Junior miner Atlas Iron will restart production at its Mt Webber mine in Western Australia’s Pilbara in July.
It expects the Mt Webber project to produce 6 million tonnes of iron ore per year for more than eight years.
In a statement issued by the ASX, Atlas said it would pay its contractor BCG Contracting between $17.1 million and $19.6 million in shares and cash to cover the termination costs of its Wodgina mining contract.
It will also cover the suspension, remobilisation and other costs for the Mount Webber mine.
Under the revised agreements, Atlas and BCG are aiming for cost savings of between 10 and 12 per cent, meaning the company’s break-even price would be approximately $US50 per dry metric tonne of iron ore.
That is compared to today’s market ore price of $US61.50.
Last month, Atlas announced it had reached a deal with its contractors to allow it to bring its three Pilbara mines back into production, after the tumbling iron ore price forced the company to halt production in April.
It also accepted a royalty relief package from the West Australian Government worth $12.5 million.
By Irena Ceranic