Iron ore miner Atlas Iron has announced that it expects to see increased cash flow in August after it cut cash costs for its iron ore production in July to $55 per wet metric tonne.
“Based on cost estimates for August and forward pricing arrangements in place for this month, we expect to generate increased cash flow for August relative to July,” the company said in a statement.
Atlas Managing Director David Flanagan said the cost reductions reflected the success of the contractor collaboration models in place at the Company’s Wodgina and Abydos projects.
“The collaboration agreements are working. Costs have fallen and our mines are generating positive cash flow. The Mt Webber mine has achieved ramp up in August and we look forward to shipping more tonnes and further reducing costs,” Mr Flanagan said.
Two months ago, the miner resumed production at three of its Pilbara operations after it suspended operation due to falling iron ore prices in April.
Since the announcement, Atlas has re-mobilised and/or re-commissioned all mobile and fixed plant, rebuilt stocks and achieved the run-rates required to deliver significant savings.
The company has also resumed iron ore exports from Mt Webber and said that it remains on schedule to achieve a 14-15Mtpa export rate by December 2015.
“For the 6 months to December 2015, some 63% of production is currently the subject of various pricing mechanisms (including hedging products) which provide a degree of certainty around the price the Company will ultimately realise on its production during this period. The price fixing arrangements have focused on the USD iron ore price, with the majority of shipments still subject to floating AUD exchange rate,” reads the announcement.
“Consistent with the intention of the collaboration agreement with certain contractors, the Company endeavours to lock-in floor pricing for a minimum of 80% of production three months in advance for the Wodgina and Abydos projects. The Company intends to apply a hedging programme for Mt Webber in a broadly similar manner.”