TIDMLOND
RNS Number : 8102H
London Mining Plc
17 July 2012
London Mining Plc
Quoted on London AIM (LOND LN)
("London Mining" or the "Company")
17 July 2012
Q2 2012 PRODUCTION REPORT
Highlights
-- Quarterly production of 397,000 wmt (369,000 dmt) of iron ore
from Marampa mine in Sierra Leone, up 26% on previous quarter
-- Sales of 350,000k wmt (326,000 dmt), up 36% on previous quarter
-- Consistent premium quality specification ore of 65.3% Fe with low impurities
-- Expansion to 5Mtpa progressing well with second plant
expected to be commissioned in Q1 2013
-- Ramp up tracking production of 1.5Mt in 2012
Post period highlights
-- Appointment of James North as Chief Operating Officer
Graeme Hossie, Chief Executive Officer of London Mining said
"The ramp up at Marampa is going well and we are on track with our
production plans. We continue to ship our premium quality ore to
customers in China where the product has been extremely well
received. We have made excellent progress with our expansion plans
at Marampa to 5Mtpa next year and will complete our bankable
feasibility study for the next stage growth to 9Mtpa later this
year as planned. The combination of near term softening of spot
prices, along with an extended commissioning period of the
transhipment platform has reduced current margins, however we
expect a significant margin uplift once we commence loading of
larger, ungeared vessels in Q3 2012. Overall, we are pleased with
the progress we have made this quarter, with logistics from mine to
ship proven to be robust in the earlier than expected wet season.
The hedging of some of our 2012 volume at USD148/dmt has also
helped our realised price.
I am also delighted about the recent appointment of James North,
who will replace Luciano Ramos as COO of the Company. James brings
over 20 years of mining experience to London Mining and will play a
vital role as we continue the ramp up at Marampa and execute our
planned expansion plans. I am also extremely pleased that Luciano
remains on the board and continues to provide ongoing support and
technical advice."
Marampa, Sierra Leone (100% owned)
Production
2Q 2012 1Q 2012 % change
Concentrate produced (wmt) 397,000 315,000 +26
Average daily production rate (wmt/d) 4,358 3,467 +26
Sales (wmt)* 350,000 244,000 +36
Average concentrate grade shipped (Fe%) 65.3 65.9 -1
Average FOB price including hedges (USD/dmt) 105 108 -8
* 1wmt = 0.93dmt
**FOB prices are net of freight and grade premium but exclude
marketing related fees
Quarterly iron ore concentrate production at the Marampa
mineincreased by 26% over the second quarter 2012. The plant is
successfully processing tailings and weathered ore and the ramp up
continues in line with previous guidance to produce 1.5Mt in 2012.
H2 2012 mining costs are expected to be lower than H1 2012 due to
short term variations in mine scheduling as well as mine
development considerations. Five tenders have been received for a
mining contractor to mobilise and commence operations for a three
year period during Q3 2012. The tenders being considered reflect
increased market rates for international mining contractors in
Sierra Leone and costs for 2012 and 2013 are expected to be higher
than previous guidance as a result of this contractor price
inflation. Longer term solutions, including owner-operator mining,
will be considered as part of the bankable feasibility study
("BFS").
The haul road has operated without interruption during the
initial six weeks of the wet season with over 5,000wmt/d
consistently achieved as expected. 350,000 wmt of concentrate was
sold to China over the quarter. Average moisture content of
shipments during the quarter was 6.7%. Wet season procedures for
barge transport and ship loading are working well as designed.
The average unhedged received price after deduction of freight,
over the Q2 2012 was USD98/dmt FOB. This reflects the movement in
the Platts 62% spot rate from an average of USD143/dmt in Q1 2012
to USD 139/dmt in Q2 2012 and an increase in the average freight
rate for geared vessels to China of USD45/wmt up from USD 39/wmt
last quarter. Delivery into London Mining's 512kt hedging contract
through which London Mining sells approximately 57kdmt/month at an
average price of USD148/dmt on a 62% Fe equivalent basis, commenced
in April. After hedging, the realised FOB price for Q2 2012 was
equivalent to USD105/dmt (USD108/dmt in Q1 2012).
Commissioning of the transhipment vessel has been slower than
expected due to minor fabrication issues. London Mining's dedicated
maritime logistics team in Freetown are continuing to work through
the commissioning process, with loading of larger ungeared bulk
vessels now expected to commence during Q3 2012. This is expected
to allow London Mining to reduce freight costs by between USD15/wmt
to USD20/wmt.
Update on expansion
The processing plant has been operating at a rate capable of
delivering guided production tonnage of 1.5 Mt in 2012 using a
blend of tailings and highly weathered ore without installation of
the ball mill. A mobile crusher is now planned to be used starting
in Q3 to process weathered material including a stockpile of
oversize material accumulated during the first six months of
operations. The ball mill for the first plant will now be
commissioned in Q1 2013 but this is not expected to have any impact
on 2012 guidance due to the ability of the plant to operate above
capacity which will be augmented by the mobile crusher.
Foundations for the second plant are now complete and
commissioning of the second WHIMS plant to provide installed
capacity in excess of 3.6Mtpa is expected in Q1 2013. Installed
capacity of 5Mtpa will be reached in Q3 2013 after the addition of
a gravity circuit and milling circuits to each plant.
Work on the BFS for the proposed expansion to 9Mtpa is still
expected to be completed in Q3 2012.
London Mining, Colombia (100% owned)
Operations and exploration
Progress on exploration and development continues and the
Company expects to release a JORC compliant resource on its
properties in the vicinity of its coke ovens by the end of Q3 2012.
Q2 2012 coke production of 12,616t was hampered by unexpected
repairs to the ovens due to the appearance of certain performance
faults during ramp up. The issues have been identified and the
contractor is undertaking the necessary repairs at its own cost.
The previously guided 200ktpa steady state production level is now
expected in H1 2013 due to the construction timeline being adjusted
to allow for incorporation of improvements to the ovens.
Isua, Greenland (100% owned)
The permitting process continues in Greenland which the Company
expects to be completed by the end of the year. Following the
completion of the BFS for the 15mtpa project, the Company has
commenced a process to bring in strategic partners to assist with
the funding of the project.
New management appointment
On 2 July 2012, London Mining announced the appointment of James
North as Chief Operating Officer ("COO") to take over from Luciano
Ramos who will retire as an executive during 2012, but who will
remain on the board of London Mining.
Conference call
There will be a conference call for analysts and investors
hosted today by Graeme Hossie, CEO at 8.30am BST (UK).
Please see below for dial in details:
UK Toll Free 0800 279 4841
International dial-in +44 (0)20 7784 1036
Confirmation code 5934081
Replay facility will be available on London Mining's website for
seven days after the call.
For more information please visit www.londonmining.co.uk or
contact:
London Mining Plc
Graeme Hossie, Chief Executive Officer
Rachel Rhodes, Chief Financial Officer
Thomas Credland, Head of Investor Relations +44 (0)20 7408 7500
Liberum Capital (Nominated Advisor/Broker)
Clayton Bush/Christopher Kololian +44 (0)20 3100 2000
J.P. Morgan Cazenove (Broker)
Neil Passmore / Ignacio Borrell +44 (0)20 7742 4000
Brunswick Group
Carole Cable / Rosheeka Field +44 (0)20 7404 5959
About London Mining
London Mining is focused on identifying, developing and
operating mines to become a mid-tier supplier to the global steel
industry. London Mining is producing high specification iron ore
from its Marampa Mine in Sierra Leone and developing two other iron
ore mines in Greenland and Saudi Arabia as well as a coking
operation in Colombia. All London Mining's assets have deliverable
production with potential for expansion. The Company listed on AIM
in London on 6 November 2009. It trades under the symbols LOND.L
(Reuters) and LOND LN (Bloomberg). More information about London
Mining can be found at www.londonmining.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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