Atlas Iron says estimates for its Pilbara iron ore reserves have increased by 21 per cent to almost 500 million tonnes over the past seven months.

The emerging Pilbara miner has upgraded its reserve estimates at Mt Dove by 21 per cent, McPhee Creek by 98 per cent and Abydos by 25 per cent compared to estimates released on June 30 last year.

The 499 million tonne ore reserve includes mining depletion at Pardoo and Wodgina as construction ramps up at Abydos.

It comes a fortnight after Atlas indicated it could beat its full year sales guidance after shipping more lower-grade iron ore than expected in the December quarter.

Managing director Ken Brinsden said the growth in reserve estimates, particularly at McPhee Creek, was the result of extensive drilling programs, engineering and ongoing feasibility works conducted over the past 18 months.

"We shipped at a record annualised rate of seven million tonnes per annum in the December 2012 quarter and we are on track to hit 10 million tonnes by the end of June this year, on the back of the production start-up at Abydos where construction is now well underway," Mr Brinsden said in a statement on Tuesday.

"At the same time we are growing the ore reserves to underpin our Horizon Two growth options."

Horizon Two is Atlas' second growth program, which includes McPhee Creek in the northern Pilbara.

Atlas shipped a total of 1.75 million tonnes of iron ore in the three months to December 31, up 10 per cent from the preceding three months.

The company has also been in discussions around Pilbara infrastructure as it works to secure a rail solution and expand into its Horizon Two asset.

Atlas believes the iron ore price will trade around $US120 to $140 per tonne over the medium to long-term, while analysts tip it will trade lower than $US100 per tonne over the longer term.

Atlas shares closed 4.5 cents, or 2.96 per cent, higher at $1.565 on Tuesday.

 

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