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Atlas takes another big hit

Atlas Iron managing director Ken Brinsden. Picture: Sharon Smith/The West Australian.

Atlas Iron says it will book another big write-down in its annual accounts, but says the asset impairment will not put key debt covenants at risk of breach.

Atlas said today it expects to slash the value of its Pilbara development projects by $130-$160 million.

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It will not be forced to impair the value of its three Pilbara mines, the company said, because of this month’s company-saving cost-and-profit sharing deal with its key contractors.

That deal has seen Atlas’ Abydos and Wodgina mines return to operation this month, and Atlas has said it plans to have its Mt Webber operation back up and running later this year.

Atlas’ major covenant on its $US270 million ($340.6 million) debt is a requirement for it to maintain two-to-one ratio of asset value to debt.

The company said the impairment would leave it with an asset-to-debt ratio of 2.38 to 2.45 to one, even before cash comes in from its $180 million capital raising.

Managing director Ken Brinsden said the estimated impairment result reflected the company’s improved
financial outlook in the wake of the successful collaboration agreements with key contractors across its operating mines.

“While any asset impairment is undesirable, this result speaks volumes about the positive impact the innovative collaboration agreements will have on the company’s operating mines," he said.

“The significant boost to cash flow from these cost savings and the sale of lump ore has helped to underpin thevalue of our assets and in the process ensures that we are comfortably ahead of the requirements contained in our debt covenants."

Atlas shares remain suspended from trading. They last changed hands for 12¢.