Atlas Iron’s future is looking brighter, having accelerated its debt repayments and exploration programs. Image: Atlas Iron.
BY CAMERON DRUMMOND
ONCE-BELEAGURED iron ore junior Atlas Iron will pay back a further $20 million of debt on the back of surging iron ore prices.
Atlas’ lenders have also agreed to ease loan covenants, including reducing the minimum cash balance requirement at the end of each month from $35m to $15m.
Atlas managing director Cliff Lawrenson said the decision to reduce debt was in line with the company’s strategy to re-position the business, and the strong Australian dollar made the timing opportune.
“Following this $20m, we will have reduced our debt from more than $180m in June 2016 to less than $85 million – cutting our interest cost by about $8m a year,” he said.
“After evaluating other financing alternatives, we concluded that a staged repayment of the term loan is the best option for the company to preserve liquidity while strengthening our balance sheet.
“A stronger balance sheet will allow us to face volatility in the iron ore market with increased confidence.
“The decision reflects our commitment to re-position the business by reducing debt, growing our existing iron ore business through Utah Point and diversification beyond iron ore.”
Atlas recently returned encouraging results from first pass field reconnaissance at its Pancho lithium project.
“Analytical results from surface rock chip sampling show several of the targets have geochemistry that confirms they are lithium-caesium-tantalum style pegmatites that have the potential to host lithium enrichment,” the company stated.
“Compilation of these results along with other information gathered in the field has enabled Atlas to define a specific zone of focus for the next stage of exploration work.”
RC drilling at the company’s Copper Range project also provided positive results.
“With up to nine kilometres of historically anomalous copper and gold results along the length of the Copper Range project, Atlas believes there to be excellent potential for a large scale, low grade copper deposit to be defined, with opportunity to discover smaller higher grade massive sulphide lenses,” the company stated.