Atlas Iron increased shipping volumes 16 per cent during the June quarter and has outlined plans for continued growth, though the closure of its first mine at Pardoo will change its production profile.
Atlas said today that Pardoo, with annual production of about 1 million tonnes, was expected to move into care and maintenance from about March 2014.
This followed a redefinition of the Pardoo reserve, and withdrawal of the Floyd pit, after hydrogeology studies.
The Mt Dove mine will also wind down production at about the same time, as previously indicated.
The company said that offsetting these reductions will be the start of mining at Mt Webber, with shipping due to commence in the June 2014 quarter.
Patersons Securities said in a research note "the pressure will now be on ramping up the Mt Webber operation" to 3 million tonnes per annum.
"At this stage we envisage the June Q FY14 to be a particularly weak quarter as a gap in the production profile between the cessation of Mt Dove/Pardoo and the commencement of mining at Mt Webber is apparent," the broking firm said
Patersons said Mt Webber will not come on line meaningfully until the first quarter of FY15.
The company shipped 2.2mt in the June 2013 quarter and a total of 7.4mt in the 2012-13 financial year.
It anticipates production of between 9.8mt and 10.3mt in the 2013-14 financial year, and about 12mt in the following financial year.
The latter forecast is dependent on the Mt Webber stage 2 development proceeding, and that is subject to further environmental approvals and feasibility studies.
Atlas Iron managing director Ken Brinsden (pictured) said he was pleased with the company’s performance.
“This is a strong result, with the company continuing to expand production while meeting the quarter’s cost and shipping guidance,” Mr Brinsden said in a statement.
“This was achieved despite difficult and unseasonal weather conditions.”
In the June 2013 quarter, the average price Atlas received for its ‘standard fines’ iron ore product fell to $US107 per dry metric tonne.
It’s ‘value fines’ product, which accounted for about 15 per cent of sales, attracted a lower price of $US94 per tonne.
Its cash operating costs for the year were $49 to 50/t, in line with guidance.
The projected cost next year is $59-53/t.
Atlas currently has three mines in production, at Pardoo, Wodgina and Mt Dove.
Its fourth mine, at Abydos, is in production, with annual output of 2-3mtpa expected; haulage is due to commence in August this year.
The company has continued to invest in the development of port infrastructure at Port Hedland.
It also announced a maiden resource of 25mt (at 56.5 per cent Fe) at its Corunna Downs deposit.
Atlas shares closed up 8.9 per cent at 91 cents.
