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* Australia's Atlas Iron turns a profit amid weak ore prices
* Shipments up 47 pct year-on-year
* Sells iron ore for average $98.10/t vs $104.90/t yr ago (Adds production, cost, financial data, iron ore price)
SYDNEY, Aug 28 (Reuters) - Atlas Iron posted a A$14 million ($13 million) net profit versus a $245 million loss a year ago as sharply higher production offset weaker iron ore prices, enabling it to pay a dividend.
"Our operations have met or exceeded all production and cost targets, with further gains forecast for this financial year," said Atlas Managing Director Ken Brinsden.
Stronger cash generation during fiscal 2014 and reduced capital spending for a new mine project allowed it to declare a full-year A$0.02 per share dividend, Brinsden said.
Atlas is Australia's fourth-biggest iron ore producer by tonnage, although it ranks far behind major producers such as BHP Billiton. It produced 10.9 million tonnes of iron ore in the year to June 30, up 47 percent on a year earlier.
This year it is aiming for production of between 12.2 million and 12.8 million tonnes, it said
Revenue in fiscal 2014 rose to A$1.1 billion, up 58 percent against the previous year.
Increased iron ore shipments to China from top Australian producers BHP, Rio Tinto and Fortescue Metals Group, as well as Vale in Brazil, are weighing heavily on prices.
Spot iron ore slipped to its lowest price in nearly two years this week, with iron ore for immediate delivery to China .IO62-CNI=SI at $88.20 a tonne, according to Steel Index. The price has fallen nearly 35 percent so far this year.
Brinsden said Atlas was targeting a reduction in cash production costs to between $47 and $50 per tonne after its average selling price per tonne dropped to $98.10 in fiscal 2014 from $104.90 the previous year.
All-in delivered costs to China, Atlas' main market, averaged A$76.80 per tonne, he said.
Atlas said its underlying profit after tax came in at A$9 million, while underlying earnings before interest and tax and amortisation (EBITDA) rose to A$248 million in fiscal 2014 from A$113 million the previous year.
U.S. $1 = 1.0714 Australian dollar Reporting by James Regan; Editing by Richard Pullin