Atlas Iron Limited

By Jason Fittler

Atlas Iron Limited (AGO) is an iron ore producer located in Western Australia. 

Projects are predominantly located within the Northeast Pilbara region and cover approximately 26,000km2 of ground prospective for iron ore.  

Pardoo is AGO's flagship project and is located approximately 50 km east of Port Hedland and is Australia's newest iron ore mine. 

It was announced in Dec 2009 that Direct Shipping Ore from this project has reached a shipping capacity over 1 million tonnes of iron ore in its maiden year of operation.

AGO result was a little weaker than expected but the long-term outlook remains on track. 

Production growth to 12 million tonnes a year has been delayed slightly too mid 2013 but expansion is still tracking well. 

A resource reserve update is due in July 2012 with growth in production being the primary concern for investors. 

We have a fair value of $4.00 for the company, which is currently trading at $3.20. 

AGO results were poor with a 96% drop in profit for the half-year to $6 million. This was due to weaker iron ore prices and two shipments of low-grade ore. 

Cash flow also fell 27% to $159 million but continues to fully fund investing cash flow. The cash balanced increased 3%. 

AGO also sold its Yerecoin and Balla Balla magnetite projects for $57 million and those funds are expected to be received during the current half. 

We are expecting a full year dividend of $0.03. 

This company is for the more aggressive investor. 

We expect that we will see a 25% upside in the coming 12 months.  

For more information on Atlas Iron Limited (AGO) please contact us on 07 4771 4577. 

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