latest recommendation report ( high risk)

So Atlas Has $350 odd million no dept and is seen as a high risk
So those miners that are in dept, still exploring not producing get a better rap than a solid company?


From Morningstar

Valuation: $2.70
Undervalued but there is time to purchase
Last updated:
17/07/12
Model review and valuation change
Investment rating

Atlas iron is an iron ore producer and explorer based in the Pilbara, Western Australia. Two operational mines, Pardoo and Wodgina produce 6Mt annually of direct shipping ore. Production of 12Mtpa is targeted during 2014. Near term development projects include the Abydos and Mt Webber mines. Three scrip mergers have resulted in a large tenement base. Port facilities constructed at Port Headland alleviate infrastructure concerns and provide up to 15Mtpa of capacity. An excellent track record of resource growth and low capex requirement instils confidence. Single commodity exposure dependent upon Chinese demand increases risk. The shares are only suitable for risk tolerant investors.
Event

We have reviewed Atlas Iron financial model resulting in an increase to our cost of equity from 10% to 12% to more accurately reflect investment risk.


Impact

As a high risk investment, our Atlas iron valuation is sensitive to financial model changes. The increase to our cost of equity assumption reduces our fair value estimate from AUD 3.40 a share to AUD 2.70 a share.


Recommendation impact (last updated: 17/07/2012)