Atlas Iron says strong iron ore prices at the end of last year have put the company on track for a bumper annual result.

Shares surged on the release of a strong production report and guidance.

The company has raised its full-year iron ore production guidance after a record second quarter result.

Atlas says it now expects to ship between 10.2 and 10.7 million tonnes of iron ore in the year to June.

That is up from previous guidance of 9.8 and 10.3 million tonnes.

The company also increased its half year earnings outlook.

Atlas’ executive director Mark Hancock says a period of stability in iron ore prices in the last three months of 2013 was a particular benefit.

“It’s been a strong quarter for iron ore prices, a very steady quarter as well,” he said.

“Very little volatility between the months which I think’s good for everybody to see.

“In terms of our own pricing, we averaged $US120 per dry metric tonne for the standard product, up a couple of per cent on the prior quarter.”

Shares in the company have gained as much as nine per cent on the news.