Atlas Iron approves $212m expansion

Atlas Iron has confirmed it will ramp up production at its part-owned Mt Webber iron ore mine to 6 million tonnes per annum this year and expects to see a solid reduction in operating costs as a result of the expansion.

Atlas told the market today its board had given approval to proceed to stage two of development at Mt Webber, with production set to double to a 'run rate' of 6mtpa by the end of the calendar year.

The Pilbara miner is on track to export its first ore from Mt Webber in the June quarter, having commenced mining at the project in recent months.

Atlas now expects life of mine operating costs to be in the range of $49-$51 per wet metric tonne, compared with its original estimate of $56/wmt for stage 1, as a result of a low strip ratio and economies of scale in the road haulage and mining operations.

The combined stages of the Mt Webber project are estimated to cost a total of $212 million, including road upgrades, representing about $35 per annualised tonne of production and including the cost of road upgrades.

Atlas managing director Ken Brinsden said the operating costs were well below industry norms.

The Mt Webber project is 70 per cent owned by Atlas, with the balance held by Brisbane-based Altura Mining.

The miner meanwhile reported a half-year net profit of $74 million on the back of record iron ore production.

The result is a significant improvement on the first half of the previous financial year when the company posted a $256 million loss after writing down the value of its undeveloped exploration projects.

Atlas shipped 5.1mt of ore during the six months to December 2013 at an average realised price of $US115.60 per dry metric tonne, more than doubling its revenue to $588 million.

The company has increased its full-year production guidance to between 10.2mt and 10.7mt on the back of the results.

"These are outstanding results which reflect the significant investment we have made in growing our business while maintaining a conservative balance sheet and returning dividends to shareholders," Mr Brinsden said.

"We are now producing at more than 10mtpa and heading towards 12mtpa, we have a significant resource base in the Pilbara and port entitlements giving us attractive options for value accretive growth."

Atlas announced an interim dividend of 3 cents per share.

Its shares were trading 1.2 per cent lower at $1.07 at 11:28am WST.