Atlas Iron reveals strategy to weather storm of discounts

Atlas Iron (ASX: AGO) announced today that, despite high discounts for lower grade iron ore, it is still on track to meet its fiscal 2017-2018 shipment volume and cost guidance, which management set last August in 9 million-10 million wet tonnes, having shipped 5.2 million wet tonnes in the first-half to December 2017.

In a media statement issued Tuesday, Australia's fifth largest iron ore producer also revealed that net cash flow from operations for six months was $19 million. According to the company, the result was weighed down by the reduction in tonnes shipped following the end of scheduled mining at its Wodgina and Abydos mines combined with significant discounts for lower grade iron ore.

Given these results, the Perth-based firm said that it implemented a series of measures to generate a product that contains fewer impurities and that initial tests have been positive. "Trial shipments have performed well, with early evidence supporting Atlas’ view that this product will be priced at a premium to conventional Atlas fines. Atlas expects that the pricing premium will more than offset any increased costs associated with supplying the product,” the press release reads.

The company also explained that, supported by increased activity at its Mt Webber mine, it is aiming to lift lump production rates to over 50 per cent of all iron ore shipped before June 2018, which is higher compared with its fiscal 2017-2018 guidance of around 40 per cent.