JOHANNESBURG (miningweekly.com) – A significant fall in the price of rutile has offset the record rutile sales and the strong sales volumes of ilmenite and zircon and other concentrates by London-listed Sierra Rutile in the 2014 financial year.

A 21.6% year-on-year fall in the average realised rutile price at $818/t reduced revenue from $123.4-million in 2013 to $117.8-million in the 12 months to December 2014.

The group posted earnings before interest, taxes, depreciation and amortisation of $14.3-million, down from the $35-million recorded in 2013.

Sierra swung into the red this year, reporting a loss for the year of $9.4-million, compared with a profit of $9.8-million in the prior year.

In 2014, the mineral sands miner sold 129 602 t of rutile, generating revenue of $106-million, a 17% rise on the 111 018 t sold, generating $116-million, in 2013.

Just over 37 670 t of ilmenite was sold during 2014, generating $6.7-million in revenue, compared with the 24 170 t sold in 2013 generating $6.1-million.

Sierra reported that 36 530 t of zircon and other concentrates had been sold for $4.9-million in the period under review, a rise on the 13 597 t sold for $1.3-million in the prior year.

“Demand for natural rutile was strong but also highly price-sensitive as the overall titanium dioxide feedstock was in surplus from an abundance of lower-grade feedstocks. This resulted in a cap on the premium customers were willing to pay for natural rutile over lower-grade products and dragged the market downwards overall,” Sierra CEO John Sisay said.

This made it essential for Sierra to maintain its “disciplined approach” to cost control, with a 5.4% reduction in total operating cash costs to $646/t, a 10.5% fall in all-in cash costs to $683/t and a 7% decline in direct operating cash costs to $546/t achieved in the 12 months to December.

“This rigorous approach to cost control ensured that we generated significant operational cash flow and allowed for continued selective investment in our asset base,” he added.

Sierra posted an operational cash generation of $8.6-million, which enabled the miner to inject capital investment of $19.8-million to complete the mineral separation plant upgrade at the Gangama dry mine, in Sierra Leone.

With the Ebola-related challenges easing, Sierra aimed to invest further in the operation, with the further refinement and optimisation of the project expected to extend Sierra’s ability to “leverage its existing processing capacity and infrastructure further into the future”.

“This capital expenditure-efficient expansion will increase production and lower operating costs, positioning the company to commence meaningful and sustainable distribution to shareholders,” said Sisay.

The final stage of the upgrade would be completed early in 2015.

During the year, the group also directed $6.1-million to its loan with the Sierra Leone government and reached an agreement for the deferral of the debt repayments until June 2016.

This would enable the company to fund asset expansion, including the Gangama project, without increasing the current level of borrowings, Sierra chairperson Michael Barton explained.

Meanwhile, Sierra’s full-year production was “lower than anticipated”, with a 5.1% drop in rutile output to 114 163 t and 10.8% more ilmenite produced at 35 839 t.

This was attributed in part to lower-grade areas mined during 2014 and operational challenges caused by the outbreak of the Ebola virus in the region last year.

Sierra ended the year with cash and cash equivalent of $6.5-million and total current assets of $76.8-million.

“For the coming year, Sierra will continue to focus on cash generation and cost management, and continue preparations for further expansion … when market and Ebola-conditions permit,” Barton said.