TIDMLOND
RNS Number : 3203E
London Mining Plc
09 May 2013
London Mining Plc
Quoted on London AIM (LOND LN)
("London Mining" or the "Company")
9 MAY 2013
Q1 2013 PRODUCTION REPORT AND INTERIM MANAGEMENT STATEMENT
Marampa, Sierra Leone
Production
-- Quarterly production of 706,000wmt iron ore concentrate, up 29% on the previous quarter
-- Quarterly sales of 589,000wmt, up 52% on the previous quarter
-- Commissioning of second plant completed increasing capacity to 3.6Mdtpa
-- Annualised export rate of 3.9Mwtpa in April following arrival
of first self propelled barge mid month, with second self propelled
barge contracted to arrive in June
-- Pride of Marampa loading ungeared Panamax vessels at end of Q1 2013
-- Production guidance of 3.3 to 3.6Mdmt and sales guidance of
3.6 to 3.8Mdmt maintained for 2013
-- Production from gravity circuit as well as 5Mtpa run rate expected Q4 2013
Isua, Greenland
-- Engagement with new Government following election in March
with permitting process unchanged
Graeme Hossie Chief Executive of London Mining said:
"London Mining has made an excellent start to 2013 and we are
pleased to announce record production and sales volumes in the
first quarter. We are well advanced with the next stage of
expansion to achieve a run rate of 5Mtpa by the end of the second
half of this year and are reviewing high return opportunities for
the further development of Marampa. As part of a programme of
continuous improvements throughout our business we are increasing
logistics capability, implementing our cost optimisation plan and
are reviewing key areas of margin improvement including progressive
reduction of FOB costs below USD50/dmt, improved FOB pricing from
reduced ocean freight and reduction of our overall overheads. We
are moving forward at Isua where we are encouraged following our
initial engagement with the new Government of Greenland and
continue to expect completion of the exploitation permitting
process in 2013."
Marampa, Sierra Leone (100% owned)
Q1 2013 summary
Q1 2013 % change Q4 2012 Q1 2012
------------------------------------------------ -------- --------- -------- --------
Concentrate produced (wmt) 706,000 +29 546,000 315,000
Average daily production rate (wmt/d) 7,841 +32 5,939 3,467
Sales (wmt) 589,000 +52 387,000 244,000
Average concentrate grade sold (Fe%) 63.5 -1 64.3 65.9
Average concentrate moisture content sold (%) 7.1 0 6.8 4.7
Average FOB price * including hedges (USD/dmt) 104 0 104 108
Average freight (USD/wmt) 35 +6 33 39
------------------------------------------------ -------- --------- -------- --------
*Free on board ("FOB") prices are net of freight and grade
premium but exclude marketing related fees
Production
Operations at Marampa continue to progress according to plan
with production up 29% quarter on quarter and up over 220% on Q1
2012. Commissioning of the second plant has been completed and
annualised capacity of 3.6Mdtpa achieved for the combined
processing operation. Grade temporarily fell during the quarter
primarily due to the start up of the second plant but Fe grades
have already reverted to around 65% Fe now production has been
stabilised and calibration work concluded.
Planned upgrades to plant capacity will be completed to achieve
production from the gravity circuit and ball mills in Q4 2013 with
a run rate of 5Mtpa expected to be achieved by the end of the year.
Essential long lead items to complete the expansion including the
spirals for the gravity circuit and ball mills are in Sierra Leone
with foundations for the milling and gravity circuits already in
place ahead of commencement of the wet season. Production guidance
of 3.3 to 3.6Mdmt is maintained for the year, and we are reviewing
opportunities for high return investment in volume and operating
cost optimisations.
Measures to mitigate against the adverse impact of the wet
season to operations are in place with a c1.5Mt run of mine
stockpile ready for processing, a dewatering plan implemented for
mining areas and essential work already undertaken to the haul and
mine access roads ahead of the first rains.
Sales, prices and hedging
Record sales volumes of 589,000wmt were achieved in Q1, a 52%
increase on the previous quarter with Marampa iron ore continuing
to capture a grade related premium relative to the Platts 62% Fe
benchmark. The average unhedged received price after deduction of
freight over Q1 2013 was USD115/dmt FOB, up from USD93/dmt in Q4
2012. After hedging, the realised FOB price for Q1 2013 was
equivalent to USD104/dmt (USD104/dmt in Q4 2012). Despite the
higher CFR benchmark in Q1 versus Q4, the FOB price remained at
USD104/dmt after the impact of hedging, higher freight due to
seasonal variation and the temporary reduction in iron content
premium as a result of the second plant start up.
A progressive hedging programme to project margins in a key
period of investment commenced in Q4 2012. 1.6Mdmt of 2013
production has been hedged at an average price of USD126/dmt CFR.
1.3Mdmt of this hedge remains at USD125/dmt at the end of Q1.
113,000dmt of Q1 2014 production has been hedged at USD111/t.
Shipments have now commenced under the Vitol offtake agreement
which is based on the Platts 63.5% Fe benchmark.
Logistics upgrades
Following the completion of commissioning of the Pride of
Marampa floating offshore transhipment platform (FOTP), loading of
ungeared vessels commenced at the end of March. The move to
ungeared vessels means that freight is expected to average less
than USD30/t in 2013 with potential for further savings once
loading of larger vessels commences during 2014. The floating crane
transhipment unit (FCTU) is en route from India and after a short
period of commissioning will be available to commence loading ocean
going vessels in Q2. In addition to delivering an expected
reduction in barge cycle times and providing back up to the
existing FOTP, the FCTU will also provide accelerated loading
capability which is of particular benefit during the wet
season.
Record export volumes of 330,000wmt were achieved in April (or
3.9Mtpa on an annualised rate basis) following the arrival and
operation of the first self propelled barge (SPB) mid-month. A
second SPB is contracted to arrive in June and further barging
capacity is scheduled to be added in accordance with production
requirements. Annualised export capacity therefore now exceeds
production and reduction of the stockpile to around one shipload is
on track for H1 2013 with sales of 3.6 to 3.8Mdmt forecasted for
2013. A stockpile of less than 400,000wmt of concentrate which
meets the specification of the existing offtake agreements is now
in place.
Health and safety
Health and safety metrics improved in all areas over the quarter
and London Mining remains committed to continuous progress in all
aspects of health, safety and the environment at its
operations.
Q1 2013 Q4 2012 Q1 2012
----------------------- -------- -------- --------
LTI 0 0 3
-------- -------- --------
All Injuries incl.LTI 7 9 15
-------- -------- --------
Fatalities 0 1 0
-------- -------- --------
LTIFR 0.00 0.76 4.77
----------------------- -------- -------- --------
Isua, Greenland (100% owned)
Following the election of a new government in March we are in
dialogue with the new minister of Mines and the new Premier of
Greenland. Premier Aleqa Hammond has confirmed that the permitting
process will proceed as anticipated under the previous government.
Issuance of the exploitation permit continues to be expected in
2013.
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 BST (UK). Details for the conference
call are below:
International dial-in: +44 (0)20 3427 1912
UK Toll Free: 0800 279 5004
Confirmation code: 6823370
Replay facility will available on London Mining's website after
the call, www.londonmining.com.
For more information please visit www.londonmining.com 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)
Christopher Kololian / Tom Fyson +44 (0)20 3100 2000
J.P. Morgan Cazenove (Broker)
Ben Davies / Ignacio Borrell +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.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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