“As you may be aware, after making the difficult decision to stop mining due to the sharp fall in the iron ore price earlier this year, Atlas Iron Limited (ACN 110 396 168) has taken decisive action to significantly reduce costs and has resumed production at its three iron ore mines in WA’s Pilbara, targeting a production rate of 14-15 million tonnes per annum by the end of this year."
“The cash flow that is expected to be extracted from these mines is now underpinned by a significantly lower cost base than the one which existed before we suspended our operations in April this year."
“By taking disciplined action to reduce our overheads and working in collaboration with our key contractors, Atlas’ costs are now significantly lower than those achieved in Atlas’ historical operations."
“As a result of the innovative agreements we have struck with our contractors, and with the support of the West Australian State Government, Atlas’ break-even cost is expected to be lower than many hundreds of millions of tonnes of current iron ore production in the market."
“This major change in Atlas’ business means we can maximise the profits and cash flow we generate from our mines, while helping to provide a measure of insulation for the company against a volatile iron ore price."
“Now Atlas is implementing the next stage of its recovery strategy. This involves a capital raising to further strengthen our financial position. Detailed information about the capital raising and all of the above can be found in Atlas' prospectus dated 11 June 2015, as supplemented by the supplementary prospectus dated 6 July 2015, and I encourage you to read that in full."
“The capital raising has been priced at 5 cents per share, which represents a significant discount of 58% to the last traded price of Atlas and is significantly lower than Atlas shares have ever traded, which I think is very attractive.
“To provide investors with additional upside potential, you will receive one free attaching option, which can be exercised for 7.5 cents, for every share acquired in the capital raising."
“The raising was overwhelmingly endorsed by our shareholders at our recent general meeting, and the feedback I have had from them and potential new investors to date has been very pleasing."
“All eligible Atlas shareholders are invited to participate in the capital raising, and have a priority to do so. Other investors are also welcome to apply. The offers of securities under the capital raising are made in the prospectus dated 11 June 2015, as supplemented by the supplementary prospectus dated 6 July 2015. Investors can go to www.atlasiron.com.au to download the prospectus and the application form/s."
“The prospectus as supplemented by the supplementary prospectus describes the investment proposition in full, but importantly also describes in detail the risks and uncertainty related to an investment in Atlas and so should be considered carefully before any investment decision is made. Anyone who wishes to subscribe for securities under the capital raising will need to complete the application form/s that is in or accompanies the supplementary prospectus.
“Please also keep in mind that the offers to most eligible shareholders and the general public close at 5.00pm Perth time on Monday the 13th July 2015.”
Yours faithfully
David Flanagan
Managing Director
Atlas Iron
If you have any questions about the capital raising, please contact the Atlas shareholder hotline on 1300 723 432 (from within Australia) or +61 3 9946 4434 (from outside Australia) at any time between 9:00am and 5:00pm (Sydney time) on Monday to Friday during the period in which any of the offers under the prospectus remain open.
David Flanagan will be presenting in Sydney and Melbourne this week. To attend these presentations, for details and to register please click below, or contact [email protected] or phone (08) 9388 1474.
AGO Price at posting:
12.0¢ Sentiment: None Disclosure: Not Held
