McAleese warns of hefty earnings dive

Transport contractor McAleese has
warned of a massive earnings drop due to the impact of its altered contract
with Atlas Iron.

The company, which hauls ore
from Atlas’ mines to port, announced underlying
full-year earnings were expected to fall to about $70 million from $85.3m in
2013-14.

This is $20 million lower
than the group’s February forecast of $85m
and $90m in underlying earnings this financial year.

The company suffered a 49.4
per cent drop in the price of its shares yesterday on the back of the news and closed at 8.1c.

The trouble started
for McAleese when Atlas decided to close its Pilbara mines in April in light of the falling iron ore price.

Just
three days later, McAleese called a trading halt amid reports the company
expected the contract with Atlas to make up around 40 per cent of its 2015
earnings.

Since then McAleese has
struck a deal with Atlas which will see it continue to haul ore from the Abydos and Wodgina mines during May.

This will allow Atlas to keep
mining, but will mean a lower base haulage rate for McAleese with profit share
dependant on the price of iron ore.

McAleese said discussions around
the potential recommencement of mining at the Mt Webber mine were ongoing.

The company also announced a
review of its heavy haulage and lifting division was ongoing, with a non-cash
impairment likely.

“The expected non-cash
impairment reflects low activity levels and a reduced pipeline of capital
projects in the resources and infrastructure sectors across Australia,”
McAleese said.

McAleese has
appointed financial advisers 333 Group to
provide an independent review of its financial performance.

“This review has commenced and will assist with developing
robust and sustainable plans beyond the immediate initiatives,” the company
said.

TasRail sign deal to transport Venture’s iron ore

TasRail has inked a deal which will see it transport iron ore from Venture Minerals Riley Creek Mine in Tasmania’s Tarkine region.
 
The announcement comes after a court challenge by environmentalists to halt mine’s development was dismissed last week.
Venture Minerals said it expects to begin work at the site in coming weeks.

TasRail will provide train services on the existing Melba Line, transporting ore through to the Burnie Port where the company will store it and provide ship loading services.

TasRail chief Damien White said the deal represents development opportunities for both companies.

“TasRail is the operator of critical economic freight infrastructure in Tasmania that is an enabler for existing and new major industries, and is well placed to provide high tonnage base load haulage for new mines,” White said.

“As TasRail owns and operates Tasmania’s only open access bulk ship loader facility at Burnie, the capacity to provide a vertically integrated bulk service for Venture, and support the development og jobs in the North-West region of Tasmania is a win-win.”

Tasmania’s Resources Minister Bryan Green has previously said the mine will contribute $40 million a year to the state’s economy.

The project is set to employ 60 people and run for two years.

Asbestos fears over Rio railway line

A council in Western Australia’s Pilbara region has expressed concern over Rio Tinto’s plan to build a railway line near the asbestos-ridden ghost town of Wittenoom.

As part of Rio’s proposed Koodaideri iron ore mine, the company have submitted documents for a 167 km railway line to be built which would connect to the company’s Dampier-Tom Price line.

While the track would avoid the former town, Rio plan to construct part of the track through the wider Wittenoom asbestos management areas, The West Australian reported.

The Shire of Ashburton is concerned workers could be at risk to exposure, calling for indemnity from litigation if the track goes ahead.

According to documents filed by Rio, the $3.5 billion project is expected to produce 35 million tonnes of ore a year, before a ramp up by 2030 which will see that figure increase to 70 million tonnes a year

New roads, power sources, water infrastructure and FIFO village facilities would also be need to be constructed.

The Environment Protection Authority is currently assessing the project before making a recommendation to the Minister for Environment Albert Jacob.

If Rio choose to pursue the project construction is expected to begin in the second half of 2014 before first production in 2016.

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