PERTH (miningweekly.com) – Iron-ore miner Atlas Iron on Friday revealed plans to cut back operating costs in an effort to keep its Pilbara mines afloat.

Atlas in April announced plans to progressively suspend mining operations in the Pilbara as the iron-ore price crashed. However, the miner later announced that operations at Abydos and Wodgina would continue during May as Atlas worked to reduce costs.

The iron-ore miner on Friday announced that it had executed agreements with its key contractors at Abydos and Wodgina, which would deliver a break-even price equal to the benchmark 62% iron price of around $50/t, based on full cash costs. This was compared with the current benchmark price of around $60/t.

Under the collaboration agreements, the contractors could receive an uplift in their rates as the iron-ore price increased, and would receive a total of 25% of applicable positive net operating cash flows.

Mining had already resumed at the Abydos operation, and openpit operations at Wodgina were expected to restart next week. The two operations were expected to deliver a combined nine-million tonnes a year of production.

Atlas said on Friday that the Mount Webber mine was expected to restart shipping operations during the September quarter, at a targeted rate of six-million tonnes a year, increasing Atlas’s combined production to between 14-million and 15-million tonnes a year.

Atlas chairperson David Flanagan said that the agreements were the result of widespread commitment shown to Atlas’s success and a desire to see the company prosper.

“Our production costs will be very competitive against other global supply. This will underpin our ability to generate strong cash flow which, in combination with a capital raising, will provide the company with a robust balance sheet that can withstand the sorts of iron-ore price volatility we have witnessed in recent times.

“It will also pave the way for further increases in production, enabling us to deliver strong returns to all who have played a key role in ensuring the success of an important Australian company.”

Meanwhile, Atlas on Friday also flagged a capital raising, telling shareholders that a share placement and a shareholder participation offer would be launched shortly to ensure the company’s long-term financial strength.

The capital raising would require shareholder approval, and a meeting had been scheduled for June 19.

Project house McAleese Group, which provided haulage services at Abydos and Wodgina, had already confirmed a A$14-million commitment to Atlas’s share issue, subject to the satisfaction of certain conditions.