AGO - Atlas Iron

6thAugust 2008
ATLAS SIGNS PORT ACCESS AGREEMENT WITH FMG
Atlas Iron Limited [ASX Code: AGO] is pleased to announce that it has today signed a binding Heads of
Agreement with Fortescue Metals Group Limited (ASX Code: FMG) for access to FMG’s Port Hedland port
facility for initial production from Atlas’ Pardoo Direct Shipping Ore (DSO) Project, which is scheduled to
commence production in October 2008.
“This is a ground breaking Third Party Port Access Agreement, the first of it’s kind in Western Australia”
commented David Flanagan Atlas Managing Director. “We now look forward to building on our association
with FMG as we commence development of our second iron ore project 120km south of Port Hedland at
Abydos.” he added.
Background
Atlas is on track to commence mining in October 2008 at its Pardoo DSO Project and to commence DSO
exports from Port Hedland in the 4th Quarter of 2008. Together with additional DSO export tonnages from
Abydos, Atlas is targeting exports of 6 million DSO tonnes per annum by 2010 and 12 million DSO tonnes
per annum by 2012 through Port Hedland.

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Atlas Iron signs JV deals with Fortescue

August 6, 2008 - 7:34PM


Atlas Iron Ltd has entered into a joint-venture agreement with Fortescue Metals Group Ltd (FMG) for Atlas's Abydos project in Western Australia's Pilbara region.

The joint venture covers a tenement over which Atlas owns the iron ore rights.

Atlas also said that it was the first company to seal a port access deal with Fortescue for its new Port Hedland iron ore export terminal.

"The primary focus of the joint venture is to define and develop extensions to the FMG Glacial Valley magnetite deposit, (part of the Abydos project)" Atlas said in a statement.

"FMG may earn a 60 per cent joint-venture interest in the iron ore rights by delineating inferred resources of iron ore within the tenement," Atlas said.

It also said FMG may earn a further 15 per cent joint venture interest in the iron ore rights by completing a pre-feasibility study on the mining of iron ore within the tenement.

A further 12.5 per cent joint venture interest may be earned in the iron ore rights by completing a definitive feasibility study on the mining of iron ore within the tenement.

Atlas has converted a memorandum of understanding (MOU) into a binding heads of agreement to use Fortescue's port facilities for the initial period of production from its flagship Pardoo project, about 100km from Port Hedland.

Pardoo commences production in October, with exports to follow in December.

"This is a ground-breaking third-party port access agreement, the first of its kind in Western Australia," Atlas managing director David Flanagan said.

"We now look forward to building on our association with FMG as we commence development of our second iron ore project, 120km south of Port Hedland at Abydos."

Atlas is expected to negotiate a rail haulage agreement with FMG to transport ore from Abydos to port.

It is also likely to use road haulage to get its product from Pardoo to port.

Mr Flanagan flew from the Diggers and Dealers Conference in the mining town of Kalgoorlie to Perth to finalise the negotiations.

He returned to the popular conference to make a presentation.

He told delegates that Atlas had not yet committed to offtake agreements because it planned to sell about 60 per cent of product on the spot market to capitalise on high prices.

"Every other day we receive an offer ... with a base case that we would achieve a premium to the benchmark price," he said.

He said Atlas was spending between $1.2 million and $1.5 million on exploration each week.

The only other company that has an MOU with Fortescue is BC Iron Ltd.

* The writer of this article has shares in Atlas

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Doris said:

Does anyone know why AGO has broken up today?

Their reply to the ASX for a speeding ticket this morning simply reiterated announcements from the past five weeks.

It opened up .11, rose to 2.79, seems to be consolidating about 2.62, up 15%.

The intraday price chart looks as though someone knows something new!

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michael_selway said:

FRS is up alot too, and a few other IRON ORE's, not sure why though

It must be some takeover speculation?

MS

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Capacity at Port Hedland's inner harbour is set to increase to cater for the iron ore expansion projects by BHP Billiton, which today secured an agreement with the state government.

BHP will move to increase its capacity at the port to move a total of 240 million tonnes per annum through the inner habour to cater for the Rapid Growth Projects 5 and 6.

The company's current approved capacity is at 155mtpa.

But the announcement didn't shed any further light on BHP's outer harbour development plans.

Last week, BHP chief executive Marius Kloppers remained tight-lipped on details on the development of an outer harbour, known as the Quantum project, saying it was still in prefeasibility study mode.

In the announcement, the minister added that the government and BHP, along with other interested parties, have been working together to develop up to 400mtpa capacity in the Port Hedland outer harbour which would start exports within five yeas.

Less than two weeks ago, Minister MacTiernan said the development of an outer harbour at Port Hedland did not depend on a commitment by BHP.

The news could add to the speculation that BHP is banking on a successful takeover bid for Rio Tinto, giving it access to Rio's Cape Lambert and Dampier port facilities - both of which have the potential to be expanded.

BHP had previously flagged infrastructure synergies in the Pilbara as one of the attractive features of a BHP-Rio merger.

The expansion comes as facilities at Port Hedland become increasingly squeezed as new iron ore producers come online and BHP and Rio Tinto ramp up iron ore output.

Fortescue Metals Group has completed the development of its own port facilities and plans to eventually ship up to 200mtpa.

Two new multi-user berths and associated infrastructure in the Port Hedland inner harbour, which are yet to be built, are reserved for members of the North West Iron Ore Alliance, including BC Iron Ltd, Atlas Iron Ltd, Brockman Resources Ltd and FerrAus Ltd.

The two new berths will add an extra 50Mtpa iron ore export capacity and could be in operation as early as 2012.

The total inner habour's capacity has now more than doubled over the past two years to move through over 400mtpa.

In its annual report, BHP expects RGP5, with an estimated capital expenditure of $6.1 billion, to be completed in 2011. The project will boost iron ore capacity to 200mtpa.

BHP is currently working on the $1.8 billion RPG4 which is scheduled for completion in 2010 and will increase capacity to 155mtpa.

Planning and Infrastructure Minister Alnnah MacTiernan said the inner habour agreement will also accelerate progress with the $225 million Utah Point berth Development.

"The Utah Point project will see manganese and chromite storage and export operations move further away from the town, so the port can use existing berths closer to town for the ever increasing volumes of general cargo," she said.

"It will also provide long-term capacity for smaller iron ore producers.

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bluekat said:

AGO appears to be a great stock, all the boxes look good, , but not in SP.
Is production in January 09 appearing unlikely?.

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YELNATS said:

With what appears to be a great report yesterday identifying two new DSO iron ore bodies, and production/export to begin this month, sp has dived to $1.29 today, down nearly 12%.


Puzzling, to say the least/

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