about whether it would launch a rival bid.

UBS analysts suggested at the time that the port development rights may have been the focus of Fortescue’s interest

Atlas operates two iron ore mines in the Pilbara and owns two undeveloped projects, along with its interest in the construction of a port facility capable of handling 50 million tonnes of exports each year.

Atlas shares gained 0.8 cents, or 22 per cent, to 4.4 cents on Monday.