Atlas Iron (ASX:AGO) will break with the past and is entering a period of low(er) sustaining capital expenditures which will have an important impact on the company’s all-in sustaining cost per tonne of ore and thus its bottom line. Additionally, the company expects its moisture content to drop from 6.3% to 5%, which will be noticed in a lower discount based on the moisture content. The sustaining capex is expected to be slashed by a stunning 66% to $125M, or approximately $10 per produced tonne of iron ore.
Total production for the financial year 2015 (which ends in June 2015) is expected to be 12.2-12.8 million tonnes of iron ore, and the company should be free cash flow positive this year, even at the current low iron ore price.
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Disclosure: The author holds no position in Atlas Iron. Please see our disclaimer for current positions.
