AGO 0.00% 4.5¢ atlas iron limited

atlas inks infrastructure deal with talison

  1. 1,021 Posts.

    Kate Haycock
    Monday, 27 October 2008

    ATLAS Iron has signed an infrastructure deal with Talison Minerals over its Wodgina tantalum mine in Western Australia that Atlas says could help unlock its Abydos iron ore project – but the new iron ore miner has still yet to secure an offtake deal for Pardoo.

    Drilling at Atlas Iron's projects in the Pilbara

    The Wodgina tantalum mine is 100 kilometres south of Port Hedland and unlisted company Talison supplies some half the world’s tantalum and lithium from the mine and its Greenbushes operation south of Perth.

    Atlas said today the memorandum of understanding could see it using infrastructure at the mine to help bring the Abydos direct shipping ore project online at a lower capital cost.

    Atlas managing director David Flanagan said the deal was another example of how share infrastructure in the Pilbara could deliver “win-win outcomes”.

    Flanagan told the infrastructure at Wodgina included a large camp which is already hosting some Atlas employees.

    “[Wodgina] has gas power and a power station and they might have excess crushing and screening capacity,” he said.

    “They’ve got water and they’ve also got a mine footprint. If you’re going to have a new pit start up on an adjacent mining lease and you can put waste and use it to backfill an old pit or put waste onto an old waste dump, it will have a smaller environmental impact.”

    Talison also has a pre-existing mining fleet with contractors on site and Flanagan said a collective mining contract could deliver benefits to both Atlas and Talison, and also offer potential synergies with equipment.

    “At the moment what there is [between Talison and Atlas] is goodwill,” he said.

    “Ultimately, all of that has the potential to deliver operating and cost savings.”

    Atlas’ shares fell 6.5c or almost 11% to 63c just after market open this morning despite the news.

    The Perth-based miner started mining at its Pardoo DSO project in the Pilbara two weeks ago, but has yet to secure an offtake deal for the operations.

    The lack of a deal has seen Atlas’ share price drop from $1.10 on October 16 to current levels, bringing its market capitalisation from around $320 million to $183 million.

    Flanagan told MNn this morning the company was speaking with several prospects and would announce the deal as soon as it was completed.

    Atlas hopes to export 1 million tonnes from Pardoo during its first year of operation, growing to 3Mtpa the year after, 6Mtpa by 2010 and 12Mtpa by 2012.

    The company’s share price – like many of its fellow iron ore plays – has also been battered in recent weeks as vital iron ore indicators such as the stainless steel prices, spot iron ore price and the Baltic Dry Index of shipping have dropped.

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