Atlas boosts shipments, cuts costs

Atlas Iron has reported record shipments and lower costs ahead of creditor and shareholder meetings that will vote on a crucial debt-for-equity swap.

Atlas shipped 3.9 million wet metric tonnes of iron ore in the March quarter, up 7 per cent on the previous quarter, with cash costs down 9 per cent to $49/wmt.

The iron ore miner realised an average price of $53/wmt, up 4 per cent, while cash at bank fell 19 per cent to $87 million, mostly due to the timing of payments to suppliers.

“Atlas’ strategy to reduce costs in cooperation with its contractors and staff continues to deliver strong results,” Atlas managing director David Flanagan said in a statement.

The results were announced on the eve of a creditors’ meeting to vote on a plan to restructure Atlas’s finances, which aims to slash the miner’s debt in half to $135 million and cut annual cash interest expenses by 65 per cent.

“Atlas stands to save another $20 million a year in cash interest expenses as a result of the debt restructure and we continue to identify opportunities to reduce operating expenses,” Mr Flanagan said.

“By roughly halving our debt and amending our banking covenants, the restructure will also strengthen our balance sheet significantly, giving the company far greater certainty and resilience.

“As a result, Atlas will be better placed to endure future iron ore industry volatility and to capitalise on further gains in the iron price.”

If creditors vote in favour of the scheme tomorrow, and shareholders agree by way of a vote next week, the company’s lenders will emerge with 70 per cent ownership in the company’s shares.

An independent report put together by PPB Advisory earlier this month warned that if the scheme isn’t approved, Atlas would likely be wound up within six months and the company’s assets would be worth far less than if the scheme were to be implemented.

Atlas shares were 15 per cent higher to 2.3 cents each at 1:30pm.