Atlas Iron cut spending amid iron ore price pain

Atlas Iron will cut back on capital spending as the company revealed it was selling iron ore at a loss.

The company shipped 3.8 million tonnes in the December quarter, but the average price it saw for each tonne was a dollar less than its all-in cash costs of $US67 per wet-metric-tonne.

The company said it has already worked to cut costs and a further $25 million will be targeted this year to bring capex down to $69 million tonnes.

“Atlas’ successful focus on cost reduction has ensured the company finished the quarter with a robust cash balance of $169m, despite the challenging market conditions, and now has minimal further capital expenditure requirements,” managing director Ken Brinsden said.

“At the same time, operations are exceeding our production guidance and we are strongly leveraged to any uptick in the Australian dollar price of iron ore.”

Brinsden said Atlas’ continuing "hard work, innovation and the ongoing co-operation of its suppliers and contractors", combined with the lower Australian dollar, lower oil prices and falling ocean freight rates would help to boost cash flow in the current half.

The company is also eligible for the newly announced royalty relief initiative flagged by the West Australian government and said it is in discussions to secure the rebate.

In September the miner was forced to cut jobs in response to the falling price of iron ore.

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