PERTH (miningweekly.com) – Takeover target Atlas Iron has faced another tough quarter during the three months to June, with all-in sustaining costs outweighing the price for its ore.

Atlas on Thursday told shareholders that C1 cash costs for the period reached A$42/t, up from the A$41/t in the March quarter, while full cash costs remained stagnant at A$62/t.

The miner said that the C1 costs for the quarter increased as a result of increased haulage and port operating costs, which was driven by higher fuel prices.

Meanwhile, Atlas achieved an average price of A$59/t for its iron-ore, after option premiums and provisional pricing adjustments, which was in line with the price achieved during the March quarter.

Cash on hand at the end of the June quarter declined to A$56-million, from the A$64-million reported in the March quarter, with the miner also transferring its A$14-million in the reserve account to cash at hand, prior to the end of the quarter.

Atlas told shareholders that its cash position was adversely affected by negative operating margins on its iron-ore business, as well as the payment of a A$3.12-million break fee to fellow listed Mineral Resources, after a failed takeover attempt. The timing of shipments late in the month also increased working capital drawdown, the miner said.

The miner has warned shareholders of a non-cash impairment of between A$75-million and A$100-million for the 2018 financial year, due to the challenging market conditions.

Atlas on Thursday reported that it had shipped 2.1-million tonnes of ore during the June quarter, consisting of 1-million tonnes of fines and 1.1-million tonnes of lump. This compared with the 2-million tonnes shipped in the March quarter of this year.

The company has previously said that it would suspend iron-ore crushing at the Mt Dove operation, in the Pilbara, and reduce the mining rate at its Mt Webber operation to seven-million tonnes a year, on the back of challenging market conditions.

Atlas noted that it would seek to ramp-up iron-ore production with a short lead-time, if economics permitted.