Atlas Iron looks to lithium and iron ore 'crumbs' to increase export volumes
http://www.copyright link/content/dam/images/g/h/l/m/a/6/image.related.afrArticleLead.620x350.gy6bsx.png/1503982552535.jpg
Read more:
http://www.copyright link/business/...-export-volumes-20170829-gy6bsx#ixzz4r9V6TThN
Follow us:
@FinancialReview on Twitter |
financialreview on Facebook
Atlas Iron is examining opportunities to pump more volume through its Utah Point port capacity as it forecasts lower iron-ore production and higher costs in 2018.
After shipping 14.4 million tonnes in 2017, Atlas expects to ship between 9 million and 10 million tonnes this year.
Atlas' Wodgina mine was closed during 2017, and the company has deferred its Corunna Downs development due to market conditions and lengthy approval processes.
But managing director Cliff Lawrenson said Atlas hoped to pump more tonnes through Utah Point, where it has up to 13 million tonnes of capacity, by exploring
opportunities in lithium and exploiting the "crumbs that have fallen off the table" in its iron-ore landholding.
"The value driver in this company is the infrastructure corridor that we have through Utah Point and it is all about keeping that corridor at capacity," Mr Lawrenson told
The Australian Financial Review
"What we are focusing on now is filling that infrastructure corridor … we have lithium opportunities with Pilbara Minerals and others, and we have identified some smaller [iron-ore] deposits within our tenements which are not projects in their own right but they are what we call here 'stocking fillers' – so a couple of million tonnes [per annum].
"
Corunna and McPhee Creek will still be the big signature projects that are coming next, but if we can put more capacity into that pipeline for minimal capital dollars then we will do that."
Increased production
One example Atlas is already working on is increasing the rate of production at its Mt Webber mine from 7 million tonnes to 9 million tonnes a year and processing the extra tonnes at its recommissioned Mt Dove plant, for a capital cost of just $1 million.
Mr Lawrenson said the company was also looking closely at the 4 million-tonne Miralga Creek resource, which is near its other operations and about 140 kilometres from the port.
"I don't know whether we will be able to liberate tonnes from that this financial year, but if we can we will," he said.
Atlas has also inked a memorandum of understanding with lithium hopeful Pilbara Minerals, run by former Atlas boss Ken Brinsden.
Pilbara is contemplating shipping spodumene ore direct to China while it constructs the processing plant at its nearby Pilgangoora project, and has signed an agreement with Atlas which would see the iron-ore miner provide haulage, crushing and port services to achieve this.
"Obviously we are talking to other players as well," Mr Lawrenson said.
"We have had a lot of interest from our well-established iron-ore customers about lithium … mostly traders who view it as another commodity to add to their arsenal."
Price to soften
Increasing volumes through the port would help Atlas lower its costs during a year in which analysts largely expect the iron-ore price to soften from current levels at about $US77 a tonne. Atlas has guided for its "full cash costs" to increase to between $54 and $58 a tonne this year from $53 in 2017.
It came as Atlas swung back into the black with a net profit of $48 million for the 12 months to June 30, 2017, from an impairment-impacted net loss of $159 million a year earlier.
The miner ended the year with
net debt of $8.2 million, compared to $108.5 million at the end of 2016 after knocking $79 million off its Term Loan B debt during the year.
Mr Lawrenson said Atlas had commenced talks about new debt facilities which could allow it early retirement of the Term Loan B debt – which nearly pushed it to the wall
when iron ore plummeted in 2015.
"In my mind, we should end up with more of a working capital-style facility that we can access if and when we need it," he said.
In a year where there was "enormous volatility" in the iron-ore price, Mr Lawrenson said Atlas orchestrated a strong turnaround that demonstrated the business' viability, even at lower prices.
"We have formed a base from which we can move forward now," he said.
