Atlas Iron Limited (ASX Code: AGO)
ASX RELEASE 16 MARCH 2009
ATLAS ENTERS INTO LONG TERM OFF-TAKE AGREEMENTS FOR FURTHER 50% OF PARDOO DSO
Atlas Iron Limited (ASX Code: AGO) is pleased to announce that it has entered into two new long term off-take agreements with two medium-sized Chinese steel mills. The two off-take agreements account for 50% of iron ore that will be produced from its 100%-owned Pardoo DSO Project for the three year period to 31 March 2012.
The execution of these two off-take agreements follows Atlas? maiden off-take agreement in respect of 30% of the iron ore that will be produced from Pardoo, announced in December 2008. As a result, Atlas has now entered into three off-take agreements for 80% of its Pardoo DSO product for the next 3 years. A further offtake agreement for the remaining Pardoo volumes is expected to be executed shortly.
Key terms of the two new off-take agreements are as follows:
? Price referenced to the long term benchmark, with pricing relativity achieved reflecting the strong competition to secure access to Atlas tonnage;
? An adjustment mechanism which applies only in the event that spot prices and benchmark prices materially diverge. Once activated this mechanism serves to adjust the sales price mid-way to the spot price, in order to maintain the fairness of contract pricing to both parties; and
? Ore sold on a delivered basis, with freight to be arranged by Atlas and reimbursable by the customers.
The first shipments under these off-take agreements are expected to be completed by the end of June 2009. Ore for the initial shipments under these two off-take agreements will be sourced from the Bobby and Alice deposits at the Pardoo Project, where mining is currently underway.
These off-take agreements were executed after careful evaluation of the extremely competitive bids received from trading groups and steel mills.
?The continued level of interest in Atlas? Pardoo DSO product has been very strong? commented Atlas Managing Director, David Flanagan. ?Atlas is looking forward to developing long term relationships with these two steel mills,? he added.
?Our marketing team will shortly commence negotiations with interested trading groups and steel mills for sales of product from the Company?s Abydos DSO Project.?
Background Atlas Iron Limited
Atlas is mining at its 100%-owned Pardoo Iron Ore Project, located 75 kilometres by road from Port Hedland, in the Pilbara of Western Australia and completed its first shipment of Pardoo DSO in early December 2008. Atlas is planning to export 1 million tonnes during its first 12 months of operations at the Pardoo Project, growing to 3 Mtpa following commissioning of the Utah Point port facility. When combined with additional export tonnages from Abydos, the Company is targeting exports at an annualised rate of 6 Mtpa by 2010, growing to 12 Mtpa by 2012.
For further information please contact
David Flanagan, Managing Director
Mark Hancock, Chief Financial Officer Tel: (08) 9476 7900
READ CORPORATE
Public Relations Corporate Communications
T: (+61-8) 9388-1474 | F: (+61-8) 9388-1472 | E: info@readcorporate.com.au | Web: www.readcorporate.com.au
PLEASE NOTE:
This e-mail and any attachments may contain confidential and/or privileged material and is for the intended addressee(s) only. If you are not an intended addressee, you must not use, copy, retain, disclose or distribute this information. Please notify the sender immediately by return e-mail and delete the message from your system. If you believe that this message constitutes a Commercial Electronic Message (CEM) under the Spam Act 2003 and you wish to unsubscribe please contact the originator of this message with the subject line of unsubscribe.
Note: Virus scanning is carried out on all incoming and outgoing email, but cannot be guaranteed to be timely, secure, error or virus-free. To protect against computer viruses, e-mail programs may prevent sending or receiving certain types of file attachments. If you are having problems please check your e-mail security settings to determine how attachments are handled.