Struggling junior Pilbara miner Atlas Iron has extended its equity raising campaign, citing strong demand from existing shareholders.
Atlas moved to close its Pilbara mines when the iron ore price dipped below US$50 a tonne earlier this year. It decided to keep open two of its projects – Abydos and Wodgina – however, after it struck new deals with its key contractors.
Managing director David Flanagan in June told shareholders the new contractor deals meant the miner could keep going, but he said an equity raising program was needed to “build resilience and strength in our business”.
The equity raising program, in the form of a Shareholder Participation Offer (SPO) and General Public Placement, was extended from the planned Monday night deadline to Thursday evening at 5pm, Perth time.
Flanagan said the extension was made in response to increased interest in the offer towards the end of the initial period, from existing Atlas shareholders.
“The last few days have by far been the strongest period of uptake in the SPO to date,” Flanagan said. “Atlas has decided to extend the closing date for the SPO and General Public Placement in light of this recent uptake.”
The equity raising would not be possible without the deal Atlas struck with its contractors in late April.
“The decision to continue operating at these projects, rather than suspending production in April as previously announced, is the result of a substantial reduction in forecast cash costs for May at these mines,” the miner told the ASX on April 30.
“The cost reductions were achieved with the support of Atlas’ key service providers.”
The decision was also motivated by the premium quality of the product being mined at Wodgina, the miner added.
“Up to 65% of Abydos’ production will be in the lump product category which is priced at a premium.”
Under its new terms, Atlas believes it can operate the two mines as long as the iron ore price stays above US$50 a tonne. Overnight, the price of iron ore dipped to US$49.90 (at 62% Fe).