About three weeks ago, struggling iron ore miner Atlas Iron announced that it would progressively suspend its mining operations this month due to the rapid fall in the iron ore price; however, the company reversed its decision and says it will keep two of its three mines in the Pilbara in operation.
The Pilbara iron ore producer managed to strike a deal with its major service contractors that will substantially reduce its forecast costs for this month. As a result, production will continue at the Abydos site and be resumed shortly at Wodgina.
According to the ASX Announcement, the company’s newest and most expensive operation, Mt Webber, remains under review.
“The decision to continue operating was also taken in light of the successful production and sale of Atlas’ first lump cargo from Abydos during March. Up to 65% of Abydos’ production will be in the lump product category which is priced at a premium (subject to variable iron ore market conditions), to Atlas’ Standard Fines product,” the company said in the ASX Announcement.
“Atlas will continue to work on defining contractual arrangements with key contractors in an effort to convert these initiatives into viable longer-term operating solutions as soon as possible.”
The company released its quarterly report for the three months to March, showing the dire market conditions that forced the company to consider suspending operations at its mines. The company posted $21.3 million negative cash flow.
Atlas also announced that its shares will remain in suspension and that it expects to be cash flow-positive in May.