8th Oct 2015 07:54
LONDON (Alliance News) - Sierra Rutile Ltd on Thursday said it has achieved its second highest quarter of production ever and should hit the middle to upper range of its full-year production guidance.
The miner said third quarter production totalled 33,960 tonnes of rutile, which was up 13% quarter-on-quarter and 46% year-on-year. The company said it is confident it will hit the middle to upper range of its 120,000 to 130,000 tonne target for the full year.
In addition, Sierra Rutile ended the quarter with 2,000 tonnes of heavy mineral concentrate stockpiled, containing approximately 700 tonnes of rutile, which will be processed in the fourth quarter of 2015. Total production of rutile is expected to be higher in the fourth quarter than it was the third.
"Sierra Rutile's operations continue to benefit from stable operating conditions and planned maintenance shutdowns completed in the first half of 2015. Both Lanti dry mine and Lanti dredge mine continue to operate at or above target levels," said the company.
"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," it added.
Ilmenite production soared in the third quarter to 10,229 tonnes, almost 1.5 times the 4,117 tonnes produced in the previous quarter. Sierra Rutile said it is on track to hit its full year target of 30,000 to 35,000 tonnes of ilmenite in 2015, with 27,149 tonnes produced in the first nine months of 2015.
Third quarter ilmenite production benefited from mined tonnes from the second quarter that were carried over and processed in the third.
Zircon concentrate production in the third quarter totalled 446 tonnes, which was up a third from the 333 tonnes produced in the second quarter of 2015.
Rutile is mainly used to produce titanium metal or as a pigment and is also used to produce ceramics. Ilmenite also is used to produce titanium and is used as a pigment in paint, whilst zircon is an opacifier, mainly used in the ceramics industry.
In addition to reiterating its full-year production guidance, Sierra Rutile said it is also on track to meet its full-year guidance concerning cash costs. However, all of its cash costs are currently at the top end or higher than the company's full-year targets, and most of the costs rose quarter-on-quarter.
Its direct operating cash cost rose quarter-on-quarter to USD560 per tonne from USD527, which is way above its full year target range of USD520 to USD530 per tonne. Total operating cash cost rose to USD647 per tonne from USD636, also way above Sierra Rutile's full-year target range of USD595 to USD615 per tonne.
All-in-sustaining cash cost was the only cost to experience a quarter-on-quarter fall to USD670 per tonne from USD685. However, that figure is at the very top end of the company's full-year guidance range of USD650 to USD670 per tonne.
Some of the reasons for higher cash costs in the third quarter included bad weather, flooding and the timing effect of by-product shipments that were pushed back from the third quarter to the fourth, it said.
"Sierra Rutile remains well positioned to meet its operating cash cost guidance for 2015. Entering the fourth quarter 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," said Sierra.
In addition, the miner said the Gangama dry mine remains on track to begin producing toward the end of the second quarter of 2016. Sierra Rutile said the construction of the plant terrace is "well advanced" and on track to be completed before the end of October.
Sierra Rutile shares were trading up 5.1% to 18.00 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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