PERTH (miningweekly.com) - Iron-ore miner Atlas Iron has warned shareholders that it would book a noncash impairment of A$258-million for the six months to December, attributed to deferred minerals resource rent tax and income tax.
The miner said that the impairment followed a review of the carrying value of select, undeveloped, Horizon 1 and 2 exploration project areas, as well as noncore tenements.
The impairment was a consequence of the accounting values attributed to Atlas' exploration assets, arising from the higher price of Atlas’ shares used as a consideration when several of the tenements were acquired as part of the four mergers and takeovers that Atlas completed between 2009 and 2011.
“Atlas was able to capitalise on the strength of its share price over time to acquire what are highly strategic assets, which are expected to play a key role in its growth over the coming years,” said MD Ken Brinsden.
He added that Atlas believed that the impairment charge would position the company’s balance sheet favourably to withstand any future iron-ore price volatility.
“Atlas has started four mines in four years, with more growth to come. The company is well positioned financially with A$423-million cash on hand at the end of December, and undrawn financing facilities of A$50-million to complete its Horizon 1 development objectives,” Brinsden said.
Atlas was also expanding into a more robust iron-ore price environment, and was expected to generate substantial growing cash flows as it executed its Horizon 1 and 2 strategy, Brinsden said.
Atlas’ share price dropped by 5.95% on news of the impairment, with shares trading at a low of A$1.65 on Wednesday.