JOHANNESBURG (miningweekly.com) – While London Mining’s Sierra Leone-based Marampa iron-ore mine achieved an increase in output during the quarter ended June 30, logistical challenges hit sales.

The iron-ore explorer on Thursday reported a 30% quarter-on-quarter hike in production to 1.2-million wet metric tonnes (wmt).

However, the group posted a 5% dip in sales to 830 000 t in the quarter under review on the back of transshipment issues, including the floating offshore transhipment platform having cut loading rates in June to allow for maintenance and repairs and a dispute over the transportable moisture limit of 10.9%, which had since been resolved.

While analysts at Liberum Capital believed the logistical challenges could put London Mining’s balance sheet under additional stress in the second half of the year, London Mining said it had moved to rectify and improve the movement of its product ahead of the wet season.

The iron-ore miner increased the loading rate at the barge loading facilities by 25% to a yearly installed capacity of 8.8-million wmt and acquired two new pusher barges, which arrived during the quarter under review.

“[The] significant cost benefits [expected] from the more efficient barging format, which uses less fuel than the two-tug-per-barge solution employed in the first two years of operation and has half the cycle time, will be realised from the third quarter.

“Critical path items are under way to allow loading of larger Capesize vessels in the inner harbour in the first quarter of 2015,” London Mining CEO Graeme Hossie said in a statement.

The group maintained its guidance for the full year of between 4.9-million wmt and 5.4-million wmt as it focused on increasing production rates by between 10% and 20% above current nominal capacity through debottlenecking and plant optimisation.

London Mining would, this month, initiate a low-cost optimisation programme to redirect excess milled high-grade material from the spirals circuit to the magnetic separation plants.

This was expected to allow the plants to consistently operate at 110% to 120% of nominal capacity – the equivalent of 5.9-million wmt to 6.5-million wmt a year, explained Hossie.

Meanwhile, progress had been made with efforts to secure a strategic partner for its Marampa operations to reduce debt and fund an accelerated growth plan on the back of ongoing pricing volatility.

Following the decline of the iron-ore price, exacerbated by an uncertain price environment, London Mining had been managing its cash flow “tightly”, while working to increase its financial headroom.

A new $17.5-million facility had been arranged and drawn down from Vitol as a partial prepayment on 500 000 t of future unallocated exports.

Further, active and constructive discussions were ongoing with its lending banks for an additional short-term working capital tranche of up to $25-million, maturing towards the end of 2014.

The combination of these two measures would satisfy expected short-term liquidity and headroom requirements under current conditions.

Liberum noted that the short-term debt funding would see the iron-ore miner through to concluding a deal with a strategic partner, which could “revolutionise” the company’s balance sheet and short-term prospects.