ATLAS' s consolidation plans give the iron ore hopeful a boost.
Atlas Iron (AGO)
Analyst: Trent Barnett, Hartleys
Recommendation: Buy
Price target: $5.48
Thursday' s close: $3.73
Reason: Larger production target, better chance of meeting it
Comments: Atlas has announced a " consolidation of the iron ore assets in the southeast Pilbara " via a friendly transaction with FerrAus. The transaction, if completed, can allow Atlas to reach 42 million tonnes per annum production by end 2016 by adding resources which in turn improve the economics of the required infrastructure. We have increased our base case valuation for $4.31 (from $4.19) which assumes rail infrastructure is funded on balance sheet. We retain our " buy " and have a $5.48 twelve month price target. One risk is our assumption that Atlas gets control of FerrAus.
AGO Price at posting:
$3.71 Sentiment: None Disclosure: Held
