Photo by: Bloomberg
PERTH (miningweekly.com) – Iron-ore miner Atlas Iron reported on Tuesday that its cost-cutting measures were continuing to deliver results, with the company reducing its all-in cash costs from A$69/t to A$66/t during the three months to December.
Atlas previously announced plans to cut between A$65-million and A$90-million a year in capital costs through a range of initiatives, including productivity improvements at its operating mines in the Pilbara.
The miner at the end of last year also announced staff reductions, with about 80 positions made redundant at its head office and across its Pilbara operations.
“As fast as the iron-ore price has been falling, unfortunately, the good news is that Atlas has been able to continue to strip costs out of our business to make sure that we keep our heads above water,” said MD Ken Brinsden on a conference call on Tuesday.
Brinsden pointed out that for the full year, Atlas had not revised its all-in cash cost guidance of A$65/t; however, he noted that the company was positive that further savings could be achieved.
“We have not revised our cash cost guidance; however, it must be obvious when you hear people talking about the continuing reduction in the oil price and the pretty significant reduction that has recently occurred in sea freight, our expectations are that we will continue to materially lower our cost base.”
The declining cost base was also driven by an increase in production, with Atlas shipping 3.8-million tonnes of ore during the quarter ended December, exceeding its guidance.
As a result of the productivity increase, Brinsden said that the company had now upped its full 2015 production expectations from between 12.4-million and 13-million tonnes, to between 12.9-million and 13.5-million tonnes.
During the quarter under review, Atlas also completed construction of its Mt Webber mine, with Brinsden noting that the project came in about A$10-million below budget.
The two-stage project was expected to deliver six-million tonnes a year of iron-ore.
Meanwhile, Brinsden noted that Atlas was looking to save a further A$25-million in capital expenditure for 2015, revising the company’s planned spend from A$94-million to A$69-million.
Brinsden said that the capital spend savings would arise from a number of different avenues, including the forward spend on the remaining projects, and the deferral of a small amount of capital to the 2016 financial year.
“There have been challenging market conditions, but we have continued to stay ahead of the game by reducing our cost base, finishing the capital expenditure, and we have fantastic leverage to any improvement in both the Australian dollar price received and for the iron-ore price,” Brinsden said.