LOND London Mining

TIDMLOND

RNS Number : 6389B

London Mining Plc

06 March 2014

London Mining Plc

Quoted on London AIM (LOND LN)

("London Mining" or the "Company")

6 March 2014

AUDITED FINANCIAL RESULTS FOR THE FULL YEAR ENDED 31 DECEMBER 2013

First group operating profit

Highlights

Financial

   --        Revenue of USD299.4 million from sales of 3.7Mwmt of iron ore concentrate from Marampa 

-- Group EBITDA increased by USD68.3 million to USD54.1 million (2012 loss of USD14.2 million)

-- Group operating profit of USD22.6 million, a USD49.8 million increase from prior year (2012: loss USD27.2 million)

-- Loss before taxation of USD19.2 million, an improvement of USD38.8 million from prior year (2012: loss USD58.0 million)

-- Debt of USD310 million refinanced to extend tenor providing facilities for life of mine extension. Cash at 31 December 2013 was USD47.2 million

Marampa, Sierra Leone (100% owned)

   --        Full year production of 3.4Mwmt, a 108% increase year on year 

-- Marampa expansion to 5.4Mwmt/a substantially completed for capital expenditure of around USD340 million

-- Full year sales of 3.7Mwmt ahead of our revised range of 3.5 to 3.6Mwmt, a 186% increase year on year

   --        Installed plant capacity increased 35% to 5.4Mwmt/a with commissioning ongoing 
   --        Operating cost of USD57/wmt, down 21% from USD72/wmt in 2012 
   --        Life of mine study completed for 6.5Mwmt/a operation with a 40 year mine life 
   --        Lost time injury frequency rate reduced 75% to 0.25 and no fatalities 

Post period highlights

Marampa, Sierra Leone (100% owned)

-- Licence area doubled to 28km(2) providing additional land for improved long term tailings and waste rock disposal

   --        Two spot sales at significant premium to existing offtake agreements 

-- New offtake agreement with Cargill for 1Mwmt/a over 5 years at higher pricing than existing arrangements with no marketing fees

Financial

   --        Sale of London Mining Colombia for total consideration of up to USD5 million 
   --        USD 20 million offtake related prepayment facility arranged with Cargill 

2014 guidance

Marampa, Sierra Leone (100% owned)

-- Expected production of 4.9 to 5.4Mwmt, factoring in slower than expected ramp up of plant in Q1, with unit operating costs at or below USD50/wmt

Commenting on the results Graeme Hossie, CEO, said: "2013 was a year of real progress for London Mining, particularly at our Marampa mine. During our second year of production, we commissioned and ramped up our second plant in Q1, doubling our production capacity to 4Mwmt/a, and completed construction of a third plant in Q4 for a further 35% increase in production capacity to 5.4Mwmt/a. Sales were almost three times 2012 levels as our modular logistics solution was expanded, delivering an annualised export rate of 5Mwmt/a in November. We reduced costs throughout the business with operating cost down 21%, shipping costs down 21% and cash corporate overhead down 36%. Importantly we generated group EBITDA of USD54.1 million in 2013, a USD68.3 million increase on 2012. Our latest offtake agreement indicates strong demand for Marampa concentrate and increased realised pricing for the long term. I am also proud of the improvements we made in safety performance and the ground breaking steps we have made in our approach to sustainability which position us well for the future.

During Q4 our production was impacted by an extended wet season combined with a longer than expected completion for the new plant upgrades. This was compounded by a negative stockpile adjustment in December resulting in volumes falling short of expectations and original forecasts. We have made improvements to our operations, in particular to build a substantially increased ROM stockpile, to ensure these issues do not reoccur and, when combined with completion the commissioning of the plant upgrades, we expect to deliver production of 4.9 to 5.4Mwmt in 2014. Looking forward, we intend to complete our capital programme to complete our life of mine expansion to 6.5Mwmt/a, reduce net debt and create a position where we can begin to return excess cash to shareholders.

Operations

The year under review saw production of 3.4Mwmt and sales of 3.7Mwmt at Marampa. Plant upgrades have been completed, expanding plant capacity to 5.4Mwmt/a. Capital expenditure to complete the initial 5.4Mwmt/a operation is around USD340 million, equivalent to USD63/annual tonne of capacity. Annualised export rates of 5Mwmt/a were achieved in November with the first pushers and barges expected to arrive in Q1 2014 to increase logistics capacity further to the required expanded rate. Unit operating costs were USD57/wmt in 2013, a 21% reduction on 2012 which was achieved through: a change of mining contractor and move to activity based contracts, use of medium fuel oil instead of diesel for power generation and increased economies of scale. Costs are expected to fall further as additional volume is added. Production of between 4.9 to 5.4Mwmt is expected in 2014 with operating costs at or below USD50/wmt.

In September, we completed a feasibility study which showed a plan to increase production capacity to 6.5Mwmt/a and extend the mine life by 40 years for a further capital investment of USD280 million. Based on over 500Mt of reserves grading 31% Fe, the plan showed a further downward trajectory in operating costs to USD39-42/wmt over the life of mine for a 64 - 65%Fe premium quality iron ore concentrate.

Since year end we have agreed a five year deal with Cargill for 1Mwmt/a of Marampa concentrate which will realise materially higher net pricing for 64 to 65% Fe product. A USD20 million prepayment facility has been agreed as part of the signed arrangement.

Financial summary

Group EBITDA increased by USD68.3 million to USD54.1 million largely due to a USD79.4 million EBITDA contribution from Marampa. We have continued to invest in Marampa having generated cash from operating activities of USD63.7 million and deployed USD112.3 million net cash on investing activities in 2013. Cash was USD47.2 million as at 31 December 2013.

In March, we secured a revised corporate debt facility of USD180 million. Net proceeds after issue costs and the repayment of the previous facility of USD90 million with Standard Chartered Bank (SCB) were USD84.1 million. This allowed the repayment of the USD55 million unsecured loan with Vitol (USD60.6 million including rolled up interest). Subsequently on 30 December 2013 we further revised and upsized the corporate debt facility to USD200 million with SCB, FirstRand Bank Limited, Ecobank and FBN Bank. Net additional proceeds were USD13.9 million, with total net proceeds from the corporate debt facility of USD98 million during the year. Maturity of the facility has been extended to 31 March 2019, with first amortisation in June 2016. In addition the maturity of the USD110 million Guaranteed Convertible bonds has been extended to 30 April 2019 (from February 2016) with an increase in coupon from 8% to 12%. The conversion price remains unchanged at GBP4.7541. These refinanced debt arrangements together with cash flow are expected to provide sufficient liquidity to finance the USD280 million capital programme to extend the Marampa mine life to over 40 years and capacity to 6.5Mwmt/a. Given this, we are focussing on judicious use of cash and resources to maintain the financial flexibility required to fund this programme.

Board development and restructuring

Luciano Ramos is to retire from the Board in June. Luciano had been a key member of the London Mining management team and has been a driving force in building the Company's key technical competencies. His presence on the Board has ensured a smooth transition from exploration to operations at Marampa.

Earnings Summary

 
 USDmillion                                               2013      2012 
 EBITDA (continuing operations)                           54.1    (14.2) 
 Sierra Leone                                             79.4      20.4 
 Greenland                                               (0.7)     (2.3) 
 Saudi Arabia                                            (0.1)     (0.6) 
 Corporate - excluding non-cash share-based payments    (16.4)    (25.8) 
 Corporate - share-based payments                        (8.1)     (5.9) 
 Depreciation                                           (31.5)    (13.0) 
 Profit/ (loss) from operations                           22.6    (27.2) 
 Other gains and losses                                  (1.6)         - 
 Net finance charge                                     (40.2)    (30.8) 
 Taxation                                                (1.4)      29.7 
 Net loss after tax (continuing operations)             (20.6)    (28.3) 
 Result from discontinued operations                     (4.3)    (79.5) 
 Loss for the year                                      (24.9)   (107.8) 
 

Please find the full operations and financial review, as well as the Company's presentation of the period enclosed.

http://www.rns-pdf.londonstockexchange.com/rns/6389B_-2014-3-5.pdf

http://www.rns-pdf.londonstockexchange.com/rns/6389B_1-2014-3-5.pdf

Webcast and conference call

There will be a webcast and conference call for analysts and investors hosted by Graeme Hossie (CEO), Benjamin Lee (CFO) and Jim North (COO) at 9.00am GMT today.

The presentation will be available via a live webcast, a link to the webcast can be found on London Mining's homepage, www.londonmining.com.

The webcast will include audio from the conference call and synchronised power point slides. You will not be able to post questions through the webcast.

Please use the following numbers and conference ID to dial in to the conference call:

 
 Country                  Number 
 International dial-in    +44(0)20 3427 1906 
 UK Toll Free             0800 279 4841 
 USA Toll Free            1877 280 2342 
 
 Confirmation code        1256917 
 

There will be a replay facility available on London Mining's homepage after the webcast.

For more information, please contact:

 
 London Mining Plc 
  Graeme Hossie, Chief Executive Officer 
  Benjamin Lee, Chief Financial Officer 
  Thomas Credland, Head of Investor Relations     +44 (0)20 7408 7500 
 Liberum Capital (Nominated Adviser/Broker) 
  Richard Crawley / Tom Fyson / 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 / David Litterick                  +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 producing 3.4Mwmt/a in 2013 and expanding to a capacity of 6.5Mwmt/a over the next few years. Marampa has sufficient resources to support a staged expansion to up to 20Mwmt/a. London Mining has also completed bankable feasibility studies outlining plans for a further 20Mwmt/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

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