19th Sep 2014 09:33
LONDON (Alliance News) - African Minerals Ltd Friday said its chief executive has progressed with the company's financial recovery plan, and the board has agreed a revenue-enhancement strategy.
Chief Executive Alan Watling has completed his assessment of the company's current financial position and his financial recovery plan has been approved by the board. The plan includes recommended actions to make its Tonkolli project in central Sierra Leone have a positive cash flow on a sustainable basis by the end of 2014, even given the ongoing weakness in iron ore prices, African Minerals said.
"The board has approved this plan, and the associated actions and budgets, to increase export volumes, reduce costs, enhance revenues, and seek refinancing to strengthen the project companies' balance sheets," the company said.
In addition, it has agreed that a revenue-enhancement strategy should be pursued, with all future shipments to be sold at a fair market price, reducing the discounts and other incentive currently granted. "We will be communicating with our customers to temporarily defer the current price influencing factors (including, but not limited to, discounts, agency fees, marketing fees, freight subsidies)," said African Minerals.
Watling said he "expects that this project [Tonkolli] will become cashflow positive, assuming that the iron ore price environment remains broadly unchanged, by the end of this year... that will firmly establish Tonkolili as a low cost producer."
The company does not expect there to be any material impact to the Tonkolli project from the planned four-day curfew that the government of Sierra Leone intends to apply over the coming weekend in response to the Ebola virus outbreak, it said.
The company reiterated its guidance of 16-18 million tonnes of production for the full-year 2014, with cash costs in the range of USD34 to USD36 per tonne, it added.
"I am confident that the project will achieve financial stability in the near term, and will put us in a strong position to implement appropriate medium and longer term financing strategy to support the goals of both the project and the company," added Watling.
African Minerals' shares were up 7.3% to 25.75 pence per share Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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