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.