Atlas Iron Ltd will cross a major threshold in its development when it announces an offtake deal in the next few weeks, the company says.
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The deal could be one or more arrangements to buy some or all of Atlas' ore - secured possibly by the end of the month - and it marks a milestone in the company's transition from iron ore explorer to miner and exporter.
Managing director David Flanagan said the company had been approached with about 100 offtake offers, half of which could be considered seriously.
These included proposals from about 35 Chinese majors.
"These would either be massive conglomerate trading companies or massive steel mills," Flanagan told journalists after the company's annual general meeting in Perth on Friday.
"The balance are from Malaysia, Korea, Taiwan, the Middle East and some Indian groups, who are looking to develop a project in the Pilbara that they can then export into China."
A few shareholders at Friday's meeting expressed disappointment that small investors were unable to participate in a recent heavily oversubscribed rights issue that raised $100 million.
Flanagan said Atlas had tried to include as many shareholders as possible, but given volatile financial markets the best way to raise fund was through institutional investors, who had continued to buy shares.
He said the company would begin exploration drilling at its landholdings in Western Australia's mid-west region in the next few weeks.
Flanagan also said the company was on track to commence production at its Pardoo project near Port Hedland as soon as August but more likely in October.
It would start at a rate of one million tonnes per annum (Mtpa) then ramp up to 3Mtpa.
Atlas says the project is the lowest-cost iron ore mine in Australia, with a capital cost of $10 million for start-up production.
"It will cost another $15 million to upgrade Pardoo and we can make $150 million per annum," Flanagan said.
"Environmental approvals remain our critical path items but feedback from the Environmental Protection Authority is encouraging."
Atlas plans to commission its larger project, Abydos, by the end of next year.
Flanagan said it had a value comparable with WA's largest gold deposits. The pre-feasibility study for what could be a 10-year, 140 million tonne project was expected to be completed by July.
At an initial production rate of 3Mtpa, the Abydos project was expected to produce a cashflow of $155 million a year, assuming a 65 per cent increase to the 2008/09 benchmark iron ore price.
Flanagan said Atlas would sell its ore through contract sales and up to 60 per cent in spot sales.
Source: AAP NewsWire
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