15th Jan 2016 09:12
LONDON (Alliance News) - Sierra Rutile Ltd shares rose Friday morning after the company achieved the top end of its production guidance in 2015, driven by record levels of production in Sierra Leone, and said the Ganagama mine is set to boost volumes further in 2016.
Sierra Rutile shares were trading up 9.5% to 17.11 pence per share on Friday morning.
The company said production in the fourth quarter of 2015 reached 38,787 tonnes of rutile and 10,484 tonnes of ilmenite, representing a 25% and 14% year-on-year increase, respectively, its highest level of production in one quarter.
Total rutile production in the quarter would have been even higher at over 40,000 tonnes, but the company had only partially processed around 1,550 tonnes of rutile at the end of the year, meaning it has been pushed into 2016.
Regardless, the company achieved the top end of its production guidance for 2015, producing 126,021 tonnes of rutile against its guidance range of 120,000 to 130,000 tonnes. That also represents a 10% lift from 2014, and is also the Sierra Rutile's highest annual production since 2006 when its operations restarted.
The company provided further good news by stating it has continued to improve its cost performance after increasing production and initiating cost-savings measures.
Sierra Rutile's production comes from its operation in Sierra Leone in West Africa, and the company said the nearby Gangama dry mine also remains on track, with construction due to lead to commissioning before the end of the first half of 2016.
The company has spent a total of USD21.0 million on Ganagama to date, which will provide further dry mining production capacity to facilitate higher production volumes in 2016. Importantly, Sierra Rutile said it has already contracted sales for 80% of the maximum amount it could produce in 2016 - giving it great security and visibility going forward.
"The continued transition to a sales-led, flexible production model provides Sierra Rutile with the flexibility to align production to focus on maximizing the profitability of sales," said the company.
"Looking forward into 2016, we remain focused on unlocking shareholder value in a disciplined way: aligning production volumes to customer requirements, continuous cost improvements and productivity enhancements. We have further strengthened our position as a leading producer of premium grade rutile and continue to work in close collaboration with our customers on long-term rutile demand planning," said Chief Executive John Sisay.
By Joshua Warner; [email protected]; @JoshAlliance
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