Profit fall for Atlas Iron
Profit fall for Atlas Iron

Atlas Iron expects the price of iron ore to increase over the next two months as China’s demand for steel remains strong.

Despite Atlas reporting a full year loss, Atlas executive director Mark Hancock was upbeat about the company’s prospects.

"We still see demand for the product coming through quite strongly and our product is continuing to move as and when it’s available at the port,” Mr Hancock told a briefing after the Perth-based iron ore miner released its full year results today.

Mr Hancock said the recent fall in iron ore prices did not challenge previous views around a price floor supported by Chinese and global production.

"Demand in the short to medium term can’t be met at today’s pricing, so we expect pricing to firm over the next few months and then continue to be very optimistic about the pricing for 2013 as the political change completes in China,” he said.

"We’d certainly expect to see over the next two months that price starting to edge back up."

The company said it was on track to double production to 12 million tonnes of iron ore per annum by the end of next year.

Atlas Iron posted a $114.6 million loss due mainly to costs associated with its sale of some mines and takeover of another resources company.

The result, for the year to June 30, was down from a $168.6 net million profit in the previous corresponding period.

It included $48.6 million in loss from impairments on its Balla Balla and Yerecoin magnetite projects in the Pilbara, which Atlas agreed to sell in December 2011.

There was also $19.8 million in costs related to the integration of FerrAus, which Atlas Iron bought in 2011.

Underlying profit, which excludes those one-off items, was $72 million, down 59 per cent from $174 million.

Morningstar Resources analyst Gareth James said the company’s major expansion plans remained on track while the port allocation had mostly been factored into the share price.

The WA Government recently confirmed plans to allocate port space to Atlas at Port Hedland.
Mr James said the offloading the Balla Balla and Yerecoin assets was a good move due to the weaker iron ore price.

"Development would have cost a significant amount,” he said.

He said the net loss had not affected the company’s outlook and noted that cash flow after investing remained positive, up 6 per cent from the previous year at $72 million.

"It’s quite an achievement and I expect that to grow over the next year."

Atlas Iron closed down 5 cents to $1.605.

The West Australian

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