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London Mining Scores First Profit As Mine Ramps Up
By Stephen Eisenhammer
22/08/2013
LONDON (Reuters) - Sierra Leone-focused miner London Mining went into the black for the first time since it listed in 2009, posting core profit of $24 million due to the ramp-up of its Marampa iron ore mine.
Operating costs fell 18 percent to $62 per dry tonne, with the firm repeating it expected to hit a run rate of 5 million dry tonnes a year by the end of 2013 in a statement on Thursday.
Shares in the miner were up 5 percent in early trade with analysts saying the results were solid and encouraging.
The company, which also has projects in Greenland, Saudi Arabia and Colombia, said it had another $48 million of investment outstanding to bring Marampa to its target run rate, reiterating a total project cost of $340 million.
A life of mine study will be released later this year, which will include an analysis of the potential for expanding the mine to 10 million tonnes per year, Chief Executive Graeme Hossie told reporters on a conference call.
Iron ore producers in Sierra Leone have faced challenging conditions during the country's rainy season, when ore can become too wet to ship, but Hossie said the company was doing well this year.
"It rains a lot in Sierra Leone at this time of year, but we are performing very well during the wet season," he said.
Shares in London Mining, which is one of the few junior iron ore companies currently producing in West Africa, lost around 26 percent this year, but have come off all-time lows hit in July.
Earnings before interest, tax, depreciation and amortisation reached $24 million in the first half compared to a loss of $2.6 million in the same period a year earlier.
Iron-ore shipments from London Mining and peer African Minerals helped fuel estimated economic growth of 20 percent in Sierra Leone last year, one of the world's fastest growth rates.
The company said it is on track to achieve operating costs of $50 per dry tonne at Marampa by end of 2013 - an important milestone according to analysts.
"A solid performance with the company now beginning to build up a creditable track record of project delivery having hit ramp-up expectations for 18 months," Richard Knights, analyst at Liberum, wrote in a note. Rhys Jones and Keiron Henderson)
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