QUARTERLY REPORT ATLAS IRON LIMITED SEPTEMBER 2011 25 October 2011 HIGHLIGHTSFOR THE SEPTEMBER 2011 QUARTER . 1.465 Mt (WMT) shipped during the September 2011 quarter, consistent with the June 2011 quarter. Maiden dividend of 3 cents per share paid post quarter end following maiden annual profit announced during the quarter . Atlas achieved an average price per tonne for its product of ~ USD 152/t CFR (DMT) . Unaudited notional cash operating costs (FOB, excluding royalties) remain consistent with guidance of $42-45/t range for the 2012 financial year . $373 million cash on hand at 30 September 2011. $390 million cash on hand at 21 October 2011 after payment of $26.6 million in dividends post quarter end . Atlas’ successful off-market takeover offer of FerrAus Limited closed on 5 October 2011 with Atlas moving to compulsory acquisition on 6 October 2011 . DSO Resources at the end of the September 2011 quarter stand at 1.035Bt at 56.3%Fe . Atlas is on target to continue to ship at a rate of approximately 1.5Mt in the December 2011 quarter (6Mtpa) . Wodgina expansion commenced and initial payments of $23.1 million made to Global Advanced Metals, as part Wodgina infrastructure access agreement announced in May 2011 . $18.7 million strategic investment in Brazilian iron ore explorer and developer, Centaurus Metals (ASX Code: CTM) completed . Horizon 1 Strategy feasibility studies (inclusive of rail analysis) is expected to completed by 31 March 2012 “This has been a massive period for Atlas. The team have delivered on production targets within cost guidance, announced our first profit, paid a maiden dividend, achieved the takeover of FerrAus, completed 45,000 metres of drilling, advanced delivery of our growth projects and grew DSO resources to over 1 billion tonnes,” commented Atlas Managing Director, David Flanagan. “Shareholders are getting the benefit of a terrific team of people who are all working very hard to build a Great Australian Company.” SEPTEMBER 2011 QUARTERLY REPORT Page 1 of 14 QUARTERLY REPORT ATLAS IRON LIMITED SEPTEMBER 2011 FIGURE1 - Atlas: Pilbara’s Emerging Powerhouse INTRODUCTION Atlas commenced exporting direct shipping grade iron ore from the Pilbara of Western Australia in December 2008. Following the commencement of mining at Wodgina in June 2010, Atlas has now ramped up iron ore exports from 1Mtpa to approximately 6Mtpa. As a consequence, the Company is now generating significant cash flows with further growth to come from the North Pilbara and South East Pilbara projects.The Company is targeting exports at a rate of 12Mtpa during the 2013 financial year and 22Mtpa during the 2015 calendar year. With the completion of the acquisition of FerrAus Limited after the end of the September 2011 quarter, the Company is active in the assessment of its South East Pilbara assets to further expand exports, targeting 46Mtpa. Atlas is working to become a globally significant supplier of steel making raw materials through the discovery and development of relatively low capital cost iron ore projects. With these incremental steps the Company will then develop larger scale, low cost, long life operations. This should deliver significant important strategic options for the Company, further value for shareholders and great outcomes for the communities in which we operate. The people who work in our business continue to deliver outstanding results and their efforts are greatly appreciated. With our people, iron ore deposits, infrastructure assets and growth model, Atlas is well positioned to continue its rapid expansion. SEPTEMBER 2011 QUARTERLY REPORT Page 2 of 14 QUARTERLY REPORT ATLAS IRON LIMITED SEPTEMBER 2011 OPERATIONS MINE PRODUCTION AND SHIPPING Table 1: Production Variance September June Variance Quarter Quarter ‘11 (t) Quarter ‘11 (t) (t) Quarter (%) Ore Tonnes Mined 1,462,187 1,464,502 (2,315) 0% Ore Tonnes Processed 1,416,909 1,467,056 (50,147) -3% Haulage to Port 1,407,784 1,514,822 (107,038) -7% Note 1: See Appendix 1 for detail of mine production at Pardoo and Wodgina Table 2: Inventory Variance Variance September June Quarter Quarter Quarter ‘11 (t) Quarter ‘11 (t) (t) (%) Run of Mine Ore Stocks 339,385 331,948 7,437 +2% Final Product Stocks - Site 100,258 82,654 17,604 +21% Final Product Stocks - Port 33,653 85,029 (51,376) -60% Table 3: Shipping Variance Variance September June Quarter Quarter Quarter ‘11 (t) Quarter ‘11 (t) (t) (%) Ore Tonnes Shipped (Wet) 1,464,653 1,464,823 (170) 0% Ore Tonnes Shipped (Dry) 1,368,619 1,364,771 +3,848 +0.2% Production for the September 2011 quarter has achieved Ore Tonnes Shipped consistent with the June 2011 quarter, and with the positive effect of the now fully commissioned HPGR crusher (rolls secondary crusher) at the Wodgina plant, processed tonnes and hauled tonnes are anticipated to uplift in future quarters. Cash operating costs of production remain stable month on month, and are consistent with guidance of $42-45/t for the 2012 financial year. Atlas remains on target to continue to ship approximately 1.5Mt (wet) of DSO in the December 2011 quarter (consistent with annualised exports of 6Mt). SEPTEMBER 2011 QUARTERLY REPORT Page 3 of 14 QUARTERLY REPORT ATLAS IRON LIMITED SEPTEMBER 2011 MARKETING Iron ore sales for the September 2011 quarter were 1.465 Mt WMT (1.368Mt DMT), unchanged from the June 2011 quarter (1.465 Mt WMT (1.364Mt DMT)). Due to a number of shipments late in September 2011, there was 308,000 tonnes for which cash proceeds were not received at month end, compared to 110,000 tonnes which carried over from the June 2011 quarter. This impacts on net cash generated for the September 2011 quarter, with all funds received post quarter end. Achieved pricing outcomes in the September 2011 quarter were strong and were comparable with the June 2011 quarter. The Australian dollar weakened slightly but continues to impact on net AUD sale proceeds. The Company has two forward exchange contracts outstanding at the date of this report. Each is for USD 14 million and they are due for settlement in November 2011 and December 2011 respectively at rates less than parity. As noted by other iron ore producers and in media coverage, the iron ore market has softened during October 2011 due to reduced Chinese steel demand and uncertainty on Europe’s financial position. This will likely result in lower realised prices in the December 2011 quarter. However, it is expected the iron ore price will stabilise shortly as sale prices near the levels of marginal cost of Chinese iron ore production. PROJECTS Since embarking on its Pilbara Iron Ore development strategy in 2006, Atlas has focussed on building a strong mine project and infrastructure pipeline that provides various development options for the Company. In so doing, Atlas now has many and varied development options in front of it, with the cash flow from existing and future mines to assist in underwriting its development objectives. Furthermore, with many feasibility studies and two mine developments behind it, Atlas now has the track record, skills and experience to optimise these options and continue to deliver on its development strategy. During the September 2011 quarter Atlas spent $18.6 million dollars on project development (excluding the initial payments of $23.1 million made to Global Advanced Metals as part Wodgina infrastructure access agreement announced in May 2011). INTRODUCING ATLAS IRON’S ‘HORIZONS’ GROWTH PROGAM Horizon 1 The ‘Horizon 1’ Growth Program defines Atlas’ near term focus, extending its North Pilbara development model to produce at a rate of 12Mtpa during the course of the 2013 financial year, and then filling Atlas’ 15Mtpa Utah Point allocation (contractually available from September 2015). The ‘Horizon 1’ growth program incorporates and envisages changes to the previous Turner River Hub (TRH) development strategy. Changes in the scope of the original TRH project have arisen as a result of the recent acquisition of Giralia Resources NL, the extension of the Wodgina Mine infrastructure agreements and now the acquisition of FerrAus Limited, each of which provide further opportunity to either rationalise infrastructure or enhance the development of the North Pilbara logistics chain, including consideration for a North Pilbara rail case. SEPTEMBER 2011 QUARTERLY REPORT Page 4 of 14 QUARTERLY REPORT ATLAS IRON LIMITED SEPTEMBER 2011 The ‘Horizon 1’ Growth Program now encompasses several mine and infrastructure developments, including; Expansion of the existing Wodgina DSO Mine, inclusive of a crushing hub for both the Wodgina and soon to be developed Abydos mine, Development of the Mt Dove mine as a standalone DSO project, Development of the Mt Webber mine, inclusive of a crushing hub for both the Mt Webber and potential future McPhee Creek operations early start-up, Development of an off-highway private haul road network to support North Pilbara production, and Further development of Utah Point port facilities to realise Atlas’ ultimate 15Mtpa port allocation. Horizon 1 projects remain Atlas’ highest priority and attract the most management resources to ensure targets are met. Horizon 2 Atlas’ ‘Horizon 2’ Growth Program targets the expansion of the Company’s production base from 15Mtpa targeting up to 46Mtpa, through expansion of its North Pilbara production, development of its South East Pilbara Resources and further expansion of the Company’s logistics chain including port and rail developments. Atlas’ acquisition of FerrAus Limited is consistent with the Company’s efforts to deliver on its ‘Horizon 2’ Growth Program. Furthermore, progress is being made on both port and rail solutions through the Company’s participation in North West Infrastructure and parallel negotiations around the various options for rail solutions. These are ambitious and achievable targets that build directly on the Company’s skill set, infrastructure rights and expanding resource assets.