JOHANNESBURG (miningweekly.com) – Aim-listed mineral sands producer Sierra Rutile recorded improved production during the first quarter of 2013, with rutile output growing by 21% to 25 087 t and ilmenite production increasing by 22% to 5 567 t, compared with the 2012 comparable period.
This was in part attributable to the Sierra Leone-based company’s $41-million Lanti Dry Mining project that was officially opened during the period under review and continued to ramp up production in-line with budget.
Similarly, the feasibility study and front-end engineering and design study for the development of the Gangama Dry Mining project continued to progress on schedule with completion of the study expected in the second quarter of 2013.
Based on a recently completed prefeasibility study, Gangama Dry Mining will have an average yearly production profile of 83 400 t of rutile, 46 000 t of ilmenite and 9 500 t of zircon concentrate over a life of six years, for an up-front capital cost of $103-million over its 12-month construction period
Sierra Rutile indicated that, though twice the throughput of the Lanti Dry Mining project, it anticipated that the Gangama Dry Mining project could be implemented in a similar 12-month timeframe to the Lanti Dry Mining project.
“The speed of construction of the Gangama Dry Mining project gives [us] significant flexibility to time or potentially stage the project to meet optimum market demand for our high-value natural rutile product. Any delay in advancing the project after the feasibility study is complete is likely to result in additional cash flows being available to pay dividends,” the company put forward.
Meanwhile, during the quarter, Sierra Rutile’s board had approved and implemented a dividend policy to distribute at least 50% of free cash flows to shareholders following capital expenditures, committed future expenditures and the repayment of any borrowings. However, the first dividend payment would be considered once the timing of the Gangama Dry Mining project was determined.
The company said the declaration and payment of future dividends, and the frequency of them, would be subject to its financial condition, future prospects, satisfaction of statutory solvency tests and other factors deemed to be relevant.
Sierra Rutile would seek shareholder approval for the payment of dividends, but noted that no guarantee could be given as to the amount of dividends payable.
On the sales front, prices for the first quarter of this year remained the same as in the fourth quarter of 2012. However, these prices remained historically high. Sierra Rutile noted that based on the recent news of increases to pigment prices, combined with increased inbound enquiries for its rutile product, supported its conviction that there would be a strengthening of the market during 2013.
"We remain on track to deliver a year-on-year production rate increase of over 30%. Additionally, the finalisation of the Gangama Dry Mining feasibility study in the next few months will provide [Sierra Rutile] with significant further production growth optionality beyond the current operations," CEO John Sisay said.