ASX Announcement 24 February 2015
Atlas further reduces operating costs
Cost reduction accelerates, delivering further substantial savings in the current half
Key Points
Atlas is continuing to substantially reduce its operating costs for FY15
Lowering of all-in cash cost* guidance, now down to A$60-$63/WMT CFR for second half of FY15, compared to $67.29 for H1 FY15
All-in cash costs* for the month of January^ were A$60.80/WMT CFR
Lowering of C1 cash cost guidance, now down to A$42-$45/WMT FOB for second half of FY15, compared to $46.94 for H1 FY15
Cost reduction program now targeting total annualised savings+ of A$90-120M by June 2015 (previously A$75-100M)
Upgrade of second-half shipping guidance to 6.8 - 7.2 million (WMT)
Atlas Iron Limited (ASX: AGO) is pleased to advise that it continues to substantially reduce its production costs. All- in cash costs* are now forecast to be A$60-63/WMT in the six months to 30 June 2015 compared with A$67.29/WMT in the first half of this financial year. Atlas aims to be at the lower end of this revised range by June,
2015. This anticipated reduction in production cost is already evident, with all-in cash costs* for the month of
January 2015^ being A$60.80/WMT CFR.
Atlas' guidance for C1 cash costs in the six months to June 30, 2015 is A$42-45/WMT FOB compared with
A$46.94 in the first half of this financial year. Again, Atlas expects to be at the lower end of this range by June,
2015.
Atlas has continued to cut costs significantly and now expects to book annualised savings+ of A$90-120 million by June this year, compared with the previous financial year. This represents a substantial increase from the previous savings target of A$75-100 million and arises as a result of the continued cost reduction focus from the Atlas team and our suppliers.
"We have and will continue to be unrelenting in our focus on reducing costs, with the goal of making us clearly the lowest cost junior iron ore producer in Australia while targeting to be among the lowest cost producers globally outside of the big four," Mr Brinsden said.
"Our track record in cost reduction over the past 12 months speaks for itself.
"As a result, we are we are well placed to benefit from an increase in the Australian dollar iron ore price."
Mr Brinsden said that the cost-cutting program was being undertaken in parallel with the Company's strong focus on maintaining its status as a consistent and growing producer.
"Our results demonstrate that we can achieve substantial cost savings while maintaining our strong production
performance," he said.
Investor Enquiries:
Atlas Iron +61 8 6228 8000
Ken Brinsden, Managing Director
Media Enquiries:
Read Corporate +61 8 9388 1474
Paul Armstrong +61 421 619 084
Atlas Iron Limited
ABN 63 110 396 168
Raine Square, Level 18
300 Murray Street Perth WA 6000
PO Box 7071
Cloisters Square Perth WA 6850
P: +61 8 6228 8000
F: +61 8 6228 8999
E: [email protected]
W: www.atlasiron.com.au
WMT - Wet Metric Tonnes
+ annualised savings as compared to FY14 production costs
* 'all-in cash costs' includes C1 production costs, royalties, freight, corporate and administration, expensed exploration and evaluation but excludes interest expense, capital expenditure and one-off restructuring costs
^all-in cash costs for the month of January are derived from unaudited January 2015 management accounts
ADDITIONAL INFORMATION
The following table shows Atlas' FY14 and H1 FY15 costs, compared to the guidance for H2FY15
H2 FY15
FY14 H1 FY15
Guidance
|
All-in cash costs (A$WMT CFR China)
|
$76.8
|
$67
|
$60 - $63
|
C1 cash costs (A$WMT FOB)
|
$51.0
|
$47
|
$42 - $45
|
The below graph depicts Atlas' successful cost reduction program, incorporating the guidance range for H2 FY15.
2