Atlas Iron has made significant cost savings in the September quarter and increased its production guidance, but lower prices have delivered only marginal profits.
Atlas Iron has made significant cost savings in the September quarter and increased its production guidance, but lower prices have delivered only marginal profits.
Atlas Iron managed to trim all in cash costs, minus interest and capital spending, to $68.90 per wet metric tonne in the quarter, down from $75 in the June quarter.
It shipped 3.1 million wet tonnes of iron ore in the September quarter, unchanged from the previous quarter.
However, the average price it received was $70.83/wmt, representing an exiguous profit, which was somewhat boosted by the falling Australian dollar.
In addition to five-year low iron ore prices, Atlas also was hit with a 10 per discount to the iron ore price because of a lower-grade product.
Atlas managing director Ken Brinsden said the reduction in costs across the business showed Atlas's ability to respond to changing market conditions.
"The cost reductions, together with continued strong results from operations, will ensure Atlas remains competitive and can take advantage of iron ore price increases as they emerge," he said.
In a statement, Atlas said it had a continual focus on cost management, cost reduction initiatives and reliable production.
It has revised down its predicted all in cash costs to $65 to $70/wmt over FY2015.
It also expects to save between $65 million to $90 million per year as it slashes capital expenditure for the 2015 year from $125 million to $94 million.
Atlas Iron increased its production target to 12.4mt to 13mt for fiscal 2015, up from its previous guidance of 12.2mt to 12.8mt.
Its port and rail expansion plans are continuing slowly.
Atlas said discussions around gaining access to a third-party rail network were continuing and it was finalising lease arrangements with the state in regards to its 63 per cent interest in two berths that would provide North West Infrastructure access to 50mtpa export capacity at Port Hedland.
“Confidentiality agreements are in place and commercial interests associated with the (rail) discussions prevent Atlas from elaborating further on the negotiations at this stage,” the statement said.
One of its directors, Kerry Sanderson, gave up her position at Atlas recently when she became governor of Western Australia.
Shares in Atlas were 1.9 per cent higher at 36.7 cents per share at 11:45am WST.
