McAleese investors gain a modicum of cheer on Atlas deal


Haulage firm and other contractors may see mining income gains if iron ore price improves

McAleese investors gain a modicum of cheer on Atlas deal
Atlas is bullish about the agreement with contractors such as McAleese

 

McAleese shares have stabilised around the 16-cent mark as investors take in relatively reassuring news surrounding the fate of major customer Atlas Iron and the price of iron ore.

Having flirted with 8 cents per share on Friday, McAleese’s price has rebounded with news that Atlas had agreed revised haulage agreements from its Abydos and Wodgina mines.

Even the haulage firm’s conditional $14 million investment in Atlas, which was joined by an undisclosed amount from mining magnate Andrew Forrest, failed to curb an enthusiasm that was coming off a very low base.

McAleese says the agreements "provide Atlas with improved cost competitiveness through a lower base haulage rate and McAleese Group with upside profit share linked to the Australian dollar iron ore price.

"Participation in the share issue will allow the company to share in the ongoing success of a highly cost competitive and recapitalised Atlas."

Atlas reportedly has gained $30 million from contractors including Qube and civil contractor MACA, though those two firms have not revealed the extent of their expected provisions.

McAleese says it "continues to hold discussions with Atlas and its other key contractors about the potential recommencement of the Mt Webber mine", while Atlas says Mt Webber is expected to recommence shipping during the September quarter, targeting up to 6 million tonnes a year from the mine.

"This is nothing short of an outstanding result for everyone involved directly and indirectly with Atlas," Atlas chairman David Flanagan says.

"We’d also like to thank our collaborating contractors for their engagement."

McAleese confirmed its gross earnings forecast of $70 million remains unchanged and that its net debt at June 30 is expected to be $174-$179 million, up $14 million on previous guidance.

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