28/08/2015 - 13:02

Atlas costs down, cash flow up

28/08/2015 - 13:02

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Shares in Atlas Iron surged on news it had lowered its cash costs in July by $11 per wet metric tonne, with the iron ore miner flagging more cash flow in August.

Atlas Iron managing director David Flanagan.

Shares in Atlas Iron surged on news it had lowered its cash costs in July by $11 per wet metric tonne, with the iron ore miner flagging more cash flow in August.

Atlas reduced its cash costs to $55/wmt last month with an average realised sale price of $57/wmt.

In a statement, the company said the cash margin was generated at a break-even price estimate of $US52 per tonne at an AUD exchange rate of US78.5 cents.

The news sent Atlas shares up 19 per cent to 2.5 cents at 1pm – roughly where they were sitting a week ago.

“Based on cost estimates for August and forward pricing arrangements in place for this month, we expect to generate increased cash flow for August relative to July,” the company said.

Managing director David Flanagan said the cost reductions reflected the success of contractor collaboration models in place at Atlas’s Wodgina and Abydos projects.

“The collaboration agreements are working. Costs have fallen and our mines are generating positive cash flow,” he said.

“The Mt Webber mine has achieved ramp-up in August and we look forward to shipping more tonnes and further reducing costs.”

Atlas maintained its target of exporting 14 million tonnes-15mt of iron ore per annum by December once Mt Webber is in full swing.

“The company is also executing underlying sales agreements with high-quality counterparties,” Atlas said.

“These agreements provide further certainty around shipping volumes and pricing mechanisms.”

Atlas stuck a deal with BGC Contracting in early June to reopen Mt Webber, after finalising commercial terms with road haulage contractor McAleese Group and mining services business Maca to re-open its Abydos and Wodgina mines.

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