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Atlas Iron shares are going nuts

The Running of the Bulls festival in Pamplona, Spain. David Ramos/Getty Images

Struggling iron ore producer Atlas Iron’s earnings have picked up.

The company posted underlying EBITDA (earnings before interest, taxes, depreciation and amortisation) for the six months to December of $20.5 million compared to a $14.8 million loss in the previous corresponding period.

A short time ago, Atlas shares were trading at $0.017, up 41.67%.

Atlas recorded a statutory loss of $114.3 million after non-cash asset impairments and inventory write-downs of $43.9 million and restructuring costs of $7.1 million. The company posted a loss of $1.08 billion in the same six months last year.

The result reflects significant savings, with the cost of producing a tonne of iron ore down $17.12 to $55.75. On the other side of the ledger, the average realised price per tonne was $59.07, down from $70.47 a year ago.

Production was steady at 6.9 million tonnes for the half year but revenue fell 17.4% to $372 million on the back of a lower iron ore price.

“The iron ore price has continued to present a challenge but the company and its contractors have responded with further savings,” says managing director David Flanagan.

“This is a big achievement that has created a leaner, more sustainable company.”

A debt restructure agreement announced in December will reduce the company’s term loans to $US135 million ($A190 million) from $US267 ($A376 million) million and extend the maturity date to April 2021 from December 2017. The term loan lenders would then have 70% of the company’s shares and options.

The Pilbara miner started mothballing its mines in April last year because the cost of digging the ore was greater than the price on the global market.

It then re-started after doing deals with contractors and cutting costs hard. It also raised $A87 million from shareholders to give the company a cushion against price fluctuations.

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