Atlas Iron shares take a beating

Atlas Iron shares fell by more than 70 per cent yesterday after the company resumed trading for the first time in three months.

As of 4.15pm (AEST) yesterday, Atlas shares were down 70 per cent at 3.6c.

Atlas went into a trading halt in April after the iron ore price dropped to $US46.60 per tonne. At the time the company announced it would cut 600 cuts and close its Pilbara mines.

Since then Atlas contractors have stepped in to help the company stay afloat, ushering in new profit-sharing agreements and cost-cutting measures which has seen the operations re-open.

Atlas also undertook capital raising during this time, but was only able to raise $87m of the $180m target.

Patersons Securities analyst Rob Brierley said the opening price was not unexpected.

"This is disappointing for the people who took up the equity raising but not surprising given the recent iron ore price weakness," Brierly said.

IG markets strategist Evan Lucas said Atlas will have a hard time regaining ground as the price of iron ore stays low, and the major miners shave more off their break-even costs.

“Atlas Iron is unsustainable… it’s very hard to see how they can compete against its major peers and the price point they’ve been averaging,” Lucas said.

“BHP said that they would be producing iron ore at $US16 a tonne and nobody else can compete with that.”

Atlas Iron has a break-even price of US$50 per dry metric tonne.

Iron ore was last trading at $US51.40 per tonne.

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