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Share prices of Sierra Rutile Limited (LSE:SRX) were up over 6% to 54.12p at midday today following a very positive production update on their first quarter.
The Report
Production
Production of rutile ore was 48% higher than during the first quarter of 2011, whilst ilmenite production increased 57% over the same period. Actual rutile production was 20,693 tonnes and is on target to meet the project production for the year. Ilmenite production was 4,960 tonnes
Expansion Projects
The company announced expanded exploration activity, firmly believing that there is a high potential for extracting significantly more rutile and ilmenite in their licensed area. The company has systematically explored and developed less that 20% of their total licensed area [4] of 580 kilometres2. The first materials and machinery for the $4 million expansion have already arrived in Sierra Leone. With additional staffing, drilling rigs, and lab equipment, Sierra expects to be able to expand explorations to two and a half times its current rate.
Financials
The company spent $10.4 million on a new dredge study during the quarter. Nonetheless, they still reported $35.1 million on hand compared to $10.7 million on hand at December 31, 2011. The cash increase is being attributed to increased demand and higher prices for both rutile and ilmenite. John Sisay, CEO, commented that “As a result of the ongoing positive production performance and exceptionally strong sales environment, Sierra does not anticipate that it will require any external sources of financing to complete the dry mining of the Mogbwemo tailings expansions.”
Corporate Comments
Mr. Sisay summarised the company’s report by saying “I am pleased to be able to report that good progress is being made on all our growth projects, supported by a solid performance from current operations. We are also very pleased that Q2 pricing to date is substantially above prices achieved in Q1. We are utilizing the current strength in our markets and strong cash generating capabilities to continue our long-term investments in growth from our world-class asset base.”
Company Spotlight
Sierra Rutile is one of the largest private sector companies in Sierra Leone. The company mines rutile, zircon and ilmenite. The end product of Sierra Rutile’s mining operations has typically accounted for more than 65% of Sierra Leone’s exports and about 12% of the global rutile supply. Rutile and ilmenite are titanium bearing ores from which the company produces titanium oxide for use in paints, paper, plastics and multiple other applications.
References
↑ Mining Weekly
↑ Official company information
