On February 22, Australian iron ore producers Atlas Iron Limited and Aurox Resources Limited announced that they have entered into a cooperation agreement in relation to Aurox's port capacity allocation at the Utah Point port facility, currently being constructed by the Port Hedland Port Authority (PHPA). The execution of this port cooperation agreement will ensure Atlas' and Aurox's port capacity allocations at Utah Point are used to their maximum and in a highly efficient cost effective manner.
According to the cooperation agreement, Atlas will advance an interest free loan to Aurox, in the amount of $13.86 million, for the purpose of Aurox paying the facility charge to the PHPA on March 31, 2010 as required by Aurox's facility agreement with the PHPA. The loan has an initial 12-month term.
In consideration for the loan, Aurox will grant Atlas a first right to use any of Aurox's unused or surplus berth, ship-loading and stockpiling capacity at the Utah Point port facility that will become available from March 1, 2012.
Atlas and Aurox will work together to optimize efficiency in their combined operations at the Utah Point Port Facility, including the installation of materials handling equipment and configuration of infrastructure by Aurox with a view to sharing equally any additional capacity generated by efficiency gains.
In 2015 Aurox will have the right to increase its annual stockpile and export capacity from 6 million mt to 10 million mt. Where annual throughput at the Utah Point Berth is increased by more than 2 million mt, Aurox's 10 million mt allocation of capacity will be increased to 12 million mt. If this additional capacity is available to Aurox, it will share that capacity with Atlas on an equal basis.