Atlas Iron (AGO) Buy Share

Atlas Iron AGOAtlas Iron (AGO) is an iron ore producer and explorer located in Western Australia.

The company has a growing number of high quality iron ore projects and one of the largest landholdings in the lucrative Pilbara region. AGO is now one of the area’s largest iron ore producers.

The company has a significant number of direct shipping ore (DSO) projects in WA. DSO projects are those that are in close proximity to ports, which helps to significantly lower capital costs.

AGO has several projects in varying stage of development, with its Abydos mines in production and its Mt Webber mine due to e commissioned in December.

Key Points:

Quarterly Production:

>>A record 2.4 million tonnes of iron ore shipped in third quarter, up from $2.2 Million tonnes in the previous quarter
>>Production rate of 10 million tonnes achieved in the quarter
>>Operating costs for the quarter were within the $49-$53 region
>>Average sale price increased 9% from the previous quarter to USD 117 a tonne, which on an Aussie dollar basis would have been much higher

China Growing:

Today saw the HSBC flash Product Manufacturing Index return a reading of 50.9, which was above of the 50.5 expected by economists

A reading above 50 indicates that the Chinese manufacturing sector is expanding, which is a good sign for commodity demand. Recent trade data out of China data showed a record level of iron-ore imports, which reaffirms the case of strong Chinese demand.


The group’s outlook looks good, with solid production from its producing mines. AGO has confirmed its FY14 shipping guidance of 9.0 – 9.3 million tonnes of with cash operating cost guidance (excluding royalties) of $49 – $53 per tonne.

The groups Mt Webber mine is also due begin production in December, with first shipments scheduled in the new year. An annual run rate is scheduled for 3 million tonnes, but upgrades are likely to increase this 6 million tonnes.

Overall AGO is good position, with low costs and high growth moving forward.

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