macquarie puts atlas on the iron ore map

Macquarie puts Atlas on the iron ore map

Sarah-Jane Tasker
From: The Australian
May 09, 2011 12:00AM



ATLAS Iron has been upgraded by Macquarie, as the Pilbara iron ore miner continues its rapid growth.

The bank upgraded the Perth-based miner to "outperform" after it made a presentation at Macquarie's Sydney conference last week.

"We believe Atlas Iron's track record of ramp-up and further capital-light growth potential position it well," analyst Martin Stulpner said in a client note.

"Atlas Iron is differentiated (from its peers) by the simplicity of its production model, taking advantage of low strip ratio mines that are located close to the port. This results in relatively low cash cost, despite the relatively cumbersome transport model of hauling ore by truck on public roads."

The miner was quickly recognised as a serious player when it led the consolidation of the smaller end of the sector, which is dominated by BHP Billiton, Rio Tinto and Fortescue Metals.


In December last year, Atlas made a friendly $828 million move on its Pilbara neighbour Giralia Resources, following a $143m takeover of Aurox Resources, which provided Atlas with extra capacity at Port Hedland's Utah Point port.

"Atlas Iron's management has shown flexibility and innovativeness in progressing the ramp-up to 6 million tonnes per annum capacity by end 2010, and positioning the business for growth," Mr Stulpner said.

"This included the acquisition of Aurox to secure port capacity. The acquisition of Giralia has matched Atlas Iron's port capacity with an increased north Pilbara resource base."

Macquarie put a 12-month price target of $4.10 on Atlas, which closed at $3.35 on Friday.