Atlas Iron’s Pardoo hematite project in Western Australia’s Pilbara region is on track for first production and export through Port Hedland in October this year.

Atlas’ managing director David Flanagan says: “Being only 75km from port and not constrained by needing a rail agreement is very handy.

“The mining agreement has been signed with the native title claimants, the mining leases have been granted and we’re recruiting our workforce. We expect to be awarding key contracts shortly and get the last of the environmental approvals in July.”

Pardoo has resources of more than 14 million tonnes and reserves of more than 5 million tonnes. The company will produce 1 million tonnes per annum from Pardoo for the first two years and will grow that to 3 million tonnes per annum thereafter.

David Flanagan says: “We also started drilling at Abydos, 120km south of Port Hedland, in July 2007, and we’ve already got a resource of over 8 million tonnes.

“It is inconceivable to me that we have found it all at this project in 6 months, so I expect we will find a lot more. Right now we are working through the Abydos pre-feasibility study which will deliver reserves by mid-year. The plan is to be in production by the end of 2009 at a rate of 3 million tonnes per annum.”

Atlas has a Memorandum of Understanding with FMG which covers rail and port services for Abydos. The FMG and BHPB railways, the proposed Hancock railway as well as the Great Northern Highway all cross the project. “We also have a port agreement with the WA State Government which guarantees 3 million tonnes per annum across the new Utah Berth. That is like gold, it’s going to be a world class shipping facility and a major advantage for Atlas delivering into China.

“Having deposits in similar geological terrain as the Goldsworthy and Yarrie operations helps customers to understand how our ore will behave in the blast furnace.

“By 2010, we expect to be exporting 6 million tonnes from the two projects with an operating margin of better than $30 per tonne.

“With an anticipated operating cost of $30 to $40 per tonne for both the recent price negotiations are indicating we will likely have operating margins of greater than $50 per tonne in our first few years.

“Our aim is to grow annual DSO production to beyond 10 million tonnes by 2012, keep operating margins in excess of 30 dollars per tonne and generate more than $300 million a year in operating cash flows. We have a great team and an amazing group of tenements in the right place at the right time.”

Atlas Iron has other production expansion options from the Ridley Magnetite Project at Pardoo and other Direct Shipping Ore (DSO) projects in the Midwest region of Western Australia.

David Flanagan says: “We think Ridley is one of the stand-out magnetite projects in Australia. It has size and proximity to infrastructure as its biggest advantages. The resource at Ridley Magnetite Project at Pardoo is already at 853 million tonnes at 37.2% iron with a proposed production rate of 10 million tonnes per annum concentrate grading 68.9%. The resource target at 1–1.5 billion tonnes is massive.

“The Ridley Deposit is at Pardoo and has all the same infrastructure advantages being 75km from Port Hedland, it’s bisected by a water pipeline, a powerline, railway, gas pipeline and a national highway.

“The Midwest assets are an option on infrastructure. When the rail and port get up and running we think these tenements should be able to support 3-4 million tonnes per annum. We are doing a scoping study on this at but operating margins in the order of $30 per tonne for a high grade product, greater than 63% iron should be feasible.”

www.atlasiron.com.au