March 2014 ly Report Another strong, Atlas on track to achieve fullyear production & cost guidance Horizon I cap-ex program set to draw to a close by end of CY2014 HIGHLIGHTS 24 April 2014 A record 2.73Mt (WMT) shipped for the March 2014, despite inclement weather impacts (December 2013 2.70Mt; 7.84Mt for nine months YTD) Strong contribution of Standard Fines product to overall s shipping volumes On track to meet full-year production guidance for FY14 of 10.2 10.7Mt shipped, with current expectation of an outcome in the upper half of the range March 2014 C1 cash operating costs (wet, FOB, excluding royalties) supports the full-year guidance range of A$49 - $52/t Average headline price of ~US$100/t CFR (DMT) received for Standard Fines product and ~US$75/t CFR (DMT) received for Value Fines for the March 2014 after adjustment for negative provisional price movements from the prior EBITDA (unaudited) of A$57M-$63M for the March 2014 A$372M gross cash on hand after cash outflow of ~A$102M invested in growth projects during the March 2014 Mt Webber Stage 1 on track for haulage/shipping in the June 2014 Mt Webber Stage 2 expansion to 6Mtpa approved by Atlas Board Horizon I capital investment to peak in the current, then rapidly reduce to the end of the calendar year North Pilbara exploration success at the Miralga Creek Project, adjacent to the Abydos haul road (see ASX Exploration Update announcement of 31 January 2014) Exploration continues at Corunna Downs with strong potential in the new iron ore province between Mt Webber and McPhee Creek Appointment of Ms.Yasmin Broughton as General Counsel and Company Secretary Investors can listen to the analysts' briefing call via webcast, which starts at 9.30am EST (7.30am WST) today. Click on the link http://www.brrmedia.com/event/123008 Atlas Iron (ASX: AGO) is pleased to advise that it remains on track to achieve its full year production and cash-cost guidance after overcoming the impacts of inclement weather to ship a further 2.73Mt (WMT) during the March 2014. Atlas Managing Director Ken Brinsden said the Company had exceeded the shipment record set in the previous. As a result, Atlas has shipped more ore in the nine months to March 2014 than it did throughout the previous financial year. With Atlas Wodgina and Abydos mines performing consistently we remain confident of meeting our production guidance for the year, Mr Brinsden said. 1
The Mt Webber Project is progressing well, with Stage 1 set to commence haulage during the June 2014, and Stage 2 on track to further increase overall North Pilbara production despite the scaling down of Mt Dove and Pardoo contributions. Atlas had A$372M cash on hand at 31 March 2014 after A$102M invested in growth projects, with a large portion of those funds contributing to progress at the Mt Webber and Abydos projects. Importantly, we will be progressively reducing our capital spend during the rest of this calendar year as we finalise completion of our Horizon I projects, Mr Brinsden said. This will enable us to retain more of the cash flows from our growing production profile. Mr Brinsden said senior Atlas representatives had recently visited China, reaffirming the Company s confidence in the long-term growth outlook for China s economy and ongoing resources demand. We have developed strong and reliable relationships with our customers, and through our dialogue with them, we remain confident about China s ongoing demand for seaborne traded iron ore, for the long term, he said. OPERATIONS MINE PRODUCTION AND SHIPPING Table 1: Production Ore Tonnes Mined 1 2,305,275 2,340,312 (35,037) (1.5%) Ore Tonnes Processed 2,349,494 2,816,798 (467,304) (16.6%) Haulage to Port 2,559,187 2,776,125 (216,938) (7.8%) Note 1: Ore Tonnes Mined represents ore tonnes delivered to Run-of-Mine (ROM) stockpiles at the processing plant and includes 142,832 tonnes delivered from Mt Webber which will be distributed under the terms of the JVA between Atlas and Altura. Refer to ASX Announcement of 8 July 2013 for further information Note 2: Please see Appendix 1 for further details of production outputs by mine Table 2: Inventory and Shipping Inventory (see Appendix 1 for detail) Final Product Stocks - Port 89,401 272,326 (182,925) (67.2%) Shipping Ore Tonnes Shipped (Wet) 2,729,060 2,704,172 24,888 0.9% Ore Tonnes Shipped (Dry) 2,557,387 2,533,270 24,117 0.9% 2
Despite the month of January being heavily impacted by the tail end of Cyclone Christine and a series of heavy wet-season rain events, Atlas has shipped 2.73Mt (WMT) for the March 2014, made up of 2.5Mt of Standard Fines and 0.2Mt of Value Fines, with the higher percentage of standard fines a pleasing outcome. Atlas was able to utilise planned finished product stockpiles at the mines and port to maintain shipped tonnes during what is traditionally a difficult part of the year for mine production and haulage. While shipping during the March 2014 remained strong; mining, processing and to a certain extent, haulage, were impacted by bad weather. When combined with the planned ramp down in activity at Pardoo and Mt Dove, this resulted in higher C1 operating costs during the March 2014 when compared to the December 2013 half year. These impacts were largely anticipated by Atlas and as a result cash operating cost guidance (wet FOB and excluding royalties) for FY14 remains unchanged, in the range of A$49-52/t. Processing of stockpiles at Mt Dove and Pardoo continued during the March 2014, with Mt Dove run-of-mine processing completed during the and Pardoo processing completed in April 2014. Atlas will supplement North Pilbara production during the current by utilising excess crushing capacity at Mt Dove to process additional mine material from Wodgina, further enhancing throughput to the end of the financial year. First haulage from Mt Webber is targeted to commence during the June 2014. Atlas reaffirms its FY14 shipping guidance of 9.0 9.3Mt of Standard Fines and 1.2 1.4Mt of Value Fines. Therefore, full year production guidance for FY14 has been maintained at 10.2 10.7Mt shipped, with a current expectation that the final result will be in the upper half of the range for total tonnes shipped. MARKETING Atlas average headline sale price for tonnes delivered during the March 2014 was US$103 CFR DMT (December 2013 US$120), which was adjusted to US$100 after recognising provisional pricing movements from cargos delivered in the December 2013, but priced in the current. The average price for Value Fines tonnes delivered during the March 2014 was US$78 CFR DMT (December 2013 US$92), which was adjusted to US$75 after recognising provisional pricing movements from cargos delivered in the December 2013, but priced in the current. In s where price trends upwards the reverse effect will occur such that an annual average relativity to index is achieved. The December 2013 pricing adjustments represent a negative A$9.2M pricing adjustment, that has been recognised in the March 2014. Please see table below for further March 2014 pricing outcomes. Pricing during the March 2014 was notably softer than during the December 2013, where the Platts 62% Fe IODEX averaged US$134.64. Despite softer market 3
conditions the Platts 62% Fe IODEX still averaged US$120.39 for the March 2014 and demand for Atlas product remained solid. On average the ultimate prices achieved continued to be positively impacted by the lower Australian dollar, although the Australian dollar did strengthen during March 2014 and this trend has continued into April 2014. The average grade for Standard Fines shipped for the March 2014 was 56.74% Fe, within the range of Atlas targeted specification. The average grade for Value Fines for the March 2014 was 53.59% Fe. MARCH QUARTER PRICING OUTCOME SUMMARY Standard Fines* Value Fines* Headline CFR Sale Price USD / DMT (62%Fe) $120.39 $120.39 Atlas Realised CFR Sale Price USD / DMT (excluding prior quarter pricing adjustments) $103.31 $78.01 Prior quarter pricing adjustments ($3.23) ($2.98) Atlas Realised CFR Sale Price USD / DMT $100.08 $75.03 Atlas Realised CFR Sale Price AUD / DMT $111.98 $83.88 Average Product Moisture 6.26% 6.69% Atlas Realised CFR Sale Price AUD / WMT $104.97 $78.26 Average Freight AUD / WMT $12.90 $13.68 Atlas Realised FOB Sale Price AUD / WMT $92.07 $64.58 *Some cargoes are provisionally priced based on 31 March 2014 forward curve with the final price to be settled in coming months. PROJECTS HORIZON I Atlas continued its investment commitment, with a total of approximately A$83M progressing mine development and capitalised exploration during the March 2014. Mt Webber - Stage 1 First production of Stage 1 product has now occurred, with haulage targeted to commence during the June 2014. Crushing with temporary equipment commenced at Mt Webber during April 2014 pending commissioning of the main crushing and screening facilities, which is targeted for late May 2014. Stage 1 of the Mt Webber project is approximately 65% complete. Key progress to date at the project includes: handover of the Ibanez pit to Atlas Operations for ongoing mine production; occupation of the final mine accommodation facilities; 4
completion of the Mine Operations Centre; completion of water and communications infrastructure; significant progress towards crushing operations including primary crusher commissioning; and mine access road and Marble Bar Woodstock road upgrades well progressed. First primary production from Stage 1 final facilities is tracking approximately one month behind schedule due to a delay in commissioning crushing and screening facilities downstream of the primary crusher, plus weather and construction material supply related impacts to the regional roads upgrade that Atlas is carrying out, as part of the Mt Webber project. The minor delay will not impact overall tonnes delivered for FY14. Figure 1- Processing Facility Construction at Mt Webber 5
Figure 2- Ore delivered to the ROM pad at Mt Webber / Mine operations in background Mt Webber Stage 2 During the March 2014, the development of the Mt Webber Stage 2 project, which is expected to double production at Mt Webber to 6Mtpa, was approved by the Board. The Stage 2 crushing circuit is expected to be commissioned by December 2014 with ramp up over the following. The life of mine operating costs are expected to be in the range of A$49-51 / WMT (FOB on a nominal basis), which represents a significant reduction from the A$56 / WMT originally estimated in prior feasibility works for the Stage 1 project. The extremely competitive operating costs are driven by a strip ratio of 0.3:1, the economies of scale achieved on longer haulage distances and general mining economies of scale. There is the potential to reduce these costs further in the future via access to rail. All environmental approvals have been secured for Stage 2 of the Mt Webber project. Atlas is also pleased to advise that the combined stages of the Mt Webber project are estimated to cost an aggregate A$212M*, inclusive of contributions towards regional road upgrades. Of this amount A$102M has already been accrued as at 31 March 2014. *Gross Mine Capex partially funded by Atlas JV Partner Altura Mining Ltd, under JV terms. Refer to the ASX Announcement dated 8 July 2013 for further information. 6
. Abydos While Abydos is now in full production, works continued during the March 2014 on final infrastructure and accommodation facilities at Abydos. These works are expected to be completed during the June 2014. PROJECTS HORIZON II McPhee Creek The McPhee Creek Mine and Rail pre-feasibility study is nearing completion, targeting approval in the June 2014. Further work within this study is underway to integrate Atlas regional development options in the corridor between Mt Webber and McPhee Creek, arising from the significant exploration success at the Corunna Downs project. Furthermore, the Company wishes to future proof any infrastructure solution by considering: the ability to incorporate the full exploration potential along the banded iron formation between Corunna Downs and McPhee Creek; the provision of a regional blending capability, which appears to be a combined product value enhancer that is unlikely to be achievable at Port Hedland for the currently envisaged rail solutions; and the overall capital efficiency of the chosen solution and ability to stage capital inputs to infrastructure and mine development. As part of the additional feasibility work underway a hub proposal is currently being assessed and brought up to the commensurate prefeasibility level (with the McPhee Creek mine), whereby regional tonnes would be aggregated and blended, before being dispatched by rail to Port Hedland (please see Figure 3 below for more detail). 7
Figure 3- Proposed Corunna Downs Hub & further exploration potential in the region including the Hales Grave prospect SE Pilbara Atlas continues to progress minor feasibility studies for its environmentally approved south-east Pilbara projects, with development scenarios in this area subject to the applicable infrastructure solution. Rail and Port Discussions pertaining to third-party rail haulage negotiations progressed during the March 2014 including further detailed agreement documentation and structuring to facilitate integration of component infrastructure (spurs and port links). These discussions remain a key priority to management and Atlas is committed to completing these negotiations subject to key terms being acceptable to all parties concerned. Confidentiality arrangements are in place and commercial interests associated with the discussions prevent Atlas from elaborating further on the negotiations at this stage. A haulage agreement will give Atlas access to its vast Pilbara resources, in turn enabling it to take greater advantage of its valuable port capacity allocations. While the agreement would facilitate substantial increases in Atlas' production, Atlas' commitment to the development of these projects is ultimately determined by financial returns, not increasing production alone. 8
In addition to Atlas right to up to 15Mtpa of capacity at the existing Utah Point port, Atlas also holds a 63% interest in North West Infrastructure (NWI), which has an allocation of 50Mtpa of export capacity within South-West Creek in Port Hedland s inner harbour. NWI remains actively engaged with the State authorities to finalise lease arrangements. Horizon II Partnering Atlas continues to receive expressions of interest and have preliminary discussions with high quality counterparties, who are interested in becoming project development partners for its Horizon II asset suite. Establishing arrangements of this nature is a key objective to realise value in Atlas Horizon II assets, reduce Atlas funding obligations, and to establish a cornerstone off-take partner for Atlas Pilbara production. Progressing more detailed negotiations is predicated on achieving a successful outcome on infrastructure negotiations. EXPLORATION AND RESOURCE GEOLOGY Due to the summer drilling break and the impact of Tropical Cyclone Christine, Atlas drilling activity was lower during the March, compared to the first 2 s of the financial year. 141 RC drill holes were completed in the March 2014 for a total of 9852m at the Miralga Creek, Wodgina and Corunna Downs Projects. A significant body of data from drilling completed in the December 2013 is currently being evaluated and modelled. Atlas is expecting to update the market on Corunna Downs project Resource, drilling results and further regional potential perspectives during May 2014, and additional exploration step-out results post the June 2014. Key focus areas included: At Corunna Downs drilling has now moved into a broader exploratory phase with a number of extensions to existing prospects and new prospects north of the Split Rock Resource currently being drill tested. Preparations for drill testing of the Hales Grave prospect between Corunna Downs and McPhee Creek are also underway, with a planned Q1 FY15 drilling date. At Miralga Creek, the drilling completed was designed to test the continuity of mineralisation first drilled in the December 2013 and communicated to the market in January 2014 (see ASX release of 31 January 2014). At Wodgina and Corunna Downs, the focus was on infilling and testing for extensions to known mineralisation. Atlas invested A$5M on total exploration during the March 2014. Further RC drilling is planned for the Corunna Downs, Mt Webber and McPhee Creek Projects during the June 2014. 9
Figure 4 - North Pilbara Projects, Atlas Tenements, Existing and Proposed Infrastructure CORPORATE Appointment of General Counsel and Company Secretary Ms Yasmin Broughton joined Atlas as General Counsel and joint Company Secretary during the March 2014. Cash Position Cash as at 31 March 2014 was A$372M after investment in growth projects of ~ A$102M, including a payment of approximately A$19M pertaining to stamp duty mainly arising from the FerrAus and Aurox acquisitions which was accrued for at the time of the transactions. Atlas Term Loan B Debt facility of US$272M is fully drawn. Other finance facilities of A$104M available to the Company are undrawn. 10
Sale of Minority Interests During the March 2014, Atlas sold its holding in Peninsula Energy Limited (ASX:PEN) and Red 5 Limited (ASX:RED) netting approximately $750K in cash. Centaurus Metals Limited (Centaurus) Subsequent to the end of the March 2014, Atlas participated in an A$5M placement in Centaurus whereby it subscribed for 12 million shares at a subscription price of $0.125 per share totalling A$1.5M. Atlas now holds a 21.34% strategic interest in Centaurus, an emerging Brazilian iron ore explorer and developer (see Centaurus website: www.centaurus.com.au for further details). Shaw River Manganese Limited (Shaw River) Atlas holds a 53.45% strategic interest in Shaw River, a manganese exploration and development company (see Shaw River s website: www.shawriver.com.au for further details). CORPORATE PROFILE Directors David Flanagan Ken Brinsden Jeff Dowling Mark Hancock David Hannon Dave Smith Kerry Sanderson AO Geoff Simpson Tai Sook Yee Non-Executive Chairman Managing Director Non-Executive Director Executive Director, Commercial Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director General Counsel & Company Secretary Yasmin Broughton Executive Management Brian Lynn Chief Financial Officer Jeremy Sinclair Chief Operating Officer Rob Wilson Chief Development Officer Registered Office and Head Office Level 18, 300 Murray Street, Perth WA 6000 Share Details as at 31 March 2014 915,496,158 ordinary shares Unlisted Options as at 31 March 2014 12,085,000 Unlisted Options Substantial Shareholders as at 31 March 2014 IMC Group 85.81M shares 11
Dimensional 45.99M shares Reporting Calendar June ly Report 24 July 2014 Annual Accounts 28 August 2014 Website: Twitter: www.atlasiron.com.au @Atlas_Iron INFORMATION RELATING TO EXPLORATION ACTIVITIES The information in this ly that relates to the Corunna Downs and Miralga Creek exploration activities on page 1 and page 10 respectively is extracted from ASX Announcement titled North Pilbara Exploration and Resource Development Success, dated 31 January 2014 and is available at http://www.atlasiron.com.au/irm/content/asx-announcements.aspx. The Company confirms that it is not aware of any new information or data that materially affects the information included in the 31 January 2014 announcement referred to above and, in the case of estimates of Mineral Resources, all material assumptions and technical parameters underpinning the estimates in that previous ASX announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person s findings are presented have not been materially modified from the 31 January 2014 announcement. FORWARD LOOKING STATEMENTS A number of statements in this ly relate to the future and are forward looking statements. The words "expect", "estimate", "guidance", "forecast", "should", "projected", "potential", "could", "may", "predict", "plan" and other similar expressions are intended to identify forward looking statements. These statements reflect views only as of the date of this ly. These forward looking statements, opinions and estimates are based on assumptions and contingencies that are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward looking statements are provided as a general guide only and should not be relied on as a guarantee of future performance. Forward looking statements may be affected by a range of variables that could cause actual results or trends to differ materially. These variations, if adverse, may affect the timing, feasibility or the cost of developing the Company's projects, the estimated cash flows and returns from those projects. Neither the Company nor any other person makes or gives any representation, assurance or guarantee that the occurrence of an event expressed or implied in any forward looking statements in this ly will actually occur. 12
Appendix 1 Mine Production by Location and Inventory Table A: Mine Production Pardoo Ore Tonnes Mined 1 145,606 277,644 (132,038) (47.6%) Ore Tonnes Processed 202,507 275,162 (72,655) (26.4%) Haulage to Port 201,281 292,559 (91,278) (31.2%) Table B: Mine Production Wodgina Ore Tonnes Mined 1 1,244,611 1,205,724 38,887 3.2% Ore Tonnes Processed 1,281,668 1,120,231 161,437 14.4% Haulage to Port 1,396,575 1,197,362 199,213 16.6% Table C: Mine Production Mt Dove Ore Tonnes Mined 1-84,566 (84,566) - Ore Tonnes Processed 189,319 676,040 (486,721) (72.0%) Haulage to Port 322,511 599,352 (276,841) (53.8%) Table D: Mine Production Wodgina Value Fines Ore Tonnes Mined 1 108,878-108,878 - Ore Tonnes Processed 120,097-120,097 - Haulage to Port - - - - Table E: Mine Production Abydos Ore Tonnes Mined 1 663,348 772,378 (109,030) (14.1%) Ore Tonnes Processed 555,903 745,365 (189,462) (25.4%) Haulage to Port 684,490 686,852 (2,362) (0.3%) Note 1: Ore Tonnes Mined represents ore tonnes delivered to Run-of-Mine (ROM) stockpiles at the processing plant 13
Table F: Mine Production Mt Webber Ore Tonnes Mined 1 142,832-142,832 - Ore Tonnes Processed - - - - Haulage to Port - - - - Note 1: Ore Tonnes Mined represents ore tonnes delivered to Run-of-Mine (ROM) stockpiles at the processing plant which will be distributed under the terms of the JVA between Atlas and Altura. Refer to ASX Announcement of 8 July 2013 for further information Table G: Inventory Inventory March 14 Run-of-Mine Ore at site 1 529,104 510,150 18,954 3.7% Final Product Stock at site 261,511 479,483 (217,972) (45.5%) Final Product Stocks - Port 89,401 272,326 (182,925) (67.2%) Note 1: Run-of-Mine Ore at site represents ore tonnes delivered to Run-of-Mine (ROM) stockpiles at the processing plant and includes 142,832 tonnes delivered from Mt Webber which will be distributed under the terms of the JVA between Atlas and Altura. Refer to ASX Announcement of 8 July 2013 for further information 14