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RNS Number : 2648E
Sierra Rutile Limited
15 July 2016
Sierra Rutile Limited
Sierra Rutile Provides Q2 and Half-Year 2016 Operational
Update
London, UK, 15 July 2016: Sierra Rutile Limited (AIM: SRX)
("Sierra Rutile") is pleased to provide an operational update on
the second quarter of 2016 ("Q2 2016").
Highlights
-- Strong quarterly production with 34,629 tonnes of rutile:
- 29% increase in rutile production from Q1 2016;
- 16% increase in rutile production from Q2 2015.
-- Record first half-year production(1) with 61,408 tonnes of rutile:
- 15% increase in rutile production from half-year 2016.
-- Continued demand for high-grade natural rutile from customer
base with 96% of maximum targeted sales volumes already contracted
for 2016:
- Re-commencement of rutile sales into the titanium metal
market;
- Continued strong demand from pigment and welding customers in
Europe and North America.
-- Gangama Dry Mine project completed on schedule and within budget on 31 May 2016:
- Mine now operational and producing high quality natural
rutile:
- Feed rates and plant utilisation exceeded design criteria
during commissioning period and ramp-up has continued to outperform
budgeted performance criteria;
- Steady-state operation expected to be achieved in Q3 2016.
-- Full-year production now expected to be at upper end of
previously stated guidance of between 120,000 tonnes and 135,000
tonnes:
- Ramp-up of production from Gangama Dry Mine performing ahead
of plan;
- Higher production from existing units driven by continued
strong demand from customers.
Commenting on Q2 2016 performance, Chief Executive Officer, John
Sisay said:
"We are very pleased with the strong performance of the business
in Q2 2016, including the successful commissioning of the Gangama
Dry Mine whose performance to date has surpassed our expectations.
We are also delighted with the signs of recovery in the pigment,
metals and welding markets with our customers showing increasing
confidence. We will continue to progress the evaluation studies on
our expansion projects in H2 2016 to ensure we can respond quickly
to any increased demand for our products in 2017 and beyond."
1 Record production on a first half-year basis, covering the
period of 1 January to 30 June.
Production
Q2 2016 rutile production was 16% higher than Q2 2015 with
34,629 tonnes of rutile produced (Q2 2015: 29,933 tonnes of
rutile).
Q2 Q1 % Q2 %
2016 2016 Change 2015 Change
=============== ======= ======= ======== ====== =======
Rutile (t) 34,629 26,779 29% 29,933 16%
=============== ======= ======= ======== ====== =======
Ilmenite (t) 5,025 3,300 52% 4,117 22%
=============== ======= ======= ======== ====== =======
Zircon (t)(1) 394 297 33% 333 18%
=============== ======= ======= ======== ====== =======
Half-year production was 61,408 tonnes of rutile, representing a
15% increase on H1 2015.
H1 2016 H1 2015 %
Actual Actual Change
=============== ======== ======= =======
Rutile (t) 61,408 53,275 15%
=============== ======== ======= =======
Ilmenite (t) 8,325 16,920 (51)%
=============== ======== ======= =======
Zircon (t)(1) 691 651 6%
=============== ======== ======= =======
1 Zircon Concentrate is a semi-finished zircon product grading
40-55% ZrO2.
Sierra Rutile's production performance continued to benefit from
improvements to plant utilisation and availability undertaken
during 2015 and early 2016. These improvements have resulted in
both the Lanti Dredge Mine and Lanti Dry Mine producing higher
volumes of HMC in H1 2016 compared to H1 2015.
The recently commissioned Gangama Dry Mine produced its first
heavy mineral concentrate (HMC) at the end of May, with plant
utilisation of 86% versus a budget of 47% being achieved in the
month of June. Higher production is expected in H2 2016 as Sierra
Rutile continues with the ramp-up towards steady state
production.
Recoveries at the mineral separation plant were consistent with
those achieved in 2015, and are expected to improve for the rest of
the year as further enhancements are implemented. H1 2016 ilmenite
production was lower than H1 2015 as the mining operations focussed
on the production of rutile over ilmenite given the relative
economics of these products in H1 2016.
Given the strong operational performance from all mining units
in the first half of the year, the successful ramp-up of production
from the Gangama Dry Mine and improving demand from customers,
Sierra Rutile expects that production for the full year should be
at the upper end of previously stated guidance of between 120,000
and 135,000 tonnes. Sierra Rutile remains on track to becoming the
world's largest rutile producer in 2016.
Project Development
Gangama Dry Mining
As announced previously, Sierra Rutile commissioned the Gangama
Dry Mine project on 31 May 2016, which is now operational and
producing high quality natural rutile.
Construction of Gangama Dry Mine commenced in April 2015 and,
over a thirteen-month period, Sierra Rutile worked alongside DRA
Projects to ensure that the project was completed on time and
within budget. Feed rates and plant utilisation exceeded design
criteria during the commissioning period and the ramp-up has
continued to outperform budgeted performance criteria.
Other expansion projects
Process optimisation, value engineering and market evaluation
for the planned 250 tonne per hour bolt-on units for the Lanti and
Gangama Dry Mines continue. Subject to a successful outcome to
these studies and appropriate market conditions, Sierra Rutile
expects to be positioned to commence construction of these bolt-on
units early in 2017. These short-lead time and low-capital
brownfield expansions allow Sierra Rutile to react quickly to a
firming market to profitably meet potential demand as markets
allow. These expansions are expected to be funded from operating
cashflows.
Sierra Rutile also continues to progress towards a definitive
feasibility study for the Sembehun Dry Mine.
Sales and Marketing
Customer destocking activity appears to have accelerated after
Sierra Rutile experienced sales volumes increasing in the second
quarter to a new quarterly record high. Volumes were higher than
the same quarter a year ago, and were also higher than the second
quarter in both 2013 and 2014.
For the second half of the year, the vast majority of Sierra
Rutile's product is committed. Improved market conditions have
generated additional sales and Sierra Rutile is able to meet
customer needs with production capacity from existing mining units
and the successful commissioning of the Gangama Dry Mine. Customer
interest in future supply is firm, helped by predictions that
rutile supply from existing mines will decline through to 2020.
As announced previously, sales into the titanium metal market
resumed, marking the return of an important high-value end market
for Sierra Rutile's premium rutile product. Purchases of rutile by
European and Western pigment manufacturers remain on a solid
footing and demand from the welding sector is picking up after a
slow start to the year.
Conclusion
Sierra Rutile continues to follow a sales led production plan
for 2016 and beyond, and will produce to meet its sales
requirements, with a focus on profitability over volume.
This disciplined and flexible approach continues to position
Sierra Rutile strongly versus its peers. It enables Sierra Rutile
to focus on profitable cash generation even during periods of
market weakness, whilst retaining the flexibility to respond
quickly to increasing demand for its products.
S
For Further Information:
Sierra Rutile Limited
Matthew Hird, Chief Financial
Officer +44 (0)20 7074
John Nagulendran, Company Secretary 1800
Investec Bank
Nominated Adviser and Joint Corporate
Broker
Chris Sim / George Price / Jeremy +44 (0)20 7597
Ellis 4000
RBC Capital Markets
Joint Corporate Broker +44 (0)20 7653
Jonny Hardy 4000
Numis Securities Limited
Joint Corporate Broker
John Prior / James Black / Paul +44 (0)20 7260
Gillam 1000
Kreab
Marc Cohen / Christina Clark +44 (0)20 7074
/ Fiona Cumberland 1800
About Sierra Rutile Limited
Sierra Rutile is a leading, multi-mine mineral sands company,
operating world-class assets and developing a portfolio of growth
projects in the south west of Sierra Leone, with its primary
commodity mined being natural rutile, a titanium feedstock. The
Company has an established operating history spanning approximately
50 years and a resource mine life of another 50 years with one of
largest natural rutile deposits in the world and a JORC-Compliant
Mineral Resource for measured, indicated and inferred resources for
the Sierra Rutile mine of over 866 million tonnes (as at 30
September 2015). Sierra Rutile expects to be the world's largest
primary producer of natural rutile in 2016 and its market-led,
long-term mine plan has the flexibility to adapt to customer
demand.
www.sierra-rutile.com
Forward-Looking Information
This document may contain forward-looking statements. These
forward-looking statements are made as of the date of this
announcement and Sierra Rutile Limited (the "Company") does not
intend, and does not assume any obligation, to update these
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required under applicable
securities legislation.
Forward-looking statements relate to future events or future
performance and reflect Company management's expectations or
beliefs regarding future events and future performance and include,
but are not limited to, statements with respect to the estimation
of mineral reserves and resources, the realization of mineral
reserve estimates, the timing and amount of estimated future
production, costs of production, capital expenditures, success of
mining operations, environmental risks, unanticipated reclamation
expenses, title disputes or claims and limitations on insurance
coverage. In certain cases, forward-looking statements can be
identified by the use of words such as "plans", "expects" or "does
not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes", or variations of such words and phrases or statements
that certain actions, events or results "may", "could", "would",
"might" or "will be taken", "occur" or "be achieved" or the
negative of these terms or comparable terminology. By their very
nature forward-looking statements involve known and unknown risks,
uncertainties, assumptions and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the forward looking
statements. Such factors include, among others, risks related to
actual results of current exploration activities; changes in
project parameters as plans continue to be refined; future prices
of mineral resources; possible variations in ore reserves, grade or
recovery rates; accidents, labour disputes and other risks of the
mining industry; delays in obtaining governmental approvals or
financing or in the completion of development or construction
activities; as well as those factors detailed from time to time in
the Company's interim and annual reports. These risks,
uncertainties, assumptions and other factors could adversely affect
the outcome and financial effects of the plans and events described
herein.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward- looking
statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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