There’s still money to be made from iron ore.
Atlas Iron is four months ahead of schedule in its return to full production and is managing to sell its ore for more than the cost of digging it up.
And it’s so upbeat about the future that it’s started looking at the development of another iron ore mine.
This is a stark contrast to April when the crash in iron ore prices, driven by softening Chinese demand, pushed Atlas to announce it was mothballing its mines because it cost more to dig up the ore than buyers were willing to pay.
The miner is now back in business in a big way, both cutting costs and ramping up production. In the September quarter, Atlas shipped 72% more ore, a total of 3.3 million tones, than in the three months to June.
And it has cut another 12% to $58 from the full cash cost of digging a tonne of ore. Its average sale price for the three months was $61 a tonne.
“This cost reduction is largely due to the success of the contractor collaboration agreements and improved port charges,” says managing director David Flanagan.
Ramp up of the mines saw Atlas return to an annual production rate of 14 million to 15 million tonnes in August, four months ahead of schedule.
“These results demonstrate that Atlas is back up and running at full speed, but this time with lower costs, a stronger balance sheet and innovative arrangements with our key contractors,” says Flanagan.
“We can now begin to eye growth opportunities, though these will have to meet our key investment criteria of having both low capital and operating costs while also generating strong cash flow.
“By maintaining higher production rates and continuing to cut costs we will strengthen Atlas’ options for restructuring the balance sheet.”
Atlas finished the September quarter with $107 million cash following an $87 million capital raising. This compares with $73 million at the end of June.
The company also announced a pre-feasibility study into the development of a low-cost iron ore mine at its Corunna Downs project, 40km from the Mt Webber project in the Pilbara region.
Atlas has started discussions with parties interested in contributing to the cost of developing the Corunna Project.
A development at Corunna is one of a number of low cost initiatives Atlas is looking at to sustain export levels of 10 million to 15 million tonnes a year beyond 2017.