London Mining’s (LON:LOND) underlying losses fell sharply in 2012 as production from its new iron ore facility at Marampa in Sierra Leone ramped up.
Production from Marampa rose to 1.5 million tonnes (Mt) at an operating cost of US$77 per dry metric tonne (dmt). Output in the current year, 2013, is expected to total between 3.3Mt to 3.6Mt.
The plan for Marampa is to expand production to 5mt per year initially and then to 9Mt per annum.
London Mining said forecast capital expenditure for the expansion to 5Mt per annum (pa) had increased from US$320mln to US$340mln, but operating costs are expected to fall to US$50/t at the 5Mtpa run rate. It is on track to meet the 5Mtpa production run rate by the end of the year it added.
Sales in 2012 amounted to 1.3Mwmt (wet metric tonnes) and revenues rose to US$120.6 million. There was a reduction in underlying losses (EBITDA) to US$14.2mln (US$36.4mln) as Marampa’s contribution swung from losses to an underlying profit of US$20.4mln.
Net losses overall were US$107.8mln as London Mining wrote-off its coal assets in Colombia at a cost of US$66.2mln. These businesses are now up for sale.
Graeme Hossie, chief executive, said he was delighted with the strong operational and financial performance of Marampa.
“High grade iron ore was produced and shipped throughout the year, production targets were met and our expansion plan remains on track as we ramp up to 5Mtpa in 2013.
“While the outlook for iron ore pricing continues to be volatile, we are focussed on cash generation. Our priority is to complete a robust 5Mtpa operation, while focussing on reducing costs and delivering operational improvements across the business.”