TIDMLOND
RNS Number : 5989J
London Mining Plc
18 July 2013
London Mining Plc
Quoted on London AIM (LOND LN)
("London Mining" or the "Company")
18 July 2013
Q2 2013 PRODUCTION REPORT
Sales and production volumes doubled in first six months of
2013
Marampa, Sierra Leone
-- Q2 production of 963,000wmt of iron ore concentrate, a 36% increase on the previous quarter
-- Q2 sales of 1,014,000wmt, a 72% increase on the previous quarter
-- Commissioning of second plant and ramp up to 3.6Mdmt/a
completed six weeks ahead of schedule
-- Further plant expansion on track for Q4 2013
-- Barging and transhipment capacity upgraded in Q2 and running
at over 4Mwmt/a with additional barging to mobilise in H2 for
increased 2013-14 volumes
-- Life of mine study to be completed in Q3 2013
-- 2013 production now expected to be at the higher end of
previous guidance of 3.3 to 3.6Mdmt (3.5Mwmt to 3.9wmt) with sales
guidance of 3.6 to 3.8Mdmt maintained (3.9Mwmt to 4.1Mwmt)
Isua, Greenland
-- Engagement and negotiations with new government have
commenced and permitting process progressing as expected
Graeme Hossie Chief Executive of London Mining said:
"We have made excellent progress at Marampa in the last few
months. The second plant ramp up was completed six weeks ahead of
schedule and solid production performance from both plants allows
us to move to the higher end of production guidance for the year.
We have made significant improvements to our logistics capability
with increased barging and transhipment capacity resulting in a 72%
increase in export volumes and a reduction in ocean going freight
costs. Our focus on continuous improvement across the business is
delivering operating efficiencies and cost reductions as we target
operating costs below USD50/t. We continue on track with activities
to complete the expansion at Marampa to achieve a run rate of 5Mtpa
by the end of this year."
Marampa, Sierra Leone (100% owned)
Q2 2013 summary
Q2 2013 % change Q1 2013 Q2 2012
------------------------------------------------ ---------- --------- -------- --------
Concentrate produced (wmt) 963,000 +36 706,000 397,000
Average daily production rate (wmt/d) 10,703 +37 7,841 4,358
Sales (wmt) 1,014,000 +72 589,000 350,000
Average concentrate grade sold (Fe%) 64.2 +0.7 63.5 65.3
Average concentrate moisture content sold (%) 7.5 +0.4 7.1 7.0
Average FOB price * including hedges (USD/dmt) 97 -7 104 105
Average freight (USD/wmt) 33 -6 35 45
------------------------------------------------ ---------- --------- -------- --------
*Free on board ("FOB") prices are net of freight and grade
premium but exclude marketing related fees
Production and expansion progress
The ramp of up the second plant was completed during the
quarter, an estimated six weeks ahead of schedule. 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 including the ball mills and gravity circuit are on site and
installation of this equipment is progressing according to
schedule. Production is now expected at the higher end of previous
guidance of 3.3 to 3.6Mdmt due to the early ramp up of the first
plant and good progress made on the plant upgrade programme.
The Pride of Marampa floating offshore transhipment platform
(FOTP) is now fully operational and, as reported in Q1, loading
ungeared vessels. The floating crane transhipment unit (FCTU)
arrived in May and commenced operation within days of arrival.
Annualised export volumes of over 4Mwmt/a were achieved over the
quarter following the arrival and operation of the first self
propelled barge (SPB) in mid April. As planned, a second SPB
arrived in June and barging capacity will continue to be upgraded
as production volumes increase over the second half of 2013.
Measures to mitigate against the adverse impact of the wet
season were in place ahead of the first heavy rains in April and
included exposure of around 2Mt of in-pit weathered ore stocks, a
run of mine stockpile of over 2Mt of all ore types established
ready for processing and completion of the haul road improvement
works. Combined with our upgraded logistics, we are well positioned
to deliver continuous exports through the wet season in Q3.
The Marampa life of mine study is nearing conclusion with the
results expected in Q3 2013. The study will consider opportunities
for incremental expansion and optimisation to further reduce
operating costs.
Sales, prices and hedging
Record sales volumes of 1,014,000 were achieved in Q2, a 72%
increase on the previous quarter with Marampa's iron ore continuing
to capture a grade related premium relative to the Platts 62% Fe
benchmark. As a result of the the lower CFR benchmark in Q2 versus
Q1, the hedged FOB price fell to USD97/dmt (USD104/dmt in Q1 2013)
despite the transition from geared supramax class vessels to
ungeared panamax vessels and improved Fe grades following
stabilisation of the second processing plant. The average unhedged
received price after deduction of freight over Q2 2013 was
USD93/dmt FOB, down from USD115/dmt in Q1 2013.
A progressive hedging programme to provide some downside
protection to margins in a key period of investment commenced in Q4
2012. 1.7Mdmt of 2013 production has been hedged at an average
price of USD125/dmt CFR. Of this hedge, 0.8Mdmt remains at
USD119/dmt remains in H2. 139,000dmt of Q1 2014 production has been
hedged at USD112/t.
As a result of the excellent performance of the second plant, we
had a stockpile approximately equivalent to one month's sales at
the end of the half year. Improvements to logistics capability made
over the quarter means we are well positioned to deplete the
stockpile over the coming months and sales guidance of 3.6 to
3.8Mdmt is reiterated for 2013. The upgraded transhipment solution
is expected to deliver lower seaborne freight costs over the
remainder of 2013 with further freight savings expected once
loading of larger vessels commences.
Health and safety
We are pleased to note our second consecutive quarter of zero
lost time injuries but are monitoring our all injuries rate and
continue to focus on continuous improvement in all levels of our
health and safety performance.
Q2 2013 Q1 2013
-------------- -------- --------
LTI 0 0
-------- --------
All Injuries 12 7
-------- --------
Fatalities 0 0
-------- --------
LTIFR 0.00 0.00
-------- --------
Isua, Greenland (100% owned)
Detailed negotiations with the Government of Greenland for the
grant of an exploitation licence to London Mining continue to
progress. It is expected that all required approvals will be
completed 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 1910
UK Toll Free: 0800 279 5004
Confirmation code: 1321989
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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