ASX Announcement 5 December 2014
C o s t R e d u c t i o n P r o g r a m m e a n d O p e r a t i o n s U p d a t e
Key Points
Total workforce reduced by approximately 80 staff across Atlas' operating sites and Perth office
Measures forecast to generate annualised savings of approximately A$15M
Once-off restructuring costs of A$3-3.5M
Production guidance remains unchanged, however targeting the upper end of 12.4M - 13.0M wmt shipped for FY15, comprising 12.3M - 12.8M wmt Standard Fines and 0.1M - 0.2M wmt Value Fines
Record 1.4 million tonnes shipped (wet) during October, 2.54 million tonnes shipped (wet) qtr-to-date
All-in cash costs+ of AUD$67/wmt CFR China during October
Further downward revision of cost guidance for FY15, now AUD$64-68/wmt CFR China, targeting the lower end of that range
Increased annualised cost reduction target of A$75M-$100M by 30 June 2015
Atlas has exceeded its targets on cost savings both in term of pace and scale year-to-date. Further material cost saving initiatives underway
Further diversification of sales destinations, including West Coast India and South Korea
Atlas Iron Limited (ASX: AGO) has further reviewed its organisational structure in light of current market conditions, and announces the following key changes:
- Approximately 30 roles redundant across Pilbara operations; and
- Approximately 50 roles redundant from the Perth office.
The Company will incur once-off restructuring costs of approximately A$3.5M. Annualised savings from this organisation restructure are approximately A$15M.
The reduction in the workforce will not impact Atlas' current production levels, nor its FY15 production guidance.
Atlas Managing Director Ken Brinsden said: "The job losses were an inevitable result of the sharp falls in the iron ore price and ensures that Atlas maintains a competitive cost base reflecting the current market conditions. We regret to see many good people leave our business. However these changes are necessary and will help ensure our longer term position in the market. Cost savings and strong productivity through our operations are delivering great results."
Cost Saving Update
As a result of today's announcement and the speed and success in delivering cost reduction outcomes to date, Atlas has updated it's annualised cost saving target to A$75M-$100M by 30 June 2015. Furthermore, Atlas is pleased to announce a further downward revision in its guidance for FY15 all-in cash cost+ target to A$64-$68/wmt CFR China, targeting the lower end of that range.
Iron Ore Sales
Atlas continues to diversify its customer base, with sales in the December quarter to include the Company's first shipments to South Korea and West Coast India, along with its first mini cape vessel to East Coast India, which follows a number of previous Panamax size shipments to that region.
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
These new markets supplement Atlas' well established China presence and are indicative of diverse and generally strong demand.
Directors
As announced on 2 December 2014, the Directors (inclusive of the Managing Director) have offered to reduce their remuneration by 15 per cent, effective 1 December 2014 as part of the Company's cost saving initiatives. The number of Atlas Directors has also reduced from 9 to 6.
Note: Actual cost outcomes for the month of October are derived from unaudited management accounts.
+ 'all-in cash costs' includes C1 production costs, royalties, freight, corporate and administration, expensed exploration and evaluation but excludes interest expense and capital expenditure.
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
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