Atlas Iron is cutting costs and ramping up production as it offers discounts of up to 10 per cent to Chinese customers.
After the recent slide in iron ore prices, the Pilbara-based miner is cutting costs by five to nine per cent in 2014/15 while increasing production and productivity.
But managing director Ken Brinsden concedes Atlas is being forced to continue offering discounts to its Chinese customers, who received 10 per cent price cuts in the June quarter.
"We've been able to hold that discount so that's a good result," Mr Brinsden told reporters on Thursday.
"A more natural place for our discounts to sit would be in the range of six to 10 per cent for the medium term.
"That's where we would see our product sitting."
With iron ore prices having fallen to below $US100 amid an oversupply, miners have been offering discounts in an attempt to hold on to customers.
Still, Mr Brinsden said market conditions had improved compared to the most volatile weeks of the June quarter.
"That doesn't mean that we think the market is strong, it's firmer in comparison to where it has been," he said.
His comments come a day after Rio Tinto boss Sam Walsh told a business lunch that marginal iron ore producers would find current conditions tough as low grade iron ore sold was discounted by about $US15 from the current price of about $US95.
Atlas hopes improvements in productivity will help reduce costs from $76.8 a tonne to between $68 and $73.
It also expects to lift production by 12 to 17 per cent to between 12.2 and 12.8 million tonnes in 2014/15.
Mr Brinsden said this year would be a turning point in the company's growth.
"After a period of substantial investment in project development, we are now poised to benefit from the increased production and lower costs being delivered by that strategy," he said.
Analysts said Atlas was operating with a thin buffer amid volatile iron ore prices.
"They're not making much money, so if the price falls more then they start losing money," one analyst, who did not wish to be named, said.
Under the company's new guidance it would still break even if the iron ore price fell by between $US2 and $US7.
Atlas shares were 2.5 cents higher at 59.5 cents at 1513 AEST.
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