Photo by: Bloombeg
PERTH (miningweekly.com) – Iron-ore miner Atlas Iron has signed a new offtake agreement with an international trading group, allowing for the offtake of up to five-million tonnes a year for a two-year period.
The miner said on Thursday that the agreement was in the form of four six-month options exercisable at the customer’s election, with floating pricing referencing the 62% iron index and market-linked product quality discounts.
In addition to the ore sales agreement, Atlas also executed six new fixed-price sales contracts for lump and fines cargos in the March quarter of 2016, at an average price of $50/t. This compared favourably with the recently reported full-cash costs of A$56.52/t during August and to the March 2016 quarter index, which was currently at $48/t for 62% fines.
MD David Flanagan told shareholders that achieving fixed-priced sales at a premium to the published forward price index was a positive indicator for iron-ore demand.
“Demand for our ore is strong and that means good agreements, good prices and high-quality counterparties. The support we are getting from our customers is evidence that our ore is an important part of their product mix, and that’s good for Atlas.”
The company was also aware of other iron-ore suppliers achieving cargo sales at a premium to the index, which further supported a favourable outlook for the iron-ore market.
Atlas recently achieved its targeted production rate of between 14-million tonnes and 15-million tonnes a year, after restarting all three of its Pilbara operations earlier this year.