JOHANNESBURG (miningweekly.com) – Despite record shipments, Perth-based iron-ore miner Atlas Iron remained in the red in the 2016 financial year, owing to low iron-ore prices. However, the miner narrowed its full-year loss to A$159-million, from A$1.38-billion in 2015, as cost reductions offset price declines.
Atlas increased its exports by 19% to a record 14.5-million tonnes and managed a 9% revenue increase to A$786-million tonnes. The company pointed out on Wednesday that the revenue increase reflected the additional lump tonnes sold, which attract a premium price.
Atlas achieved an average realised price of A$55.47 a wet metric tonne (wmt) in 2016, compared with A$59.95/wmt in 2015, and realised an average iron-ore 62% iron price of $51.37 a dry metric tonne (dmt), from $71.39/dmt in 2015.
However, the mining company reported that it had managed to match or better the rate of decline experienced in the price by generating savings. Its C1 cash costs were reduced by one-quarter to A$34.39/wmt, down from A$45.74/wmt in 2015.
“Atlas entered into new commercial relationships with key contractors and, with the support of the Western Australian government, targeted a substantially lower cost base in a lower price iron-ore environment to ensure a more sustainable business,” the company explained in its year ended June 30 financial report.
Atlas has also used hedging products, fixed price sales contracts and shorter dated pricing periods to reduce its exposure to price volatility.
At the end of June, Atlas had A$80.9-million cash and in July, the company raised A$46.6-million to strengthen its balance sheet.
The miner provided an ore shipment guidance of between 14-million tonnes and 15-million tonnes for the 2017 financial year, at C1 cash costs of between A$34/wmt and A$36/wmt.
Atlas will invest A$4-million to A$6-million in sustaining capital and between A$8-million and A$10-million in development capital.