Atlas Iron's board has unanimously recommended shareholders accept the $390 million offer from Gina Rinehart's Hancock Prospecting, while unveiling a cut in iron ore production and a breach of its information technology systems.

The junior iron ore miner, which is also being stalked by major shareholder Fortescue Metals Group, will cut iron ore production at its Mount Webber mine to around seven million tonnes a year and suspend iron ore processing at its Mount Dove operation.