Atlas Iron has given ASX-listed rival Mineral Resources three days to respond to the $390 million takeover bid by Gina Rinehart’s Hancock Prospecting.

Atlas Iron on Tuesday said the 4.2 cents-per-share all-cash bid submitted this week by Hancock subsidiary Redstone is superior to the $280 million all-scrip offer it received in April from Mineral Resources.

Mineral Resources, whose bid was previously recommended by the Atlas Iron board, now has until Thursday to make a counter proposal.

“The Atlas board has assessed the Hancock offer, and has determined that it could be expected to lead to a superior proposal when compared to the Mineral Resources Limited scheme proposal,” Atlas Iron said in a statement to the ASX.

Atlas Iron said its recommendation in favour of the Mineral Resources proposal would stand for now.

Atlas shares jumped 22.2 per cent to 4.4 cents after the Hancock bid was announced on Monday, apparently in anticipation of an escalating bidding war.

Its shares were unchanged at 1122 AEST on Tuesday, while Mineral Resources shares had slipped 47 cents, or 2.8 per cent, to $16.43.

Redstone’s offer represents a 44 per cent premium on the Atlas 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 the Mineral Resources bid.

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.

Atlas’ assets include a stake in a joint venture that holds rights to potentially valuable undeveloped port capacity in Port Hedland, which UBS analysts suggested may have been the focus of Fortescue’s interest.

The Western Australian government last week said any development application would be judged on its merit as the berths were set aside for junior miners, which could limit Hancock and Fortescue.