At­las in bid to re­place two mines

Pilbara News - - News -

At­las Iron is on a tight sched­ule to pro­duce op­tions to re­place two of its nearly ex­hausted Pil­bara iron ore mines, but in­terim boss Daniel Har­ris says he be­lieves the com­pany will keep gen­er­at­ing enough cash to meet debt covenants.

At­las’ Aby­dos and Wodg­ina mines are due to close in the se­cond half of next year, strip­ping out about nine mil­lion tonnes a year of production, or about 55 per cent of its an­nual out­put, and po­ten­tially leav­ing the com­pany with only one op­er­at­ing mine at Mt Web­ber.

At­las’ debt covenants re­quire it to hold at least $35 mil­lion in cash at the end of each month.

Mr Har­ris con­firmed it was im­por­tant a re­place­ment op­er­a­tion was de­vel­oped “within a rea­son­able time frame” if the com­pany was to main­tain its cash po­si­tion as Aby­dos and Wodg­ina wound down.

The com­pany was in no im­me­di­ate danger of breach­ing covenants but needed to find re­place­ment tonnes to main­tain production and cash flow.

At­las held $95 mil­lion at the end of Septem­ber after gen­er­at­ing $24 mil­lion cash from its operations in the past quar­ter as the iron ore price rose. It paid out $15 mil­lion to its lenders last month.

Mr Har­ris told At­las’ an­nual share­holder meet­ing yes­ter­day the com­pany be­lieved it could lift Mt Web­ber production by al­most one mil­lion tonnes a year to a 7.8mtpa run-rate by the se­cond half of next year and have a new 4mtpa mine at nearby Cor­runna Downs ready to go by the end of March 2018.

Fi­nal fea­si­bil­ity stud­ies for Cor­runna Downs are due by the end of next month, he said. At­las was tar­get­ing a 4mtpa mine at a cost of be­tween $40 mil­lion and $50 mil­lion.

Mr Har­ris said on the side­lines of the meet­ing that Cor­runa Downs, 240km from Port Hed­land, would need a $US50-a-tonne iron ore price to be vi­able.

He said he was more bullish on iron ore prices than the Pil­bara’s ma­jors, which are tip­ping com­mod­ity prices to re­turn to lev­els closer to $US40/t next year.

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