Shares in Atlas Iron have risen sharply in early trade as the iron ore miner enters into a long-term off-take agreement for its Pardoo project in the Pilbara.
Shares in Atlas Iron have risen sharply in early trade as the iron ore miner enters into a long-term off-take agreement for its Pardoo project in the Pilbara.
Under the deal, the unnamed medium-sized Chinese steel mill will purchase some 30 per cent of iron ore from Pardoo over a three-year period starting from March next year.
The price for the iron ore will be referenced to the long-term benchmark price and subject to the normal iron ore market discounts for ore of the grade that Atlas will produce, the company said.
News of the landmark development sent Atlas shares up six cents to a high of 83c in early trade on an otherwise weaker day for the broader market.
Atlas said the off-take deal excludes the two shipments from the lower grade Connie deposit, with the second shipment made today.
The Chinese steel mill will buy its ore from the Bobby deposit within the Pardoo project.
Managing director David Flanagan said off-take negotiations for the balance of the Pardoo iron ore are ongoing.
The announcement is pasted below:
Atlas Iron Limited (ASX Code: AGO) is pleased to announce that it has entered into a long term off-take agreement with a medium-sized Chinese steel mill.
The agreement is based on the Free on Board (FOB) sale of approximately 30% of iron ore produced from its 100%-owned Pardoo DSO Project for the period to 31 March 2012, with the price referenced to the long term benchmark and subject to the normal iron ore market discounts for ore of the grade that Atlas will produce.
The first shipment under this long term off-take agreement is expected to be completed by the end of March 2009. Mining is currently underway at the Bobby deposit at the Pardoo Iron Ore Project, from which ore for the first shipment under this agreement will be sourced.
The agreement was executed after careful evaluation of the extremely competitive bids received both from trading groups and steel mills.
"The level of interest demonstrated in the Atlas product has been very strong, despite the challenging global economic situation" commented Atlas Managing Director, David Flanagan.
"Atlas is looking forward to developing a, win-win relationship with our first long term off-take partner and to finalising negotiations with other interested parties for the remainder of the projected Pardoo production," he added.
This arrangement excludes the two shipments from the lower grade Connie deposit announced on 3 November 2008 and today, 19 December 2008.
Off-take negotiations for the balance of the Pardoo iron ore are ongoing and the Company expects to complete and disclose further contracts in the short term.
