Atlas Iron raised less than half of its $180m equity raising target over the window which ended last week, but managing director David Flanagan told shareholders he was “delighted” with the result.
“This is an outstanding result for Atlas shareholders, for the 700 people who rely on Atlas for work and for the state and federal governments that use our royalties and taxes to provide essential services,” Flanagan said in an ASX statement on July 20.
“This raising will strengthen our balance sheet considerably, giving us a measure of further protection against iron ore price volatility and enable the company to take advantage of opportunities as they arise.
“When this is combined with our new, lower cost base, which we are continuing to optimise, I am confident Atlas has a bright future.”
Atlas launched its equity raising deal after it secured new deals with contractors at its three mines in the Pilbara – Wodgina, Abydos and Mt Webber – and Flanagan said on Monday all three mines are back online, with a year-end production target of 14 to 15 mtpa.
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 program was extended last week 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.
But the equity raising finished at less than half of its $180m target.
Flanagan was less positive about the result in mediathis week. In stark contrast with his comments in the shareholder release, the managing director explained to the AFR: “There was a stage in the early part of the raising where I was certain we were going to be bowled over with demand, absolutely, without a doubt.”
Instead, he reportedly told the paper, a number of market factors slashed investor confidence.
“The volatility we saw in the last week – the markets in Greece, the markets in China – cost us quite a lot of money from the big institutions,” he was quoted as saying. “The institutions don’t have the same authority as a single investor does … they are investing other people’s money and they have to go to their investment committees in the week the iron ore price has its biggest fall on record.”
When Atlas announced its equity drive, the iron ore price had rebounded to roughly US$60 a tonne. During the equity raising period, however, it dropped back down below US$50 a tonne, at one point dipping below US$45 a tonne.
Nonetheless, Flanagan reportedly told AFR he was “straight back into it”, with his next major challenge the US$269m debt facility, due to be paid in December 2017.