Atlas Iron changes course, will continue to operate two mines
Atlas Iron has reversed its decision of three weeks ago to shut its three iron ore mines in Australia and now says it will keep running two of them, Australia’s Sky News.com reported.
The Pilbara iron ore miner said that it had substantially reduced its forecast cash costs with the support of its key contractors.
Representatives of transport group contractor McAleese and logistics firm Qube were involved in Atlas's talks with key creditors in the United States.
They might have agreed to reduce or even forego payments to keep Atlas afloat, which is in their interests given the miner's importance to their revenue.
Atlas said it would be producing higher priced lump product out of its Wodgina Mine and expected to be cash flow positive in May.
Amid low prices and over supply of iron ore, the company said three weeks ago that it was suspending operations, with the large falls in the iron ore price making Atlas unprofitable.
There are positive signals for the iron ore price, including Brazilian mining giant Vale saying it would consider mothballing 30 Mt (33 million st) of production with prices low and BHP Billiton slowing its expansion.
Atlas announced negative cash flow of $21.3 million in the March quarter, which would have been worse if not for $7.6 million in foreign currency gains.
That was due to the fact that it sold 3.4 Mt (3.7 million st) for the quarter - down from 3.8 Mt (4.2 million st) in the previous quarter - at $A50 a tonne with its all-in costs $A60.
The Abydos and Wodgina mines are due to keep running with Mt Webber's future uncertain.