Atlas says it's safe from the latest slump in iron ore

Iron ore. Image: Atlas Iron.

Atlas Iron, which has already once mothballed its mines because of tanking iron ore prices, has forward sold much of its production and won’t be affected by the current drop below $US50 a tonne.

The miner, whose shares have been suspended from trade since April, is back in business after doing profit share deals with many of its suppliers and making deep cuts to its cost of digging up iron ore.

Today the company told the market it had forward sold tonnages over the current quarter, the September quarter (about 70% of expected output) and about 10% of sales in the December quarter.

David Flanagan, the managing director, says the pricing strategy has reduced Atlas’ exposure to price volatility.

“This approach provides Atlas and investors with greater certainty in respect of the prices we will receive and therefore the extent of our margins and cash flows in the near-term,” he says. “At the same time, we have retained some exposure to iron ore price upside.”

Atlas is in the middle of a $180 million capital raising to give it further protection against price volatility.

Other iron ore-exposed stocks are being sold down in a falling market today. Fortescue has so far lost more nthan 5% to $1.69, BC Iron is down 6.6% to $0.28 and Mt Gibson 5% to $0.19.

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