Atlas maps out export growth BARRY FITZGERALD March 9, 2010 .
SMH
PILBARA iron ore group Atlas Iron has entered a deal on port capacity allocation with iron ore junior Aurox Resources, which is expected to give a boost to Atlas' aggressive growth plans.
Both went into a trading halt yesterday. Atlas said this was pending announcement of a ''potential material transaction'' while Aurox said its halt was pending an announcement on a ''price-sensitive transaction''.
Speculation triggered by an Indian newspaper report that the Atlas halt was related to a deal on its Ridley magnetite project was said by analysts to be wide of the mark.
Atlas has made no secret in the past of its plan eventually to offload a controlling stake in Ridley while it focused on its direct-shipping iron ore projects in the Pilbara.
Its ambitions to expand its operations in the Pilbara are limited by what access it can get to port infrastructure. It is on that point that the suggested deal with Aurox is based. Aurox recently paid a final instalment of $12.6 million for pre-paid facility charges to the port authority at Port Hedland, securing it access to 6 million tonnes of annual export port capacity from 2012, rising to 10 million tonnes of annual capacity from 2015.
Atlas provided loan funds to Aurox to make the payment. Aurox is planning a development of its Balla Balla iron ore/vanadium project but the $1.2 billion development has yet to get the go-ahead, meaning it is unlikely to use its port allocation, at least early on.
Atlas on the other hand is well positioned to be able to raise its production to take advantage of the allocation.
Separately, the North West Iron Ore Alliance - Atlas is a member - has completed a pre-feasibility study on a proposed 50 million-tonne-a-year port at Port Hedland costing $2.1 billion. It found the project had a commercial footing and could be operational by the second half of 2013.
Source: The Age
AGO Price at posting:
$2.21 Sentiment: Buy Disclosure: Held
