The Atlas Iron Limited (ASX: AGO) share price jumped 41% today to 1.7 cents, after the iron ore miner reported a 55% improvement in net losses for the six months to December 2015.
Atlas reported an underlying net loss of $63 million in the first half of 2016, compared to a $139 million loss in the previous year.
That was on the back of the falling iron ore price, which saw revenues sink 17% to $372 million, despite shipping 6.9 million tonnes or ore – the same as the previous year.
Atlas received an average price of US$42.60 (A$59.07) per tonne in the first half, compared to US$62.82 (A$70.47) a tonne in the same period last year, down roughly 30% in US dollar terms. The good news is that the miner has managed to slash its full cash costs to A$55.75 a tonne, from A$72.87 a tonne in 2015.
Operating cash flow improved to $14 million for the half too.
The market clearly liked the news, and rather than being priced for an imminent death, a little bit of confidence is coming back in.
What now for Atlas?
If the iron ore price stabilises around these levels, Atlas may be able to breakeven, or even make a small profit if the miner is lucky. The key problem remains, though – and that's the level of the iron ore price.
And as we mentioned yesterday, Atlas has also restructured its debt, but in effect will likely hand control (70%) of the company over to its lenders.
Foolish takeaway
While traders may make some money trading Atlas shares, long-term investors may want to steer clear, particularly when there are so many high-quality companies trading at fair prices.
