22/05/2015 - 14:02

Atlas accepts $23m royalty relief from state govt

22/05/2015 - 14:02

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Atlas Iron has accepted the state government's iron ore royalty relief program, which will deliver an up-front cash injection of $12.5 million and an expected total benefit of $23 million.

Atlas Iron managing director Ken Brinsden.

Atlas Iron has accepted the state government's iron ore royalty relief program, which will deliver an up-front cash injection of $12.5 million and an expected total benefit of $23 million.

The Pilbara iron ore producer, which has previously announced plans to have its three mines back in production by the end of the year, will receive a 50 per cent refund of the royalties it pays between October last year through to September this year, providing the iron ore price stays below $90 per dry metric tonne in each quarter.

Mines and Petroleum Minister Bill Marmion said the company and its supporters had been working very hard to maintain its Pilbara operations.

“I am sure that qualifying for this temporary royalty relief will help build on the already extensive efforts to secure workers’ jobs,” he said.

Mr Marmion said it was important to note that the remaining 50 per cent of the royalty income continued a significant flow to the state.

“In the case of Atlas, the scheme no doubt reinforces the company’s capacity to keep operating, helping secure the livelihoods of hundreds of Western Australian families,” he said.

Atlas managing director Ken Brinsden said the package would significantly strengthen the company’s cash position as it continues to build towards its year-end production of 14 million to 15 million tonnes per annum of iron ore.

The royalty relief will be backdated to October last year, resulting in an up-front payment next month, and is expected to provide a total cashflow benefit of about $23 million over the relief period.

Local miner BC Iron was the first recipient of the iron ore relief package when it secured a deal to defer 50 per cent, or $8 million-$12 million, in royalties by about two years in April.

Atlas Iron shares remain suspended from trade.

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