London Mining Plc has announced operations update and financial review for six months to June 30th 2012.
Highlights (including post period)
Marampa, Sierra Leone (100% owned)
Successful transition from development to production delivering high quality iron ore
Production of 712,000 wet tonnes (670,000 dry tonnes) in H1 2012
Sales of 594,000 wet tonnes (559,000 dry tonnes) into Glencore offtake agreement
Operating costs before depreciation and royalties of USD 76 per dry metric tonnes in H1 2012 with path to unit cost reduction
On track to achieve production of 1.5 million tonnes in 2012, with capacity of 5 million tonnes per annum expected in Q3 2013
Bankable Feasible Study for accelerated expansion to 9Mtpa expected by end of Q3 2012
Financial
Fully funded for expansion at Marampa to 5 million tonnes per annum
Group H1 EBITDA loss of USD 2.6 million (H1 2011 loss USD 20.5 million)
Marampa H1 EBITDA of USD 13.1 million (H1 2011 loss of USD 7.1 million)
USD 151.3 million net cash inflow from financing
USD 113.9 million net cash out flow from investing activities
USD 91 million cash in bank at 30 June 2012
Appointment of Standard Chartered Bank as lead advisor to secure project debt finance for the 9 million tonnes per annum Marampa expansion
Post period
Appointment of Mr Jim North as COO: Mr Jim joins from BHP Billiton and has more than 20 years mining experience with extensive operating expertise in iron ore and Africa
Net cash proceeds of USD 110 million received from BlackRock World Mining Trust in return for 2% revenue related royalty calculated on iron ore sales from Marampa
Extension of USD 90 million corporate debt facility with SCB to October 2013
Mr Graeme Hossie CEO of London Mining Plc said that "We continue to execute our plans to develop high quality iron ore production through the operation and staged expansion of our Marampa mine in Sierra Leone. Whilst our initial focus has been to develop new capacity at low capital intensity, our focus is now to optimize operations and reduce unit costs as we expand to steady state production at 5 million tonnes per annum before moving to 9 million tonnes per annum at the appropriate time. Marampa retains its low operating cost potential by virtue of its large resource close to a tidewater location and simple beneficiation process to produce a high quality sinter concentrate."
He added that "Sales, through our guaranteed offtake agreement with Glencore, have ramped up in line with production over the first half and positive feedback has been received from end users. This consistent demand for our high grade product has allowed us to fund our growth plans with offtake agreements for our first 4 million tonnes per annum of production with Glencore and Vitol and latterly through a royalty agreement with BlackRock Mining Trust. This royalty agreement provides further funding strength and flexibility to London Mining as well as representing a clear endorsement of London Mining's execution capabilities, the Marampa asset and confidence in the market for iron ore. Importantly, these agreements are not dilutive to shareholders and allow us to retain strategic flexibility to fund our ultimate expansion plans at Marampa and Isua to over 30 million tonnes per annum."
Mr Graeme Hossie said that "We are pleased to announce the appointment of Mr Jim North as COO, Mr Renato Almeida as Chief Marketing Officer and Mr Claude Perras as Head of Sustainability. The addition of their combined abilities in operations and development, gained in the world's leading mining companies, will further ensure London Mining's continued delivery of new high margin and sustainable iron ore production. We believe our ability to attract such high quality professionals is a clear sign of our growing reputation as a significant and fast growing new producer of iron ore."
Source - London Mining Plc
(www.steelguru.com)
