AGO - Atlas Iron

[adobee]

Option Agreement with Atlas Iron Limited
Pursuant to an option agreement under which Atlas Iron can acquire the iron ore rights at Chalice’s Yandeerra Project, Chalice has received an initial payment of $250,000 following completion of a formal agreement between the parties. Atlas Iron must then make a further payment of $1,000,000 in cash or Atlas Iron shares (valued at a 5 day VWAP) should it exercise its option to purchase the iron ore rights. The option expires no later than 12 months after the date of the formal agreement.


Yandeearra
Location and Tenure
Chalice Gold's interests in the West Pilbara gold district (Figure 1) comprises a tenement package of over 1,300 square kilometres at Yandeearra, contiguous with both Range River Gold Limited's Indee Gold Project (previous published JORC compliant resources of 529,000 ounces of gold, in several deposits) and De Grey Mining Limited's Turner River Gold Belt (including a published resource of 203,000 ounces of gold at Wingina Well). De Grey Mining Limited has also had recent success in base metals exploration at its Orchard Tank VMS prospect, which lies approximately 60 km to the northeast of the Yandeearra Project.

 

[maungatapu]

Atlas Iron Limited (ASX Code: AGO) is very pleased to announce that it has entered into an agreement with a medium-sized Chinese steel mill for the sale of the first shipment of iron ore from the Connie Deposit at its 100%-owned Pardoo DSO Project. As a result, Atlas will immediately commence hauling ore to the port of Port Hedland for shipment.
Mining is currently underway at the Bobby and Connie deposits at the Pardoo Iron Ore Project, located 75 kilometres by road from Port Hedland, in the Pilbara of Western Australia. Connie is a lower grade “startup
deposit”. Its low strip ratios, homogenous ore character and proximity to infrastructure provided the best opportunity to meet our shipping deadline within 8 weeks of final approval to mine.

Atlas recently commenced mining at its 100%-owned Pardoo Iron Ore Project in the Pilbara of Western Australia where it is targeting its first shipment in December 2008. Atlas is fully funded with approximately $100 million cash at bank and zero debt as it completes commissioning of Stage One and ramp up to 1Mtpa. Atlas is planning to export 1 million tonnes during its first 12 months of operations at the Pardoo Project, growing to 3 Mtpa for year 2. With additional export tonnages from Abydos, the Company is targeting exports of 6 Mtpa for 2010, growing to 12 Mtpa by 2012.

I'm guessing that the 1st shipment of 65,000t would be worth approx 4.55m based on the spot price of $70 per ton. I presume thats $US. 2nd shipment due out mid /late Jan. at approx the same price.

An article in The Age states that Chinese steel mills are looking at a 45% price cut for iron ore. Anybody know what the contract price is?
Atlas is planning to ship 1m tons this year. Working on $60 per ton = $60m
Don't want the $A to rise.

Be interesting to see what the quarterly report has. Should be able find out what Atlas is selling its ore for.

 

[adobee]

I'm guessing that the 1st shipment of 65,000t would be worth approx 4.55m based on the spot price of $70 per ton. I presume thats $US. 2nd shipment due out mid /late Jan. at approx the same price.

An article in The Age states that Chinese steel mills are looking at a 45% price cut for iron ore. Anybody know what the contract price is?
Atlas is planning to ship 1m tons this year. Working on $60 per ton = $60m
Don't want the $A to rise.

Be interesting to see what the quarterly report has. Should be able find out what Atlas is selling its ore for.

QUote Hartleys Report
http://www.atlasiron.com.au/irm/Company/ShowPage.aspx?CPID=1817

Long Term Offtake Agreement for 30% of Pardoo – Atlas has
finalised a long term offtake agreement for 30% of its Pardoo ore up
until 31 March 2012. The agreement is with a medium-sized Chinese
steel mill. The price is referenced to the Hamersley Iron fines long
term benchmark price, with appropriate discounts for grade and
contaminants. Whilst the Company would not disclose the actual
discount due to confidentiality, we believe that the discount is lower
than the 16% received for Robe iron ore.We understand that steel mills have bid for up to 100% of the Pardoo
offtake. However, in this uncertain time in the iron ore market, Atlas
plans to sign agreements with multiple parties for risk mitigation
purposes, and consequently chose to sell only 30% of its Pardoo ore
to this mill. Deals pertaining to the remaining 70% of the Pardoo ore
are expected in the near term.
The first iron ore under the agreement is planned to be shipped by the
end of March 2009, with the ore being supplied from the Bobby
deposit.
• Second Connie Spot Sale Secured – Atlas has also entered into an
agreement with a large Chinese steel mill for the sale of a second
shipment of iron ore from its Connie deposit at Pardoo. Letters of
credit are expected to be put in place within the next five business
days. The Company will start hauling ore to Port Hedland, ready for
shipping in mid/late January 2009. This spot sales agreement is with a
different mill to the first spot sale.
We believe that the first Connie shipment was close to revenue
neutral. However, we believe that this second shipment will generate
an operating profit due to better operating efficiencies, as well as an
increase in the spot iron ore price.

Slight Valuation Downgrade due to Commodity Price Assumptions – We have updated our commodityprice and exchange rate assumptions. We are forecasting a 25% drop in the iron ore price for the next round of
pricing negotiations in 2009, with the price then remaining flat for the next two years. Consequently, our sum of parts valuation for Atlas has reduced slightly to $3.98/share.

 

[justiceotp]

Adobee probably also important to note that that valuation by Hartleys was done on the 19th December and that AGO have released two discoveries since that date that would add to the valuations of those sites.

 

[tigerboi]

Re: AGO-massive ramp,howdya getaway with it?

True.. and I appologise for this blatent disregard of the rules... Just got caught up in the excitement of getting back in the green... Yes it is clear you definetly like BMY.. shame about their share price.. I am sure if the land is as good as you say AGO will pick them up ($5-8mill?) I dont think they could go it alone... AGO really has an advantage against many other small to mid miners with no debt and income streams...

The BMY shareprice never bothers me = great time to continue my march into the top 20,now from memory the ground you have up next to BMY was bought from IGO for cash,the better ground IGO took 11%(very important % that) of BMY & paid up for the 1/2 at 14c to retain that 11% buffer...
55m shares,top 20 got 50%

Brumbys ground got way more io in it...bonwick(igo) & jones(bmy)mates from resolute...

IGO gave AGO the dregs ...tb

 

[Motogoon]

Adobee probably also important to note that that valuation by Hartleys was done on the 19th December and that AGO have released two discoveries since that date that would add to the valuations of those sites.

justiceotp & adobee i think it should also be noted that broker recommendations are often way off the mark, i'm not saying that's the case with ago but miners are in for a very tough year i think.
Iron ore could still be in for a rough ride, especially as car makers around the world severly cut back production.

 

[maungatapu]

However, Platts reports that its Beijing source said Baosteel would be offering $US50.80 a tonne for iron ore fines from Hamersley (one of the benchmark rates). This would still be above the 2007-8 contract fines price of $US47.10/tonne and would be seen as a return to more sober levels of metals pricing rather than a devastating blow to balance sheets. Hamersley is a Rio Tinto subsidiary.

The report said the Chinese would expect the 40 per cent drop from all suppliers, which would include Brazil's Vale do Rio Doce, but the news was notable for including the phrase that the concessions would be sought "especially from Australian ore suppliers".
Extract from todays "Austrailian".

AGO up and down like a yoyo today. Opened at 123 down to 105 up to 134
any comment?

 

[adobee]

no comment.. here... yo yo it was... at 1045 I was feeling sick at 2pm I was feeling good ....

I think there are alot of people on edge with the market and jump out as soon as they see the price potentially sliding.. and stop losses being hit.. people are very scared to leave money in the stock (any stock) and let it ride... even I considered selling out with a chance to buy back in again.. luckily I didnt at this stage.. still very wary though ... not so much of AGO but of the market in general ....

 

[justiceotp]

Adobee I think your right, I was in the same position watching it drop and considered selling to buy back lower and like you glad I didn't but id say many did everyone is a bit on edge and almost expecting the worst after what came out of the US on Friday so a little trigger happy.

Here is a small theory I have on these small/medium Iron Ore companies with potential. I think the Chinese steel mills who are obviously trying to drop the iron ore price down as we have seen already are also trying to take advantage of the situation in another way by doing deals with these smaller guys when there is less demand for IO to try and reduce the market power of the likes of BHP and RIO. In a time when you see reduced production from BHP and RIO companies like AGO don't seem to have too much trouble placing shipments and putting contracts into place like the 30% in recent weeks. Also BRM Brockman resources hinted in their "Please explain letter" from the ASX that they had been in negotiations with the chinese and they are still some time off having a product.

 

[adobee]

MAIDEN INFERRED RESOURCE AT WODGINA
Atlas Iron Limited (ASX Code: AGO) is pleased to announce a maiden JORC resource estimate for the newly-discovered Anson Deposit at Wodgina (Atlas 100% Fe rights), located only 100 kilometres south of Port Hedland in the Pilbara of Western Australia.
Anson Resource – January 2009 Resource Classification
8.1Mt 57.5%FE


Looks like the PR team at AGO are really on the ball now.. seeing good updates and news out on a very regular basis. Very important to keep investors and the market up to date in the current market..

 

[maungatapu]

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Iron ore demand picking up: Atlas
January 15, 2009 - 5:40PM

Atlas Iron, the West Australian iron ore company that started mining last year, said China's demand for the raw material is recovering and contract prices may not drop as much as anticipated.

"There is big destocking of the stockpiles in China and that is pushing people to go and replenish," David Flanagan, chief executive of the Perth-based company said on Bloomberg Television today. "We are seeing strengthening demand."

Demand for the steelmaking raw material plunged last year, with prices for non-contract ore in China slumping 38% to 630 yuan ($US92) a metric tonne in the fourth quarter.

Prices, up 7% this year after China announced a 4 trillion yuan stimulus program, remain below the record contract rate set last February and may fall at least 30% in negotiations this year, according to Evolution Securities in London.

"I don't want to forecast a number specifically but I think 30% is over the top," Flanagan said. "The stimulus package is playing a role and general growth in China is also playing a role in demand rebounding."

Atlas shares declined 0.4% to close at $1.395. The shares have climbed 63% this year, after slumping 64% last year.

China's iron ore imports rose 6.2% in December to 34.5 million tonnes, according to the Beijing-based customs office. Iron ore stockpiles at ports are falling, down to 60 million tonnes from 75 million tonnes, according to Merrill Lynch.

Baosteel, China's biggest steelmaker, started annual iron ore contract talks with Rio Tinto on January 12, according to two company executives. Discussions with Brazil's Vale, the world's biggest producer of iron ore, and BHP Billiton will start soon, they said.

Atlas today announced the initial resource for its Wodgina project of 8.1 million tonnes. The project is 100 kilometres from Port Hedland, Australia's biggest export harbour for iron ore.

Good to see Atlas getting some exposure in the Australian. Looks like the contract price for ore won't be set till Baosteel has had talks with the big 3.

 

[maungatapu]

My apologies. The article is from the SMH / Age not the Australian. Didn't suffer like many other resource stocks. Down .05.

 

[justiceotp]

Heres a news article thats goes along with my theory I posted the other day.

FAST NEWS
PRODUCTION EXPANDING
Atlas lands on China's iron ore map
Australia's newest iron ore miner, Atlas Iron, is expanding production, urged on by Chinese buyers keen to weaken the bargaining power of the big producers such as Rio Tinto ahead of annual price talks.
Posted: Thursday , 15 Jan 2009
SYDNEY (REUTERS) -
Australia's newest iron ore miner, Atlas Iron (AGO.AX), is expanding production, urged on by Chinese buyers keen to weaken the bargaining power of the big producers such as Rio Tinto (RIO.AX) ahead of annual price talks.
Atlas Iron said on Thursday its expansion plans remained supported by demand from China, although steel mills are pushing for a 40 percent cut in contract prices from Rio Tinto, Brazil's Vale (VALE5.SA) and BHP Billiton (BHP.AX)(BLT.L) for 2009.
For a graphic showing iron ore price moves, please click: here
"There's something of a chasm out there -- there's a huge disconnect between the financial pages and ... and what my marketing team is hearing. We've got 10 keen expressions of interest yesterday from people wanting to buy iron ore," Atlas Chief Executive David Flanagan said. Category
Atlas's expansion plans fly in the face of cuts in iron ore output revealed by Rio Tinto in its fourth-quarter production report on Thursday in response to Asian steel mills deferring shipments as a slowing global economy cuts demand. [ID:nSYD376178]
Flanagan said the company was still targeting exports of six million tonnes per annum in 2010 and growing to 12 million tonnes per annum by 2012 as it brought new deposits into production at its Pilbara operations in north western Australia.
"We just can't get all these projects up quick enough - if we could get more port capacity we would be shipping more ore today," he said.
Atlas ships its ore through the port built by Fortescue Metals Ltd (FMG.AX) which has become the first iron ore miner in the Pilbara to allow third parties to use its infrastructure.
Under its current contract with Fortescue, Atlas is limited to shipping 1 million tonnes a year.
THICK AND FAST
Project funding was not a problem, according to Flanagan who said China's steel groups stood ready to become project partners and sign long-term off-take agreements, giving junior miners the capacity to develop new projects at a time when traditional project financing was harder obtain because of the credit crisis.
"The money is coming at us thick and fast, it may be from strategic investors and financial investors but the money is still there," said Flanagan.
He said the company's funding requirements were quite modest.
"We've got undoubtedly the lowest capital cost iron ore project in Australia -- our start-up cost was about A$12 million ($7.9 million) and pro-rata it will cost about that to upgrade (for each one million tonnes expansion)."
Other junior iron ore companies are also moving ahead with production, most often with the support of Chinese customers who are keen to become project partners.
On Wednesday, Gindalbie Metals received conditional approval for a loan of up to $1.2 million from China Development Bank for the development of its Karara iron ore project in Western Australia.
Gindalbie plans to develop the mine in partnership with China's AnSteel, now the Australian company's largest shareholder following an equity raising to help fund Karara's development.
China's steel mills still worry about the pricing power of the world's three big iron producers, Rio Tinto, Brazil's Vale VALE.SA and BHP Billiton, which together control nearly 70 percent of the world seaborne iron ore trade. That pricing power helped the big three extract a near doubling in prices from steelmakers for the year that started on April 1, 2008.
For more details see factbox [ID:nLD7229421].
"Some of this increased interest is because we've come up the ranks a bit by becoming a producer but it is still more than we've ever had. China wants alternatives," said Flanagan.
Altas late last year started shipping ore from its 100 percent owned Pardoo iron ore project and expects to export 1 million tonnes in the first 12 months of operation. (Editing by Nick Trevethan)
© Thomson Reuters 2009 All rights reserved

 

[Doris]

Note announcement at 3.15 today -

Increase at Pilbara DSO by 45% to 55.7 Mt...

Market may not see this until tomorrow.

 

[adobee]

Just over half the days volume went through after 3.15pm today.. Fingers crossed we see some good movement tomorrow... people should definetly take note of this.. previous resistance has been around $1.50 which gets hit and then we dwindle back down... lets hope for a good night on the dj and some press in the paper tomorrow morning...

 

[Dezza]

...lets hope for a good night on the dj and some press in the paper tomorrow morning...

DOW not looking too good at the moment, FTSE closed down 2.45%.

Another red day for AGO tomorrow? Looks likely.

 

[adobee]

Note announcement at 3.15 today -

Increase at Pilbara DSO by 45% to 55.7 Mt...

Market may not see this until tomorrow.

I am not sure that there was any real news in this announcement apart from confirming what had already previously been announced ?? I would have thought there would have been substanially more interest however..

 

[maungatapu]

I'm guessing that the 1st shipment of 65,000t would be worth approx 4.55m based on the spot price of $70 per ton. I presume thats $US. 2nd shipment due out mid /late Jan. at approx the same price.

An article in The Age states that Chinese steel mills are looking at a 45% price cut for iron ore. Anybody know what the contract price is?
Atlas is planning to ship 1m tons this year. Working on $60 per ton = $60m
Don't want the $A to rise.

Be interesting to see what the quarterly report has. Should be able find out what Atlas is selling its ore for.

During the last quarter Atlas has been selling its ore for $52.3 per ton a 25.7% discount to the spot price. Atlas received $3.4m for its 65000t shipment.

 

[maungatapu]

During the last quarter Atlas has been selling its ore for $52.3 per ton a 25.7% discount to the spot price. Atlas received $3.4m for its 65000t shipment.

BHP’s junior peers, led by Fortescue Metals Group and Atlas Iron, will also be anxiously awaiting details of the market leader’s iron ore performance and outlook guidance.

Fortescue admitted on Friday it had agreed to customers’ demands for unspecified price discounts in order to offload its iron ore, reducing the actual sales price in the December half to $92.31/t of ore shipped, including free-on-board (FOB) and delivered cargoes.

Atlas, meanwhile, sold its maiden shipment for only $57/t, although that included the FOB discount of at least $30/t compared to delivered benchmark prices.

Territory Resources, which ships out of Darwin, booked $40.2 million of revenue from sales and debtors in the quarter, suggesting an average per-tonne sales price of $96.30.

The Pilbara benchmark price for deliveries is $US144.66 ($225.15/t) per tonne of pure iron. BHP and Rio, the highest-grade producers in the Pilbara, usually average around 60 per cent iron content, or an effective price of $135 per delivered tonne of ore.

So why is AGO selling its ore so cheaply? Possibly lower grade. Even so not at such a discount.

 

[prawn_86]

Maung,

If your post is taken from another source you must provide a link for copyright reasons. If no link is provided the post will be removed.

Thanks

prawn