TIDMLOND
RNS Number : 6787P
London Mining Plc
21 August 2014
London Mining Plc
Quoted on London AIM (LOND LN)
("London Mining" or the "Company")
21 August 2014
FINANCIAL RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2014
Managing a high quality asset with long term credentials during
challenging times
Highlights
Operations
-- Production volumes up 24% year on year to 2.1Mwmt
-- Export volumes up 5% year on year to 1.7Mwmt with logistics upgrades performing well
-- Ramp up to an annualised rate of 5.4Mwmt/a with
debottlenecking and optimisation delivering additional volume
-- Unit operating cost of USD 57/wmt, flat year on year, with
cost under USD50/wmt achieved in June
Financial performance
-- Revenue of USD 110.6 million, down 22% as 5% increase in
sales volumes offset by lower market prices
-- Marampa EBITDA profit of USD 0.8 million, a decrease of USD
38.5 million from H1 2013 (EBITDA profit of USD 39.3 million)
-- Group EBITDA loss of USD 10.8 million, an increased loss of
USD 34.8 million from H1 2013 (EBITDA profit of USD 24 million)
-- Loss for the period of USD 12.6 million, an increased loss of
USD 7.6 million from H1 2013 (loss of USD 5.0 million)
-- USD 32 million cash as at 30 June 2014
Measures taken to maintain liquidity in weak pricing
environment
-- Non-essential capex of over USD 20 million for 2014 deferred
until market conditions improve or the strategic partner process is
successfully completed
-- USD175 million of "Life of Mine" extension capital programme
to be deferred for two years by prioritisation of mining and
processing of weathered ore through modified plant
-- Cost reduction programme delivering 20% lower cash corporate
costs year on year with further cuts targeted
-- USD 37 million in offtake facilities with Cargill and Vitol
with optionality on long term unallocated production preserved
-- USD 25 million working capital facility agreed with existing
secured lenders post period end
-- Hedging programme realised a gain of USD 11.2 million
Production guidance
-- Production guidance range 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
-- Operating cost of around USD50/wmt expected for full year
plus up to USD1/wmt from Ebola related costs
Strategic partner process
-- Process to secure a substantial investment by a strategic
partner in London Mining to reduce debt and fund future capital
expenditure is progressing
-- Several non-binding expressions of interest have been received following due diligence
-- Process expected to be concluded by end of 2014
Graeme Hossie Chief Executive of London Mining said: "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."
Earnings Summary
Period ended 30 June
USD'000 2014 2013
EBITDA (continuing operations) (10.8) 24.0
Marampa, Sierra Leone 0.8 39.3
Greenland (0.4) (0.3)
Saudi Arabia - (0.1)
Corporate - excluding non-cash share-based payments (8.1) (10.1)
Corporate - share-based payments (3.1) (4.8)
Depreciation and amortisation (18.5) (13.8)
(Loss)/ profit from operations (29.3) 10.2
Fair value gain (Blackrock royalty agreement) 32.1 10.5
Net finance charge (26.8) (25.7)
Taxation credit 11.4 2.1
Net loss after tax (continuing operations) (12.6) (2.9)
Result from discontinued operations - (2.1)
Loss for the period (12.6) (5.0)
The full operations and financial review, as well as the
company's presentation of the period can be found here:
http://www.londonmining.com/investors/reports-and-presentations/
Webcast and conference call
There will be a webcast and conference call for analysts and
investors hosted by Graeme Hossie (CEO), Benjamin Lee (CFO) and Jim
North (COO) at 09:00am BST today.
The presentation will be available via a live and on-demand
webcast, a link to the audio webcast can be found on London
Mining's website here:
http://www.londonmining.com/investors/reports-and-presentations/.
The webcast will include audio from the conference call. You
will not be able to post questions through the audio webcast.
Please use the following numbers and Conference ID to dial in to
the conference call:
International
dial-in +44(0)20 3427 0503
UK Toll Free 0800 279 4992
USA Toll
Free 1877 280 2342
Confirmation
code 7603529
For more information, please visit www.londonmining.com or
contact:
London Mining Plc
Graeme Hossie, Chief Executive Officer
Benjamin Lee, Chief Financial Officer
Thomas Credland, Head of Investor Relations +44 (0)20 7408 7500
Liberum Capital (Nominated Adviser/Broker)
Richard Crawley / Tom Fyson +44 (0)20 3100 2000
J.P. Morgan Cazenove (Broker)
Ben Davies / Ignacio Borrell +44 (0)20 7742 4000
Brunswick Group LLP
Carole Cable / David Litterick +44 (0)20 7404 5959
About London Mining
London Mining is an expanding producer of high specification
iron ore concentrate for the global steel industry and is focused
on identifying, developing and operating sustainable mines. London
Mining commenced production from its 100% owned Marampa Mine in
Sierra Leone in 2011, producing 3.4Mwmt/a in 2013 and plans to
expand the mine to a capacity of 6.5Mwmt/a. Marampa has sufficient
resources to support a staged expansion to 20Mwmt/a. London Mining
has also completed bankable feasibility studies outlining plans for
a further 20Mwmt/a of iron ore production by developing mines in
Greenland and Saudi Arabia. The Company listed on AIM in London on
6 November 2009. It trades under the symbols LOND.L (Reuters) and
LOND LN (Bloomberg). More information about London Mining can be
found at www.londonmining.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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