Showing posts with label Marampa. Show all posts
Showing posts with label Marampa. Show all posts

Monday, November 12, 2012

London Mining plans further Marampa expansion

London Mining said it has its sights set on expanding production at its flagship Marampa iron ore mine in Sierra Leone beyond the initial 5 million tonnes per annum target.

The company said it is still on track hit 5 Mpta, with the second plant expected to be completed in the first quarter of next year, increasing capacity to 3.6 Mtpa, with further expansion in the third quarter.

However, after getting the results of a bankable feasibility study back, London believes the production capacity could stretch even further to 9 Mtpa.

“We have now completed detailed technical studies for an expansion to 9 Mtpa which shows competitive capital intensity against the industry average with initial operating costs of US$39 per tonne or USD mid-20s on an adjusted Fe equivalent basis,” said chief executive Graeme Hossie.

“We are now completing value engineering work to incorporate identified potential for capex and opex improvements and are investigating the best approach to finance expansion beyond the 5Mtpa stage which will be achieved next year.”

He said this may involve using free cash flow from the operation, debt, offtake related finance and even possibly bringing in a strategic partner.

Hossie added that London is making headway with its expansion plans aimed at working out the best approach to develop the 1.1 billion tonne resource for a sustainable operation and in the best interests of shareholders.

In a conference call, Hossie said that a 5 Mtpa operation will produce substantial cash with very little risk at that point.

“As such it will be a very defensive, solid and profitable operation,” he said.

“Expansion plans to 9 Mtpa and then to 16 Mtpa will thereafter be hugely derisked.”

Hossie said the resource supports an operation of over 16 Mtpa and said the company continues to look at ways of reaching this level from the “solid platform” of 5 Mtpa.

In the three months to the end of September, the company gave a solid performance in the face of the wet season, which had a limited effect on production.

Although maximum plant capacity was boosted over the quarter as part of the ramp-up, overall concentrate production volumes were slightly lower due to restricted access to the Masaboin pit during part of the wet season.

The company produced 373,000 wet metric tonnes in the third quarter compared with 397,000 wmt in the previous quarter.

Sales volumes also dipped to 298,000 wmt from 350,000 wmt after it deferred one shipment to build inventory ahead of commissioning of the floating offshore transhipment vessel, which is permitted under the offtake agreement with Glencore at no penalty.

“We have continued to solve problems as they have come up and some things are out of our control,” Hossie continued.

“Certainly the macro environment has been against up and coming miners in iron ore this year, but I think we will change that perception once we start delivering the cash flow and get our second plant up and running in the first quarter of next year.”