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Western Australia extends helping hand to Atlas

Western Australia extends helping hand to Atlas

Photo by Bloomberg

22nd May 2015

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – The Western Australian government on Friday extended a helping hand to struggling iron-ore miner Atlas, with Mines and Petroleum Minister Bill Marmion announcing that he had extended the government’s royalty assistance programme to the miner.

Atlas would receive support in the form of a 50% rebate on eligible haematite iron-ore royalties for up to 12 months, subject to the ore price remaining below an average of A$90/t over the period.

The company was only the second miner to be extended the offer, following in the footsteps of junior BC Iron in April this year.

“While our relief scheme effectively defers half of a miner’s royalty obligations for a year, it’s important to note that the remaining 50% continues a significant royalty flow to the state,” the Minister said.

“In the case of Atlas, the scheme no doubt reinforces the company’s capacity to keep operating, helping secure the livelihoods of hundreds of Western Australian families,” Marmion said.

The Minister noted that the company had taken significant steps to remain operational, adding that the royalty relief would likely build on the extensive efforts already made.

Atlas MD Ken Brinsden said on Friday that as a result of the relief programme, Atlas would be able to access a cash refund of about A$12.5-million for royalties paid in the December 2014 and March 2015 quarters, upon final processing of its quarterly applications in late June.

“The state government’s royalty relief package supports an important segment of Western Australia’s iron-ore export industry, providing jobs, production diversity and, ultimately, further support for regional communities and the state,” Brinsden said.

“In conjunction with the landmark cost-cutting deal announced last week, this royalty relief significantly strengthens Atlas’s cash position as we continue to build towards our year-end production target of 14-million to 15-million tonnes a year.”

The iron-ore miner last week revealed plans to cut back on operating costs in an effort to keep its Pilbara projects operational.

Agreements were executed with its key contractors at the Abydos and Wodgina mines, which would deliver a break-even price equal to the benchmark 62% iron price of around $50/t, based on full cash costs. This was compared with the current benchmark price of around $60/t.

Under the collaboration agreements, the contractors could receive an uplift in their rates as the iron-ore price increased, and would receive a total of 25% of applicable positive net operating cash flows.

The Mt Webber mine was expected to restart shipping operations during the September quarter, at a targeted rate of six-million tonnes a year, increasing Atlas’s combined production to between 14-million and 15-million tonnes a year.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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