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Atlas Iron responds to changing market with accelerated cost-savings plan

Atlas Iron responds to changing market with accelerated cost-savings plan

Photo by Bloomberg

23rd October 2014

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – Iron-ore miner Atlas Iron on Thursday said its expected its cost savings for 2015 to be higher than previously thought, as the company’s cash-cost initiatives surged during the three months to September.

Atlas on Thursday told shareholders that all-in costs for the September quarter had reached A$68.90/t, compared with the A$75/t achieved in the June quarter of this year, while the current financial year’s cost guidance had been estimated at between A$68/t and A$73/t.

However, the miner noted that in light of the accelerated success in reducing costs, Atlas was now targeting all-in cash costs of between A$65/t and A$70/t for the 2015 financial year, down from the initial target of between A$68/t and A$73/t.

As a result of the cost improvement programme, the iron-ore miner had widened its expected savings to between A$65-million and A$90-million a year, as opposed to the previously estimated A$50-million to A$80-million, as announced in July.

“The same expertise that has delivered new mines and production growth in previous years is now intensely focused on removing costs from the business, as these significant savings demonstrate,” said Atlas MD Ken Brinsden.

“This lower cost base presents a strong platform for our existing Pilbara production in testing markets, and will deliver increased margins when iron-ore markets improve.”

The cost saving measures were being achieved through a range of initiatives, including productivity improvements at the company’s operations.

The miner has also lowered its forecast capital expenditure for 2015 by about A$31-million, from A$125-million to A$94-million.

“The material reduction in cost across the business highlights Atlas’ 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,” Brinsden said.

During the three months to September, Atlas shipped 3.1-million tonnes of product, including three-million tonnes of standard fines.

Brinsden noted that the 12-million-tonne production rate achieved during the previous quarter was maintained in the three months to September.

Production guidance for 2015 has also been upwardly revised from the previous 12.2-million to 12.8-million tonnes, to between 12.4-million and 13-million tonnes. This revised production guidance would include an increase in the higher-grade standard fines, which would contribute between 12.3-million and 12.8-million tonnes.

In the event that market conditions improved for the value fines product, there could be a potential opportunity to further increase production.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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