26th Mar 2015 09:59
LONDON (Alliance News) - Sierra Rutile Ltd saw its shares fall Thursday morning after it swung to a pretax loss in 2014 as lower prices more than offset higher sales volumes for its rutile and it suffered higher costs related to the Ebola outbreak in Sierra Leone and neighbouring countries.
The company was hit hard by the outbreak of the deadly disease, but was already facing challenging trading conditions and had made its target for the year to remain cash generative at the operating level. It managed to do that by cutting operating costs by 5.4% and all-in cash costs by 10.5%, meaning it was able to pay down debt by USD6.1 million and make USD19.8 million of capital investment in the business.
However, it swung to a pretax loss of USD8.9 million in 2014 compared with a profit of USD10.5 million in 2013, as revenue declined to USD117.8 million from USD123.4 million and the cost of making those sales rose steeply to USD111.3 million from USD93.1 million. Its earnings before interest, tax, depreciation and amortisation, excluding exceptional items and stock option expenses, dropped by more than half to USD14.3 million from USD35.0 million.
Rutile sale volumes rose 17% to 129,602 tonnes, from 111,018 tonnes in 2013, but its average realised price dropped 21.6%.
"We are proud to have achieved this result for the year whilst in the midst of the ongoing Ebola virus outbreak in Sierra Leone. We have continued to focus on managing our cost base and are pleased to have maintained strong cost control when certain products and services in Sierra Leone experienced Ebola-linked inflation. This rigorous approach to cost control ensured that we generated significant operational cash flow and allowed for continued selective investment in our asset base," Chief Executive John Sisay said.
"Looking forward into 2015, we expect that Ebola-related challenges will continue to ease, allowing us to invest further in our business," he added.
The company ended 2014 with cash and cash equivalents of USD6.5 million. Its investments during the year included an upgrade of the mineral separation plant and further refinement and optimisation of the Gangama Dry Mine project.
The direct impact on production from Ebola was limited to just four days of shutdown during the year, but the the indirect impact on the company was greater and felt most acutely in extended maintenance shutdowns, caused by the slow provision of irregular parts and materials, as well as a prolonged commissioning of the mineral separation plant upgrade, Sisay said.
Sierra Rutile shares were down 7.0% at 20.00 pence Thursday morning. The stock has fallen 61.8% over the past 12 months due to the impact of the Ebola outbreak on the company as well as the tough market conditions.
By Steve McGrath; [email protected]; @stevemcgrath1
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