Atlas Iron (ASX:AGO) announced today that it had recorded stronger margins in the month of August on the back of increased realised iron or prices. Atlas also advises that it achieved its targeted production rate of 14-15Mtpa in August, four months ahead of schedule, and expects to sustain this production level.
The company achieved full cash costs of $56.52 per wet metric tonne (WMT) in August compared to $66 per WMT in the June quarter. The company’s average realised sale price for August was $61 per WMT. Atlas managed to ship 1.18 million WMT in August, compared to 0.85 million WMT in July, up 33 per cent.
Managing Director, David Flanagan commented, “Atlas is in an increasingly strong position with positive cashflow, improved costs and rising production. We completed a complicated production ramp up ahead of schedule while reducing costs. The team is doing an outstanding job.”
Iron ore prices are currently around $57 per tonne and have recovered somewhat after hitting a 10 year low of $44.10 in July this year.
Mr Flanagan has stated the there is a good chance that prices will continue to rise.
"There's opportunity for more mines to close and there's also opportunity for a buying rally leading into December," he told Fairfax.
"We're seeing constant declines in stockpiles in China, and that tells me that there's not an oversupply in iron ore. People need to basically restock."
The last twelve months has seen the company’s share price decline 94 per cent as iron ore prices have suffered. Atlas entered a voluntary suspension on the ASX in April this year, as the company carried out an extensive review of its operations, financial outlook, asset sale opportunities and capital structure in light of the rapidly falling iron ore price. Trading was reinstated in July and it’s share price dropped 70 per cent on the opening. Following today’s production update, Atlas’ share price gained 6.45 per cent to 3.3 cents, as the company regains some strength from the increase in iron ore prices.