Atlas Iron boosts shipments, lowers costs

PERTH (miningweekly.com) – Iron-ore miner Atlas Iron on Friday reported that December quarter production had increased by 10% on the previous quarter, while its full cash costs for the three months fell by 9%.

Atlas shipped 3.6-million tonnes of ore in the December quarter, compared with the 3.3-million tonnes in the September quarter, with full cash costs declining from A$58/t to A$54/t, including all contractor cost clawback and profit share.

A total of 3.5-million tonnes of ore was mined at Atlas’s various Western Australian assets, with more than 3.4-million tonnes of ore processed during the quarter under review.

The Wodgina mine delivered 1.52-million tonnes of ore during the quarter, with the Abydos mine contributing 829 372 t, and the Mt Webber operation 1.14-million tonnes.

Atlas MD David Flanagan told shareholders that while the iron-ore market had remained challenging going into January, the falling Australian dollar, low freight prices and further interim cost savings negotiated in December, would assist the company in remaining competitive during the completion of its debt restructure.

Flanagan said that the debt restructure agreement, which was struck during the December quarter, was an important step in making Atlas more sustainable, particularly in volatile iron-ore markets.

Atlas in December last year inked agreements with more than 75% of its term loan B (TLB) lenders, and amended its existing syndicated facility agreement.

Under the two agreements, Atlas would make a pay down of the TLB loan of some $10-million and issue shares and options to the TLB lenders in exchange for the lenders retiring $132-million of debt.

The TLB lenders would hold a combined 70% of the company’s shares and options on issue, immediately post the restructure.

The issue of these shares and options would be subject to shareholder approval. Furthermore, the existing syndicated facility agreement would be amended to include a covenant that cash was not to fall below A$55-million on any day during the implementation of the interim covenant.

On implementation of the financial restructuring, Atlas would have reduced its term loan debt from $267-million to $135-million, extended the maturity date from December 2017 to April 2021, and reduced its cash interest expense by over 65% as a result of the lower debt balance and reduced interest rate.