TIDMSRX
RNS Number : 6022B
Sierra Rutile Limited
08 October 2015
Sierra Rutile Limited
Sierra Rutile Provides Q3 2015 Operational Update
London, UK, 8 October 2015: Sierra Rutile Limited (AIM: SRX)
("Sierra Rutile") is pleased to provide an operational update on
the third quarter of 2015 ("Q3").
Highlights
-- Strong Q3 operational performance with rutile production of
33,960 tonnes, second highest quarter of rutile production ever
-- Full-year rutile production guidance expected to be within
the middle-to-upper range of previously stated production guidance
of 120,000 - 130,000 tonnes
-- Ilmenite production remains on-target to meet annual guidance
of 30,000 - 35,000 tonnes with 27,149 tonnes produced to date
-- Well-positioned to meet full-year operating cash cost guidance
-- Gangama Dry Mine construction remains on-schedule and on-budget
-- Planned rutile sales now fully contracted for the remainder
of 2015 at prices in-line with average realised prices in 2014
Commenting on Q3 performance, CEO John Sisay said:
"We have seen strong operational performance during Q3,
reflecting stable operations across our mining units. Our mines
continue to benefit from well-executed maintenance programs which
were completed earlier in the year. This allowed us to achieve our
second highest quarterly rutile production ever. As we enter Q4
2015, we reaffirm our full-year rutile production guidance and
expect production will be within the middle-to-upper range of the
guidance given increased visibility on operational performance
through to year-end. We continue to be well-positioned to achieve
both our full-year production and operating cash cost guidance.
Gangama Dry Mine construction continues within budget and
on-schedule for first production in Q2 2016."
Production
Sierra Rutile produced 33,960 tonnes of rutile, 10,229 tonnes of
ilmenite and 446 tonnes of zircon concentrate in Q3.
Q3 2015 Q2 2015 % change
--------------------- -------- -------- ---------
Rutile 33,960 29,933 13%
Ilmenite 10,229 4,117 148%
Zircon Concentrate1 446 333 34%
--------------------- -------- -------- ---------
Q3 rutile production was Sierra Rutile's second highest quarter
of rutile production ever and has demonstrated Sierra Rutile's
ability to maintain quarterly production growth this year. Rutile
production in Q3 has increased by 13% over Q2 2015 and by 45% over
Q1 2015. In addition, Sierra Rutile ended the quarter with 2,000
tonnes of HMC stockpile, containing approximately 700 tonnes of
rutile, which will be processed in Q4 2015.
Sierra Rutile's operations continue to benefit from stable
operating conditions and planned maintenance shutdowns completed in
H1 2015. Both Lanti Dry Mine and Lanti Dredge Mine continue to
operate at or above target levels. In addition, a planned
transition to higher-grade areas has supported higher production
levels in Q3 compared to H1 2015. The Mogbwemo tailings operation
continues in its focus to ramp-up to target levels with the
successful addition of further production units over the
quarter.
Sierra Rutile remains on-target to meet full-year rutile
production guidance. Given production to date and increased
visibility on expected Q4 2015 production, Sierra Rutile expects
that full-year rutile production will be within the middle-to-upper
range of production guidance. Q4 2015 rutile production is expected
to be higher than Q3, benefiting from dry season operating
conditions and continued high grades.
Ilmenite production of 10,229 tonnes over the quarter was also
strong. As indicated in Sierra Rutile's Q2 2015 announcement, Q3
ilmenite production benefited from carried over mined tonnes from
Q2 2015 which were processed in Q3. Ilmenite production remains
on-target to meet full-year ilmenite production guidance of 30,000
- 35,000 tonnes with 27,149 tonnes produced year to date.
1 Zircon Concentrate is a semi-finished zircon product grading
40-45% ZrO(2) .
Operating Cost
Direct operating cash costs(2) and total operating cash costs(3)
in Q3 were slightly higher than Q2 2015 despite higher production
levels. The increase in direct and total operating costs was
predominantly due to a timing effect of by-product shipments
planned in Q3, but being committed in Q4. The method of only
counting by-products sold during the quarter when calculating cash
costs means that the large volume of ilmenite produced during Q3
will now become realised from a cash cost perspective when
committed shipments in Q4 2015 have occurred. When normalising for
the timing effect of the ilmenite shipment planned for Q3 but now
occurring in Q4, cash costs for Q3 were well within the operating
cash cost guidance range provided by the company.
The underlying low cash costs for the quarter (once normalised
for the timing effect of the ilmenite shipment) were achieved
despite cost pressures from high levels of rainfall during a
particularly heavy wet season. The heavy rainfall resulted in
additional costs including increased road maintenance. As a result
of heavy rainfall causing flooding in Sierra Leone, certain other
exceptional costs were incurred over the quarter, including one-off
donations related to relief efforts for flooding in Freetown.
All-in operating cash costs(4) in Q3 were lower than Q2 2015,
benefiting from certain sustaining capital payments being delayed
to Q4 2015.
Sierra Rutile remains well positioned to meet its operating cash
cost guidance for 2015. Entering Q4 2015, Sierra Rutile expects to
realise its highest quarterly by-product revenue for 2015 as
committed ilmenite shipments occur. In addition, operating cash
costs are also expected to benefit from higher forecast rutile
production and normalised expenditures as weather conditions
subside.
Q3 2015 Q2 2015 Full year
Actuals Actuals 2015
Guidance
-------------------- --------- --------- ----------
Direct operating
cash cost (US$/t) 560 527 520 - 530
-------------------- --------- --------- ----------
Total operating
cash cost (US$/t) 647 636 595 - 615
-------------------- --------- --------- ----------
All-in operating
cash cost (US$/t) 670 685 650 - 670
-------------------- --------- --------- ----------
2 Direct operating cash cost (includes direct operating costs
but excludes depreciation) less by-product revenue divided by
tonnes of rutile produced.
3 Total operating cash cost (includes direct operating costs,
general administrative costs and corporate costs but excludes
depreciation) less by-product revenue divided by tonnes of rutile
produced.
4 All-in cash cost (total operating cash cost plus
stay-in-business capital cost, but excludes depreciation) less
by-product revenue divided by tonnes of rutile produced.
Gangama Dry Mine
Gangama Dry Mine construction continued over the quarter. Plant
terrace construction, a critical path item, is well-advanced and
on-schedule for completion in October 2015. Construction remains
on-budget and on-track for first production in late Q2 2016.
Sales
As previously stated in Sierra Rutile's H1 2015 interim results
announcement, planned rutile sales for 2015 are now fully
contracted at prices consistent with average realised prices in
2014. Given an expected shortage in premium feedstock availability
over the next few years, customers have exhibited strong interest
in Sierra Rutile's expansion volumes expected from Gangama Dry
Mine.
The pigment market, while still subdued, has showed signs of
recovery with pigment volumes strengthening, and the titanium metal
market outlooks continue to be positive.
ENDS
For Further Information:
Sierra Rutile Limited
Matthew Hird, Chief Financial
Officer
John Nagulendran, Company +44 (0)20
Secretary 7074 1800
Investec Bank
Nominated Adviser and
Joint Corporate Broker
Chris Sim / George Price +44 (0)20
/ Jeremy Ellis 7597 4000
RBC Capital Markets
Joint Corporate Broker +44 (0)20
Jonny Hardy 7653 4000
Numis Securities Limited
Joint Corporate Broker
John Prior / James Black +44 (0)20
/ Paul Gillam 7260 1000
Kreab
Marc Cohen / Christina +44 (0)20
Clark / Fiona Cumberland 7074 1800
About Sierra Rutile Limited
Sierra Rutile produces titanium feedstock industrial minerals
(primarily rutile, with some associated ilmenite), as well as
smaller quantities of zircon. Sierra Rutile's mines, located in the
south west of Sierra Leone, are based on one of the largest natural
rutile deposits in the world, with a JORC-Compliant Mineral
Resource for measured, indicated and inferred resources for the
Sierra Rutile mine of over 895 million tonnes (as at 30 September
2014).
www.sierra-rutile.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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