Hopes rise for Atlas Iron

UPDATE 11.15am: The short term iron ore price recovery in April has given Atlas Iron a thin hope of survival, with the company saying it has held off on plans to close its remaining Pilbara mines.

Atlas said this morning the iron ore price improvement late in April, along with agreement from some key contractors to reduce the rates they charge, meant it had some hope of keeping its Abydos mine running. Atlas said it may also be able to return to mining at Wodgina in May.

"The decision to continue operating these projects, rather than suspending production in April as previously announced is the result of a substantial reduction in forecast cash costs for May at these mines," the company said in a statement.

"The cost reductions were achieved with the support of Atlas key service providers."

Atlas said it would continue to work on defining contractual arrangements with key contractors in an effort to convert these initiatives into viable longer-term operating solutions as soon as possible.

The company shut down its largest and most expensive mine, Mt Webber, two weeks ago, but said today it was continuing to assess its options for the mine.

"The company is solvent and remains in compliance with its debt instruments," Atlas said.

However Atlas burned through almost $44 million during the March quarter, highlighting the concerns of its secured lenders who are owed more than $330 million by the end of next year.

The company finished the March quarter with $125.5 million in cash, down from $169.4 million at the end of December.

Atlas shares remain suspended, having last traded for 12c.