In an announcement to the ASX on Friday, Atlas Iron (ASX:AGO) reported that it would continue production at its Abydos project next month. Earlier in the month the company suspended mining after iron price prices fell even further. Mining will also recommence at Wodgina as soon as possible in May, with processing and haulage restarting soon afterward. Two of three suspended mines will continue production after iron ore prices recovered significantly in April. The decision to continue the production operations is due to a significant reduction of forecasted cash costs at the mines. The cost reductions were achieved with the help of the company’s key service providers. Atlas said it would continue to work on defining contractual arrangements with key contractors now that contracting initiatives are economically viable again.
Part of the decision to resume production was due to the successful production and sale of the company’s first lump cargo from Abydos last month. Up to 65 per cent of Abydos’ production will be in lump production and will be priced at a premium subject to variable iron ore market conditions. Atlas said it expects to be cash flow-positive in May due to its new operating model combined with a positive pricing momentum. The company will continue to monitor its operations in the Mt Webber mine for a potential reopening. Shares of the company have been suspended from trading on Friday. It’s last trading price came in at 12c per share. AGO has fallen over 86 per cent in the last 12 months and 27.27 per cent so far this year.
Author: Imran Valibhoy
May 01, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.
Author: Simon Herrmann
May 01, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.