Atlas shrugs off poor weather, forecasts further production...

Atlas shrugs off poor weather, forecasts further production growth by: Sarah-Jane Tasker From:

The Australian July 24, 2013 1:47PM

ATLAS Iron has increased its production, expanded its cashflow and beefed up its resources and despite market "noise" continues to enjoy strong support from its Chinese customers, managing director Ken Brinsden has outlined in the miner's quarterly report.

The Pilbara iron ore producer today revealed it had increased shipping volumes 16 per cent during the June quarter and expected to lift production further this financial year.

Atlas also highlighted that it received net cash flows from operating activities of $62 million excluding working capital adjustments during last financial year, while capital operating costs were around $49-$50 a tonne, which was in its guidance range.

Mr Brinsden said the company had shown a strong spirit over the quarter as it was faced with unseasonably wet weather, with the wettest June for 70-odd years recorded in the region.

"The team has worked hard and been able to deliver on our underlying guidance for the quarter," he said on a media call.

"It has been a period of substantial growth. What we have been able to do in the quarter is also demonstrate the strength of our logistics chain given that at different points in time over the quarter we ran the combined mine, truck fleet and shipping at rates much higher than the average would indicate for the quarter. That bodes well as we continue to expand production during the remainder of this year."

The company outlined that the average price for its iron ore fell from $US126 a tonne in the March quarter to $US107 last quarter, but the price had since recovered.

Mark Hancock, executive director of commercial and acting company secretary, said the June quarter had witnessed the continuation of volatility in the iron ore price, with large swings in pricing outcomes.

"At the back end of the quarter the price was starting to show some good growth, which continued into July," he said.

"The dollar has started to provide some relief, so that has a significant impact on Aussie dollar-dominated remuneration that we receive from the customers."

Mr Hancock said the primary drivers behind the drop-off in the early to middle part of the quarter around Chinese credit concerns and the rate of drawdown of steel inventory had both started to ease in the back end of the quarter.

Mr Brinsden added that while there was a lot of "noise" in the market and volatility in the price of the steelmaking commodity, the behaviour of its customers has not materially changed.

"That gives us some confidence that as a Pilbara miner we have a strong niche and as a result of the cashflow being generated in the business you can see we are generating very healthy margins despite people having a pessimistic demeanour about where iron ore markets are at. From our point of view we see that quite differently."