PERTH (miningweekly.com) – Iron-ore miner Atlas Iron on Thursday reported lower cash costs for the quarter ended September, as the company’s Pilbara operations ramped up to a 14-million- to 15-million-tonne-a-year output some four months ahead of schedule.

During the quarter under review, Atlas shipped 3.3-million tonnes of ore, which was up by 72% on the 1.9-million tonnes shipped during the June quarter.

C1 cash costs for the quarter were down 22% from the A$46/t reported in the previous quarter to A$36/t, while full cash costs, including contractor cost claw-back and profit shares, were down 12% from A$66/t to A$58/t.

“Ramping up production four months ahead of schedule is a testament to the hard work of our employees and our contractors,” MD David Flanagan said on Thursday.

“These results demonstrate that Atlas is back up and running at full speed, but this time with lower costs, a stronger balance sheet and innovative arrangements with our key contractors.”

As part of its restart process, Atlas agreed to a contractor collaboration model at its Wodgina and Abydos mines, where contractors could receive an uplift in their rates as the iron-ore price increased, as well as 25% of applicable positive net operating cash flows.

“We can now begin to eye growth opportunities, though these will have to meet our key investment criteria of having both low capital and operating costs, while also generating strong cash flow,” Flanagan said.

One of these growth opportunities was the start of lump production at the Mt Webber project later this year.

Atlas would invest some A$6.5-million to modify the six-million-tonne-a-year Mt Webber plant and stockyard areas, to allow for the production of up to three-million tonnes a year of lump product.

Flanagan said testwork to date had suggested that the Mt Webber lump product would perform similarly to the lump currently being produced at the Abydos mine in terms of price and blast furnace performance. Given that the Abydos lump product was currently achieving a premium price, Flanagan had high hopes that the investment in Mt Webber would pay off.

“Mt Webber is another project that will help grow and preserve margin and that will help strengthen the business, which will get the share price up and will grow our capacity to do something about our debt,” Flanagan told a teleconference on Thursday.

In addition to the Mt Webber investment, Atlas on Thursday also announced that it would spend A$2.2-million on a prefeasibility study at its Corunna Downs project. The study would be completed by December, with first exports from Corunna targeted for 2017.

The study was expected to confirm the economics of a three- to four-million-tonne-a-year operation, producing both lump and fines product, over an initial mine-life of five to six years.

Flanagan noted that, while still at an early stage, Atlas had already entered into discussions with parties interested in contributing to the cost of developing the Corruna project.

In the meantime, Atlas had maintained its full 2016 production guidance of between 14-million and 15-million tonnes of ore shipped, at a C1 cash cost of between A$35/t and A$38/t.