ATLAS Iron expects to further increase iron ore production from its Pilbara region operations when stage two output from the Mt Webber project begins during the current quarter. This follows the start of stage one production at Mt Webber in July.
This project is set to improve Atlas Iron’s already impressive performance which saw underlying EBITDA more than double to Aus$247.8 million during the 2013/14 financial year ending June 30 on the back of a 47% increase in iron ore shipments. The result highlights the strong cash-generating capacity of Atlas’ operations, with net operating cash flow rising 104% to $289.2 million in a subdued iron ore pricing environment.
Although the average price received was US$98.10/tonne including value fines (US$104.90/tonne FY13) the net operating cash flow for the second half of FY14 was strong at $83.3 million despite the high Australian dollar, with the average price received over the second half of US$86.29/tonne.
This enabled Atlas to finish the year with $264.2 million cash on hand even with investing $388.4 million largely in mine and infrastructure development. With Atlas planning to have completed the stage 2 expansion at Mt Webber by December 31, the company will have substantially completed its Horizon I capital expenditure program.
Production growth was driven by the ramp-up of the Abydos mine and increased output at Wodgina. With the contribution from Mt Webber, Atlas is forecasting shipments of 12.2-12.8 million tonnes this financial year with a further reduction in full-year C1 cash costs to $47-$50WMT FOB.
This reflects a host of planned savings, including a pit-to-port cost reduction program. These measures are expected to generate total savings of $50-80 million by June 2015, of which some initiatives are well under way.
Atlas’ emphasis on cost control saw C1 cash costs total $51/tonne, within the previously provided guidance range of $49-$52. All-in delivered cash costs to China were Aus$76.80/WMT, in line with the FY13 all-in cash costs of $76.40 despite increases in ore distances hauled during FY14. Further cash cost savings are anticipated.
Atlas shipped a record 10.9 million tonnes in FY14, up 47% on the 7.4 million tonnes shipped during FY13. This increased revenue by 58% to a record $1.1 billion.
Atlas managing director Ken Brinsden said the company had performed strongly in the face of lower iron ore prices. “The combination of record production and a tight focus on cost control has underpinned a substantial increase in cash generation. Our operations have met or exceeded all production and cost targets. We are also set to benefit from completion of our Horizon I investment program, which will see development investment fall to $125 million in FY15 from $372 million in FY14.”