TIDMLOND
RNS Number : 2698W
London Mining Plc
24 January 2013
London Mining Plc
Quoted on London AIM (LOND LN)
("London Mining" or the "Company")
24 January 2013
Q4 2012 PRODUCTION REPORT
Marampa, Sierra Leone
Production
-- Full year production of 1.63Mwmt (1.52Mdmt) exceeding 2012 target of 1.5Mdmt
-- Quarterly production of 546,000wmt (508,000dmt) iron ore
concentrate, up 46% on the previous quarter
-- Quarterly sales of 387,000wmt, up 30% on the previous quarter
-- Upgraded transhipment capability following
- commissioning of floating offshore transhipment platform
- mobilisation of second transhipment vessel
-- Stockpile of 390,000wmt to be sold down to 100,000wmt over H1 2013 at higher margins
-- 560,000dmt of H1 2013 production hedged at an average CFR
price USD132/dmt to protect margins during growth programme
Expansion
-- Second plant in commissioning stage increasing capacity to 3.6Mtpa
-- Expansion to 5Mtpa capacity on track to complete in Q3 2013
Other Projects
-- Colombia operations have been placed under care and maintenance
-- Permitting submissions and public hearings have been
completed for the Isua Project and permit is expected in 2013.
Graeme Hossie Chief Executive of London Mining said:
"London Mining has had an excellent finish to its first year of
production at Marampa with a 46% increase in quarterly production
allowing us to beat the full year production target we set in
January 2012. We have also started commissioning of the second
plant which positions us well to meet our target of increasing
capacity to 5Mtpa at an operating cost of under USD50/t. We have
put our Colombian assets on care and maintenance with a view to
rationalise the assets over time. This will enable us to better
focus resources on Marampa which we expect to produce the greatest
return on capital for shareholders in the near term.
The excellent performance at the Marampa operation was
overshadowed by an accident in December which led to the first
fatality in over seven years of London Mining operations and
development activities. We were deeply saddened by this news and
extend our sincere condolences to the family and friends of the
individual concerned. London Mining is committed to the safety of
all its employees, contractors and host communities. This remains
the Company's highest priority, as Marampa continues to ramp up
production."
Marampa, Sierra Leone (100% owned)
Q4 production
Full year Q4 Q3 Q2 Q1
------------------------------------------------ ---------- -------- -------- -------- --------
Concentrate produced (wmt) 1,631,000 546,000 373,000 397,000 315,000
Average daily production rate (wmt/d) 4,530 5,939 4,051 4,358 3,467
Sales (wmt) 1,279,000 387,000 298,000 350,000 244,000
Average concentrate grade sold (Fe%) 64.9 64.3 64.1 65.3 65.9
Moisture content (%) 6.7 6.8 8.3 6.7 4.7
Average FOB price * including hedges (USD/dmt) 104 104 97 105 108
Average freight (USD/wmt) 39 33 39 45 39
------------------------------------------------ ---------- -------- -------- -------- --------
*Free on board ("FOB") prices are net of freight and grade
premium but exclude marketing related fees
Operations at Marampa performed very well in the fourth quarter.
This was due to increased mining productivity following the
engagement of a new mining contractor, as well as an improvement in
plant availability and metallurgical recoveries; this contributed
to quarterly production of 546,000wmt, a 46% increase over the
previous quarter. 24 ocean going vessels were loaded for export
over 2012 with sales volumes increasing by almost 30% quarter on
quarter in Q4 2012 to 387,000wmt.
Prices and hedging
Marampa iron ore continues to capture a grade related premium
relative to the benchmark. The average unhedged received price
after deduction of freight over Q4 2012 was USD93/dmt FOB up from
USD77/dmt in Q3 2012. The realised Platts 62% Fe CFR price improved
in Q4 to USD125/dmt from an average of USD117/dmt in Q3 2012. After
hedging, the realised FOB price for Q4 2012 was equivalent to
USD104/dmt (USD97/dmt in Q3 2012). As a result of the recent
improvement in spot iron ore pricing, 320,000dmt of Q1 production
has been hedged at an average CFR price of USD130/dmt and
240,000dmt of Q2 2013 production has been hedged at an average CFR
of USD134/dmt in order to secure margins in a key stage of
production growth.
Stockpile management and logistics upgrades
Following rectification works for the Pride of Marampa floating
offshore transhipment platform ("FOTP") that were completed over
the fourth quarter, operation of the Pride of Marampa has commenced
with loading of a geared panamax vessel. Loading of ungeared
vessels is expected to begin later in Q1 2013. In addition London
Mining has also mobilised a second transhipment vessel that until
recently operated successfully in India with a proven loading rate
of 15,000tpd. This second vessel is expected to arrive in Sierra
Leone for commissioning later in Q1 2013 resulting in total
installed transhipment capacity of 35,000tpd. This significantly
derisks the transhipment operations by providing back-up to the
existing FOTP and provides accelerated and multiple vessel loading
capability. The new vessel is being leased over a three year period
and will be funded through the reinvestment of operating cost
savings made from improved cycle times and a reduction in redundant
barging capacity.
As a result of the excellent performance of the Marampa
processing plant in Q4, a stockpile of around 390,000wmt is now in
place with shipping now scheduled to allow realisation of a
significantly higher FOB price than would have been achievable in
Q4 2012. The logistics required to deplete the stockpile are
already in place and the further upgrades to transhipment capacity
are expected to reduce it to an operating level of less than
100,000wmt or one ship load during the first half of 2013.
Construction of second plant and gravity circuit
Mechanical completion of the second plant has been achieved and
commissioning of the second 1.8Mtpa of capacity is underway. Plant
capacity will be increased further to 5Mtpa following further
equipment installations to beneficiation capacity in Q3 2013.
Health and safety
Although the Lost Time Injury Frequency Rate declined over the
quarter, an incident in December led to the fatality of one of our
contractors. A full investigation has been carried out and measures
to improve the safety performance of our operations have been
implemented.
Q1 Q2 Q3 Q4
----------------------- ----- ----- ----- -----
LTI 3 1 1 0
----- ----- ----- -----
All Injuries incl.LTI 15 18 21 9
----- ----- ----- -----
Fatalities 0 0 0 1
----- ----- ----- -----
LTIFR 4.77 1.55 2.03 0.76
----------------------- ----- ----- ----- -----
Isua, Greenland (100% owned)
The company has completed its permitting process requirements
for the Isua Project in Greenland with the Department of Minerals
and Petroleum (DMP) to enable construction to commence subject to
the availability of funding from a strategic partner. The Bankable
Feasibility Study for the project, as well as a Social Impact
Assessment and an Environmental Impact Assessment, was completed in
the first half of 2012. The public hearing process and related
responses and submissions, were completed over Q4 2012 and London
Mining has submitted all documents and the applications for
construction of the project to the DMP in accordance with the
Mineral Resources Act of Greenland. It is expected that all
required approvals will be completed in 2013.
In December, the Inatsisartut (the Parliament of Greenland)
passed a bill on building and construction works related to large
scale projects. The act is aimed at promoting foreign investment in
Greenland and limiting possible negative consequences. London
Mining is in full compliance with all aspects of the new
legislation.
Colombia (100% owned)
Following a review of the business and the ongoing weakness of
the market for coke, the Colombian operations have been placed into
care and maintenance whilst London Mining looks to rationalise the
asset over time, to focus on its core iron ore business. The coke
ovens are located in an area of significant coking coal resource
potential with opportunities to access the coke export market.
Q4 2012 Q3 2012 Q2 2012 Q1 2012
------------------- -------- -------- -------- --------
Coke produced (t) 14,695 12,937 12,616 5,800
------------------- -------- -------- -------- --------
Wadi Sawawin, Saudi Arabia (25% owned)
Further progress at Wadi Sawawin has been limited and is
dependent on a dispute being resolved between our Saudi partners
National Mining Company and their proposed engineering firm STX
Heavy Industries. London Mining is not involved in the dispute but
is working with both parties to resolve it constructively.
Graeme Hossie, Chief Executive Officer, and Jim North, Chief
Operating Officer will be hosting a conference call for analysts
and investors today at 8:30am GMT (UK). Details for the conference
call are below:
International dial-in: +44(0)20 7136 2055
UK Toll Free: 0800 279 4841
Confirmation code: 8498459
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)
Ignacio Borrell / Ben Davis +44 (0)20 7742 4000
Brunswick Group LLP
Carole Cable / Rosheeka Field +44 (0)20 7404 5959
About London Mining
London Mining is an expanding producer of high specification
iron ore for the global steel industry and is focused on
identifying, developing and operating sustainable mines. London
Mining commenced sales from the Marampa Mine in Sierra Leone in
2012 and expects to reach production capacity of 5Mtpa in 2013. A
bankable feasibility study was completed in 2012 on an expansion
plan to 9Mtpa and a prefeasibility study was completed in 2011
which shows that Marampa has resources to support a staged
expansion to over 16Mtpa. London Mining has also completed bankable
feasibility studies outlining plans for a further 20Mtpa of iron
ore production by developing mines in Greenland and Saudi Arabia.
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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