TIDMLOND
RNS Number : 4076S
London Mining Plc
07 November 2013
London Mining Plc
Quoted on London AIM (LOND LN)
("London Mining" or the "Company")
07 November 2013
PRODUCTION REPORT AND IMS FOR THE QUARTER ENDED 30 SEPTEMBER
2013
Improved performance through the wet season and on track for
5Mdmt/a by year end
Marampa, Sierra Leone
-- Q3 2013 iron ore concentrate production of 948,000wmt up 250%
on Q3 2012, down 1.6% on the previous quarter due to seasonal
impacts
-- Q3 2013 sales of 890,000wmt, up 300% on Q3 2012 demonstrating
improved logistics through the wet season with the additional
barging capacity now in operation, down 12.2% on the previous
quarter
-- Plant upgrade to 5.4Mwmt/a(1) (5Mdmt/a) on track for commissioning and ramp up through Q4
-- Full year production expected to be between 3.6Mwmt to
3.9Mwmt (3.3Mdmt to 3.6Mdmt ) with sales guidance maintained at
between 3.9Mwmt to 4.1Mwmt (3.6Mdmt to 3.8Mdmt)
-- Life of Mine Study completed and announced on 25 September
2013, demonstrating low capital intensity spend to develop a
6Mdmt/a operation for over 40 years with an average cash cost of
between USD39wmt to USD42/wmt (USD42/dmt to USD45/dmt) over the
life of mine.
Graeme Hossie Chief Executive of London Mining said "I am
pleased with our improved performance through the 2013 wet season
which saw a 300% increase in Q3 sales volumes on the previous year.
This demonstrates that our simple and flexible logistics solution
can accommodate increased concentrate volumes. The plant upgrades
are progressing well and we expect to meet our targeted 5.4Mwmt/a
(5Mdmt/a) production run-rate and operating cost target of around
USD47/wmt (USD50/dmt) as we exit 2013."
(1) Note: all production numbers will be reported in wet metric
tonnes (wmt) from this point forward.
Marampa, Sierra Leone (100% owned)
Q3 2013 summary
9 months to 30 Sep Q3 2013 % change Q2 2013 Q3 2012
------------------------------------------------ ------------------ -------- --------- ---------- --------
Concentrate produced (wmt) 2,617,000 948,000 -1.6 963,000 373,000
Sales (wmt) 2,490,000 890,000 -12.2 1,014,000 298,000
Average concentrate grade sold (Fe%) 63.7 63.4 -1.2 64.2 64.1
Average concentrate moisture content sold (%) 7.9 8.7 16.0 7.5 8.3
Average FOB price * including hedges (USD/dmt) 97 93 -4.1 97 97
Average freight (USD/wmt) 30 29 -3.3 30 39
------------------------------------------------ ------------------ -------- --------- ---------- --------
*Free on board ("FOB") prices are net of freight and grade
premium but exclude marketing related fees
Production and expansion progress
Production continued in line with expectations through the
quarter with initiatives implemented to operations as result of our
experience in the previous year resulting in a marked improvement
in performance over the wet season. Production was down 1.6%
quarter on quarter in 2013 versus down 7% in 2012, despite 20%
higher rainfall over the same period year on year. Volume and
product grades fell in the quarter as processing of more competent
weathered ore commenced but grade is expected to improve as the
milling circuit is brought on line in Q4 2013. Concentrate
production capacity is expected to increase to around 5.4Mwmt/a
(5Mdmt/a) following the commissioning and ramp up of the ball mill
and gravity circuit with an associated reduction in operating cost
run rate to around USD47/wmt (USD50/dmt) by year end. We expect
production for the year to meet guidance of 3.6Mwmt to 3.9Mwmt
(3.3Mdmt to 3.6Mdmt). Higher than average and prolonged rainfall
has impacted the first few weeks of Q4 resulting in depletion of
ROM stockpiles and reduced plant throughput. The recent onset of
dry weather has allowed mining to resume at the expected rate.
Sales, prices and hedging
As expected, exports were down 12% over Q2 2013 (versus -15%
2012) however volumes increased by 300% from the equivalent wet
season quarter in the prior year following the modular expansion of
trucking and barging augmented by transhipment capability. We
maintain our previous sales guidance of between 3.9Mwmt to 4.1Mwmt
(3.6Mdmt to 3.8Mdmt) for 2013 based on loading rates achieved with
existing assets at the end of June, prior to the heavy rains,
supplemented by a third self-propelled barge .A contract has been
signed to supply a new fleet of pushers and barges. The first of
these units is expected to arrive in Q4 2013 to handle increased
export volumes from the upgraded plant.
As a result of higher benchmark pricing and the transition to
ungeared panamax vessels, the average quarterly unhedged received
price after the deduction of freight was USD101/dmt FOB, up from
USD93/dmt in the prior quarter. The upgraded transhipment solution
delivered lower seaborne freight costs over the quarter at
USD29/wmt down from USD30/wmt the previous quarter. Due to high
proportion of hedged sales volumes in Q3 2013 at a lower price than
benchmark, the hedged FOB price fell to USD93/dmt (USD97/dmt in Q2
2013). As at 30 September 2013, cumulative 1.5Mdmt of 2013 sales
have been settled at an average price of USD126/dmt CFR. For the
remaining 2013 sales, 0.6Mdmt have been hedged at an average price
of USD120/dmt CFR and for H1 2014 sales, so far 1.1Mdmt have been
hedged at an average price of USD119/dmt.
Life of Mine Study
As announced on 25 September 2013, the Life of Mine Study was
completed during the quarter. In line with previous guidance,
production at Marampa can be increased further by simple
optimisation of the existing plant to a rate of 6.5Mwmt/a
(6.0Mdmt/a) in 2014 at an estimated additional cost of USD40
million. We also expect an investment of USD240 million to upgrade
the plant to process all ore types and extend the life of mine to
over 40 years based on probable reserves of over 500Mt. The
incremental expansion and other initiatives identified by the
feasibility study are expected to reduce average operating costs to
betweenUSD39/wmt to USD42/wmt (USD42/dmt to USD45/dmt) over the
life of mine.
Health and safety
Two lost time injuries (LTI) occurred over the quarter, after
six months LTI free. The rolling LTIFR has significantly improved
on the previous year, down to 0.42 from 2012's rolling LTIFR of
0.96. Safety is an important component of our business and we
continue to focus on reducing risk and improving H&S
performance within our operations.
Q3 2013 Q2 2013 Q1 2013
------------------------------- -------- -------- --------
LTI 2 0 0
-------- -------- --------
All Injuries 15 12 7
-------- -------- --------
Fatalities 0 0 0
-------- -------- --------
LTIFR (12mth rolling average) 0.42 0.46 0.94
-------- -------- --------
Isua, Greenland (100% owned)
As announced on 24 October 2013. London Mining was granted an
Exploitation Licence for the Isua Project in Greenland. Within the
Exploitation Licence, London Mining has agreed to incorporate a
royalty structure ("Royalty") with the Government of Greenland. The
Royalty, based on sales, is payable if combined withholding tax and
corporation taxes are less than the calculated Royalty in a
particular year, such that the Government receives a minimum
amount. The royalty is structured with escalating rates: with the
first five years at 1%, years 6-10: 3%; years 11-15: 4%, rising to
5% after year 16. The lower rate in the earlier years recognises
the need to protect the payback period for initial development
investment once the mine is brought into production. The new fiscal
agreement will have no material adverse impact on the net present
value of the project.
Graeme Hossie, Chief Executive Officer, and Jim North, Chief
Operating Officer will be hosting an audio webcast and conference
call for analysts and investors today at 8:30am GMT (UK). Details
for the conference call are below:
Audio Webcast
The presentation will be available via a live and on-demand
audio webcast, a link to the audio webcast can be found on London
Mining's website here:
http://www.londonmining.com/investors/reports-and-presentations/.
The webcast will include audio from the conference call. You
will not be able to post questions through the webcast.
Conference call
Please use the following numbers and Conference ID to dial in to
the conference call:
Dial-in details: International dial-in +44(0)20 3427 1913
UK Toll Free 0800 279 5004
USA Toll Free +1646 254 3388
Confirmation code 6028021
For more information please visit www.londonmining.com or
contact:
London Mining Plc
Graeme Hossie, Chief Executive Officer
Thomas Credland, Head of Investor Relations +44 (0)20 7408 7500
Liberum Capital (Nominated Advisor/Broker)
Tom Fyson / Clayton Bush / Ryan de Franck +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 concentrate for the global steel industry and is focused
on identifying, developing and operating sustainable mines. London
Mining commenced sales from its 100% owned Marampa Mine in Sierra
Leone in 2012 and expects to reach production capacity of 6Mdmt/a
in 2014. Marampa has sufficient resources to support a staged
expansion to over 10Mdmt/a. London Mining has also completed
bankable feasibility studies outlining plans for a further 20Mdmt/a
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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