Shares in Atlas Iron Ltd have jumped over 30 per cent on news the miner is on the verge of signing a long-term off-take deal as it sells its first iron ore shipment from its Pilbara project.
Shares in Atlas Iron Ltd have jumped over 30 per cent on news the miner is on the verge of signing a long-term off-take deal as it sells its first iron ore shipment from its Pilbara project.
The iron ore miner announced it has entered into an agreement with an unnamed medium-sized Chinese steel mill for the sale of the first shipment, with the same customer expressing a "very strong interest" in a longer arrangement.
As a result of the first sale, Atlas said it will start hauling ore from its Connie deposit from its Pardoo iron ore operation to the port of Port Hedland for shipment.
Atlas said it remained in negotiations for the balance of the Pardoo iron ore, and expects to complete these discussions in the short-term.
Shares in Atlas jumped from 81.5 cents to a high of $1.07 in early trade, before cooling toclose at 96.5c.
Atlas is targeting exports at a rate of six million tonnes per annum from 2010, growing to 12mtpa by 2012.
The company is cashed-up, with $100 million cash in the bank and zero debt.
Below is the announcement:
Atlas Iron Limited (ASX Code: AGO) is very pleased to announce that it has entered into an agreement with a
medium-sized Chinese steel mill for the sale of the first shipment of iron ore from the Connie Deposit at its
100%-owned Pardoo DSO Project. As a result, Atlas will immediately commence hauling ore to the port of
Port Hedland for shipment.
Mining is currently underway at the Bobby and Connie deposits at the Pardoo Iron Ore Project, located 75
kilometres by road from Port Hedland, in the Pilbara of Western Australia. Connie is a lower grade "startup
deposit". Its low strip ratios, homogenous ore character and proximity to infrastructure provided the best
opportunity to meet our shipping deadline within 8 weeks of final approval to mine.
"The Atlas marketing team comprising Mark Hancock, Daniel Taylor and with input from Warwick Davies have
done a brilliant job in a challenging environment." commented Atlas Managing Director, David Flanagan.
"This is our first shipment and we are very much looking forward to developing a long-term, win-win
relationship with our first customer."
"To take Pardoo from concept to discovery, to resources, then reserves, through the permitting phase, into
commissioning and now on track for export in a little over three years is a terrific achievement."
In line with normal commercial terms, letters of credit are expected to be put in place within five business days
and Atlas remains on track to achieve its first shipment through Port Hedland in the first week of December
2008.
Our first customer has expressed a very strong interest in a long term off-take agreement. Off-take
negotiations for the balance of the Pardoo iron ore are ongoing and the Company expects to complete and
disclose further contracts in the short term.
