London Mining starts shipping to Europe from Marampa
Sierra Leone-focused iron ore miner London Mining (LON:LOND) has continued to ramp-up output from its Marampa mine and expects to start shipping to Europe this month.
Chief executive Graham Hossie said it will be the first shipment of iron ore from Sierra Leone to Europe for over 30 years.
Production now totals 57,000 tonnes of concentrate at high grades. Some 5,782 tonnes has been loaded on to barges and moved to Port Loko channel before being shipped to Freetown Bay for onward shipping to Europe. The concentrate grades were high at 66.2% Fe.
The group lowered its production target for this year to 1.5Mt, but raised the forecast to 3.5Mt in 2013 and 4.6Mt in 2014. Eventually, production at Marampa could grow to 17Mtpa.
London added recent drilling had also increased the total mineral resource including tailings to an estimated 1,078 Mt, of which 81% was classified as indicated reserves.
This included a 350% increase in highly weathered material from 21Mt to 75Mt and London said this ore meant installing a gravity circuit could increase Phase 1 production capacity by 25% to 5Mtpa.
Capex spending will rise from US$234 million to US$260 million to fund this increased production with up to a further US40-50 million to ease bottlenecks, but the operating costs for production at 5Mtpa will be lower due to better economies of scale.
A first bankable feasibility study to assess the mine's initial expansion is now expected at the end of the second quarter of 2012.
This will now consider a low cost expansion of Phase 1 to 9Mtpa. A second bankable feasibility study will consider further expansion to 17Mtpa.
Graeme Hossie, chief executive said: "The availability of a further 54Mt of highly weathered material along with testwork supporting the use of a gravity circuit represents a significant breakthrough in production potential at Marampa with full initial production from Phase 1 now expected to total up to 5Mtpa."
"The bankable feasibility study for Marampa will now consider an additional expansion of the reconfigured Phase 1 plant to 9Mtpa utilising existing infrastructure with the addition of new crushing, grinding and gravity separation circuits to the processing plant."
Broker Fairfax said that London Mining's revised production schedule - reducing their output by 0.5Mtpa -will impact cash flows early on but as the company is planning to increase capacity by 2014 it should not materially affect the net present value.
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