UPDATE: Atlas Iron Says On Track To Ship Up To 5.7 Million Tons This Fiscal Year

Atlas Iron Ltd. (AGO.AU) said Friday that it is on track to ship up to 5.7 million metric tons of iron ore this financial year despite a tough quarter, and as it pushes ahead with the development of new mines in Australia's arid Pilbara region to significantly boost exports of the steelmaking commodity.

Two tropical cyclones and heavy rains plus the breakdown of the company's ship-loading facility in January dented production and shipments in the January-March quarter; Atlas said in a statement that it attempted to mitigate this with three shipments of lower-grade product during the quarter. Another lower-grade shipment left in April, and one is scheduled later this quarter, it said.

Despite a 13% quarter-on-quarter fall in shipments for the three months, to 1.2 million tons, Atlas said it still expects operating costs of between A$42 and A$45 a ton and deliveries of 5.5 million-5.7 million tons in the year through June. Ore processed for the quarter fell 29% from the prior quarter, to 1.06 million tons.

Atlas is one of a number of junior mining companies seeking to challenge the dominance in the iron ore-rich Pilbara of Rio Tinto PLC (RIO) and BHP Billiton Ltd. (BHP), tapping strong demand for steel and its ingredients in China and other urbanizing countries in Asia. The company earlier this week agreed with freight rail operator QR National Ltd. (QRN.AU) to study an independent multi-user railway in the Pilbara, which potentially would unlock access to ports for a number of mines.

The company said it would begin construction of its Abydos mine this month and is targeting hauling some 2 million-3 million tons of ore to port from April next year, while construction should start on its Mt. Dover mine in June, with production beginning from December. Work on its Wodgina mine is roughly half complete, and work to ramp up output at its Mt. Webber mine to 6 million tons a year is set to start in January.

In all, Atlas said it plans to invest a further A$630 million to develop its mining operations to ramp up its export rate to 12 million metric tons a year by the end of 2013. It has already spent about A$42 million on the first phase of its growth plans, which will see its exports increase to 10 million tons a year by mid-2013.

"Expanded mine production is just around the corner with the imminent development of the Mount Dove and Abydos mines," Managing Director Ken Brinsden said.

-By Robb M. Stewart, Dow Jones Newswires; [phone]; [e-mail]