JOHANNESBURG (miningweekly.com) - Iron-ore producer Atlas Iron has repaid a further A$20-million of its debt, as the ASX-listed company continues its strategy of repositioning the business by reducing debt, growing its iron-ore business through the Utah Point and diversifying beyond iron-ore.
Atlas reported on Monday that the company's lenders had agreed to ease loan covenants, including reducing the minimum cash balance requirement at the end of each month from A$35-million to A$15-million.
"Following this repayment, we will have reduced our debt from more than A$180-million in June 2016 to less than A$85-million - cutting our interest cost by about A$8-million a year," MD Cliff Lawrenson said.
"After evaluating other financing alternatives, we concluded that a staged repayment of the term loan is the best option for the company to preserve liquidity while strengthening our balance sheet. We will continue to evaluate financing alternatives on an ongoing basis," he added.
Atlas believed the stronger balance sheet would allow the miner to face volatility in the iron-ore market with increased confidence.
Atlas shipped 2.2-million tonnes for the December 2017 quarter, comprising 1.1-million tonnes of standard fines and 1.1-million tonnes of Atlas lump.
The miner further said that despite its operating results reflecting the impact of the significant discounts being applied to lower grade iron-ore, it had managed to restrict its operating cash deficit to $1.2-million for the quarter, retaining a cash surplus over its term loan balance.
"We have implemented initiatives designed to improve the quality of the product in order to increase Atlas' received price. Trial shipments are under way and we look forward to updating shareholders after feedback from our customers," Lawrenson noted.
Meanwhile, Atlas reported that its exploration programmes demonstrated the company's ongoing efforts to diversify.
A recently completed detailed on-ground geological reconnaissance programme across the Pancho lithium and copper project, in the Pilbara, has investigated 16 desktop targets, while two additional targets were identified in the field, showing several potential lithium/caesium/tantalum (LCT) pegmatites.
The drilling programme over an undercover geophysical target near Miralga Creek has also intersected disseminated and semi-massive sulphides that may indicate the presence of volcanic-hosted massive sulphide-style copper mineralisation.
Analytical results from surface rock chip sampling show several of the targets have geochemistry that confirms they are LCT style pegmatites that have the potential to host lithium enrichment. "Compilation of these results along with other information gathered in the field has enabled us to define a specific zone of focus for the next stage of exploration work," the company stated.
Atlas now plans to conduct a mobile metal ion soil sampling programme across the identified hot zone. Coupled with additional detailed mineralogical studies, this process will enable Atlas to further refine targeting for lithium enrichment below surface.