London Mining‘s production guidance range has narrowed to between 4.9 and 5.1Mwmt/a (from 4.9 and 5.4Mwmt) as a result of slower than expected ramp-up and expected impact of Ebola, while operating cost of around USD50/wmt are expected for full year plus up to USD1/wmt from Ebola related costs.
According to Graeme Hossie, Chief Executive: ”There is no doubt the first half of 2014 has been a challenging one for the iron ore industry, Sierra Leone and indeed London Mining. We have been resolutely focused on four things – improving liquidity, completing the ramp-up to 5.4Mwmt/a, reducing costs and keeping our employees safe, healthy and protected from the Ebola virus.
Marampa has over one billion tonnes of resources which underpins a long life, high grade, scaleable iron ore mine and our progress in developing it to its long term potential, has been substantial. The plant is operating at an annualised rate of 5.4Mwmt and the unit operating cost has remained flat due to an extended commissioning of the plant upgrades and increased mining activity to ensure improved performance through the wet season. The increased liquidity we have attained gives us the headroom we need to continue operating in this low price environment until the anticipated completion of the strategic partner process by the end of 2014.
While production has not been impacted by the outbreak of the Ebola virus to date, post the period end we have begun to experience disruption to the supply chain and to a number of services as we optimise the plant beyond its nominal run rate. As a result of a slower than expected ramp-up and Ebola we have narrowed our 2014 production guidance to the lower end of the range, based on the current expected level of Ebola-related impact. We continue to be vigilant about keeping our employees healthy and are working closely with the Sierra Leonean government and health agencies in this difficult time.
Despite these challenges, the long term potential of Marampa remains. Good interest has been received from potential strategic partners with whom the Company is discussing a substantial investment to enable us to reduce risk, fund mine extension capex and potentially expand to larger scale production at the right time in the cycle. We expect the process to complete before the end of 2014.”