27/07/2016 - 12:24

June boost for Atlas

27/07/2016 - 12:24

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Shares in miner Atlas Iron were up 10 per cent today after the company reported cash generation of $30 million after interest and profit sharing for the June quarter.

Atlas Iron founder David Flanagan will finish as managing director on 5 August

Shares in miner Atlas Iron were up 10 per cent today after the company reported cash generation of $30 million after interest and profit sharing for the June quarter.

Atlas shipped 3.7 million tonnes of iron ore at an average sale price of $57 per tonne, freight cost included, during the three-month period.

That represented a small fall in shipping figures from 3.9mt in March, although the sale price was 7.5 per cent higher than the average of $53/t realised in that period.

Cash costs were steady at $49, a number that includes royalties, freight, administration, exploration and interest, but not depreciation or one-off restructuring costs.

Atlas also has a profit sharing arrangement with its contractors, including trucking company McAleese Group, which take a share of profits in an arrangement agreed last year to reduce the company’s costs as iron ore prices collapsed.

The company also announced yesterday that former Atlantic chief executive Daniel Harris has been appointed interim managing director, and that David Flanagan will leave early on 5 August.

Mr Harris will revert to being a non-executive director once a permanent replacement is found.

Mr Harris will be paid $66,667 per month, plus superannuation and "reasonable" allowances for housing, motor vehicle and airfare expenses. 

During the quarter, there was some good news from the state government, which extended its discount on charges for usage of Utah Point port facility in Port Hedland, while Atlas got on board the growing lithium trend by identifying some prospects for the commodity on its tenements.

A further move was a restructure of Atlas’s debts, which were lowered in net terms from $257 million to $109 million, with lenders now holding about 70 per cent of issued shares and options in the company.

That was followed by the replacement of Cheryl Edwardes as chairman by turnaround manager Eugene Davis.

Mr Flanagan said June quarter performance was excellent and that it, combined with the debt restructure, had put the company on a sound footing.

“The business has achieved significant cost and debt reductions over a number of months and this is now leading to strong operating margins,” he said.

“We generated $30 million from our operations over the quarter after interest payments and our contractor profit sharing obligations.

“It’s now about consolidating that improved performance and delivering value for shareholders.”

Atlas shares traded at 1.1 cents each at the time of writing.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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