SYDNEY, May 15 (Reuters) - Australia’s Atlas Iron said on Friday it will resume full mining operations, surviving near bankruptcy after a slump in iron ore prices last month.
A series of agreements reached between Atlas and outside contractors as well as the government will cut costs to a break-even price below $50 a tonne, CFR (cost and freight) China, where the majority of its projected 14-15 million tonnes of annual production is shipped, the miner said.
“This is nothing short of an outstanding result for everyone involved directly and indirectly with Atlas,” Atlas Chairman David Flanagan said.
Australia’s fourth-largest iron ore miner has been in talks with its creditors and mining services providers since early April to keep it afloat
The price of iron ore dropped as low as $46.70 in April, less than half of the price a year ago, though has rebounded markedly since then to stand at $61.20..IO62-CNI=SI
Analysts see iron ore averaging $56 a tonne in 2015 and $58 in 2016, according to a Reuters poll.[IRONORE POLL/]
Atlas also said it intended to hold a capital raising for an as-yet undetermined sum to underpin long-term financial strength.
The capital raising will be put to a shareholder vote on June 19, according to the company.
Atlas, which last traded on April 2, borrowed $275 million through a term loan in the U.S. markets, which matures in December 2017. The loan, which has no earnings-based covenants, carried a margin of 750 basis points over the Libor benchmark.
Efforts have been underway with the help of transport group McAleese Ltd and stevedore group Qube Holdings Ltd to persuade lenders to agree to keep one or two of the firm’s mines open.
McAleese warned on May 4 its underlying full-year earnings were expected to fall to about $70 million from $85.3 million in 2013/14.
Under the agreement with Atlas, contractors will be paid more if the iron ore price rises. (Reporting by James Regan; Editing by Ed Davies)