Atlas Iron cuts costs, restarts
WA mines
S
truggling Pilbara iron ore miner Atlas Iron has
negotiated a deal with contractors that has slashed
costs, reduced the group’s break even ore price and
sparked a restart of work at its three West Australian
mines.
Atlas (AGO) said today the deal with its key contractors delivered a lower
break-even price for the miner, with the contractors agreeing to receive an
uplift in their rates as the iron ore price rises.
Atlas said the deal would “materially reduce” its production costs, allowing it
to break even at a benchmark iron ore price of $US50 per dry metric tonne.
The current benchmark is hovering around $US60 per dry tonne.
The contractors will also receive a total of 25 per cent of applicable net
operating cash flows, Atlas said.
Atlas said full production would resume at all three of its mines, with the
company targeting a year-end output rate of 14 to 15 million tonnes per
annum.
Mining at its Abydos project is “back in full swing” and the Wodgina pit will
recommence next week. The Mount Webber project was expected to start
shipping again during the September quarter.
The miner said the deal was helped with “significant support” from Western
Australian state government funding, with the restart of work supporting over
700 jobs, along with royalty revenue returning to government coffers.
Atlas also said it was conducting a capital raising via a share placement,
subject to shareholder approval, with the price and amount of raising yet to be
determined.
Published By Michael Roddan, The Australian Business Review, May 15, 2015