Atlas wins $12m in royalty relief
Atlas Iron received some more good news today with the State Government agreeing to $12 million in royalty relief for the embattled junior iron ore miner.
Atlas is the second WA mining company, after BC Iron last month, to qualify for relief as it restructures operations to readjust to a dramatically lower iron ore price.
Mines and Petroleum Minister Bill Marmion said Atlas Iron would receive a 50 per cent rebate on eligible hematite iron ore royalties for up to 12 months, subject to the ore price staying below an average of $90 per tonne over the period.
“This company and its supporters have been working very hard to maintain its Pilbara operations,” he said.
“I am sure that qualifying for this temporary royalty relief will help build on the already extensive efforts to secure workers’ jobs.”
At the end of the assistance period, rebates will be fully repayable within two years, with repayments to be made in accordance with a schedule negotiated between the producers and the Minister.
Atlas managing director Ken Brinsden thanked the Government for providing the relief and acknowledging the important roles smaller mining companies played in the State’s economy.
“In conjunction with the landmark cost-cutting deal announced last week, this royalty relief significantly strengthens Atlas’ cash position as we continue to build towards our year-end production target of 14-15Mtpa,” he said.
Last week, Atlas announced an industry-first profit sharing deal with its key contractors that should save 700 jobs by preventing the collapse of the Pilbara’s fourth-biggest iron ore miner.
Atlas said it had already paid about $220 million in royalties since it began iron shipping ore in 2008.
Mr Marmion said decisions to enter into royalty rebate agreements were based on detailed financial analysis, including a company’s capacity to make repayments.
“Assistance is provided only after individual companies sign a funding agreement, which provides extensive protection for the State,” he said.
Requests for royalty relief are assessed by the Department of Mines and Petroleum on a case-by-case basis, overseen by an independent probity auditor, and approved by the Minister.
Iron ore was trading at $US57.91 a tonne at the Chinese port of Qingdao yesterday.
Atlas shares are still in suspension having last changed hands for 12 cents. The company's shares are expected to resume trading once its beds down an expected $180 million capital raising.
