ASX Announcement 23 December 2015

THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

ATLAS SIGNS DEBT RESTRUCTURE AGREEMENT

Atlas Iron Limited (ASX: AGO) is pleased to announce that it has signed a Restructuring Support Agreement ("RSA") with more than 75% the Term Loan B ("TLB") lenders and an amendment to its existing Syndicated Facility Agreement ("Amendment") (collectively called "the Agreements").

Under the Agreements, Atlas will make a pay down of the TLB loan in an aggregate amount of US$10 million and issue shares and options to the TLB Lenders in exchange for the TLB lenders retiring US$132 million (approx. A$183 million) of the TLB debt. On implementation of the financial restructuring contemplated by the Agreements (the "Financial Restructuring"), Atlas will have reduced its term loan debt from US$267 million (~A$371 million) to US$135 million (~A$188 million), extended the maturity date from December 2017 to

~April 2021 and reduced its cash interest expense by over 65% as result of the lower debt balance and reduced interest rate.

The TLB Lenders will be issued shares and options such that, immediately post the restructure, they will hold 70.0% of the Company's shares and options on issue. The issue of these shares and options will be subject to shareholder approval. A notice of meeting for the general meeting of shareholders is expected to be sent to shareholders in the first Quarter of 2016.

The existing Syndicated Facility Agreement will be amended to include a covenant that cash is not to fall below A$55 million on any day (less any principal and interest paid on or after 25 March 2016) during the implementation of the RSA ("Interim Covenant"). The Company currently expects to have A$85 - 95 million of cash on hand at 31 December 2015 (pre pay down of the TLB loan).

Under the Agreements, the Asset Coverage Ratio test in the existing Syndicated Facility Agreement, which is required to be next tested at 31 December 2015, has been postponed until the earlier of 30 April 2016 or ~ 45 days from termination of RSA, if the Asset Coverage Ratio test was not met on 31 December 2015.

A summary of the material terms of the Agreements is attached in Annexure 1, including the circumstances in which the Agreements may terminate. The Financial Restructuring is subject to customary regulatory and governmental approvals.

"On behalf of the Atlas Board, I would like to thank the TLB lenders and their advisors for negotiating in good faith in this time of challenging commodity prices and for agreeing to a sensible and pragmatic restructuring of the TLB debt," Atlas Managing Director David Flanagan said. "I would also like to thank the TLB lenders and their advisors, and the Atlas team including our financial and legal advisors for their hard work in completing this agreement in a timely manner."

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

Timing

The parties to the Agreements will seek to get unanimous support of the TLB lenders for the Agreements. Should this unanimous support for the Agreements be forthcoming, the Company will immediately move to calling a general meeting of shareholders to approve the issue of the share and option consideration to approximately 82 registered TLB lenders.

If unanimous support of TLB lenders is not achieved, the Financial Restructuring will be implemented via a Creditors Scheme of Arrangement. This would result in the holding of a TLB lenders creditors meeting late in first quarter of 2016 and the implementation of the Financial Restructuring early in the second quarter of 2016. Should a Creditors Scheme be required, the Company will hold a shareholder meeting to approve the issue of shares and options before the Creditors Scheme.

Contractor and Supplier Cooperation

With the significant decline in the iron ore price since October 2015, the Company has been engaged with its contractors and suppliers with a view to reducing costs, particularly if it could successfully complete a debt restructuring agreement with the TLB lenders. The Company has agreed with its contractors a number of cost reductions that are expected to lower cash costs during the implementation of the Financial Restructuring by between A$2/t and A$4/t.

"I would like to thank all the participating contractors and suppliers for agreeing to reduce their costs," Atlas Managing Director David Flanagan said. "This is of great assistance to Atlas as it works to implement the debt restructuring agreements over the next four months."

Atlas' financial advisors for the Financial Restructuring are Lazard and JP Morgan, while its legal advisors are Ashurst and Sullivan & Cromwell.

FY2016 guidance and other important considerations

Please refer to Annexures 2 to 4 for further important information about the Company and its costs, implementation of the Financial Restructuring and the potential risks associated with these matters.

Investor Enquiries:

Media Enquiries:

Read Corporate +61 8 9388 1474

Paul Armstrong +61 421 619 084

Notes:

1. All references to dollars ($) in this announcement are Australian dollars (A$) unless otherwise stated.

2. "t" in this announcement refers to wet metric tonne

3. Cash on hand at 31 December 2015 is pre pay down of the TLB loan and based on current creditor terms

ANNEXURE 1: MATERIAL TERMS OF THE AGREEMENTS

ANNEXURE 2: FY2016 GUIDANCE

FY2016 Guidance

In its September 2015 Quarterly Report released on 22 October 2015, Atlas provided the following shipping and cost guidance for FY2016, subject to the assumptions set out in that September 2015 Quarterly Report:

Please note that this FY2016 Guidance range does not take into account either the lower costs expected from Atlas' contractors and suppliers during the Financial Restructuring implementation period referred to in this announcement (Contractor and Supplier Cooperation) or the lower interest expense that is contemplated by the Financial Restructuring.

Since 22 October 2015, the Company has agreed a number of cost reductions that are expected to lower cash costs by between A$2/t and A$4/t during the implementation of the Financial Restructuring.