LONDON (Alliance News) - London Mining PLC Thursday said it swung to a loss in the first half as revenue fell on the back of lower market prices for iron ore, while it narrowed its production guidance due to slower-than-expected ramp-up of operations and the impact of the Ebola outbreak in West Africa.
Shares of the iron ore miner focused on Sierra Leone were down 10% to 35.99 pence in early trade Thursday, making it the third biggest faller in the AIM All-Share index.
London Mining said it made a loss of USD29.3 million in the six months to June 30, against a profit of USD10.2 million a year earlier. That came on the back of a 22% fall in revenue in the period to USD110.6 million, with lower market prices offsetting a 5% rise in sales volumes in the period.
Production volumes in the half were up 24% year-on-year to 2.1 million wet metric tonnes, while export volumes also increased 5% to 1.7mwmt.
But the firm said its production guidance range has been narrowed to between 4.9 and 5.1 million wet metric tonnes per year, from between 4.9 and 5.1mwmt per year before. This was due to a slower-than-expected ramp-up of operations and the expected impact of the outbreak of the Ebola virus in Sierre Leone.
London Mining said it has made a number of moves in the first half to maintain cash levels within the currently weak pricing environment, including deferring its USD175 million 'life of mine' extension capital programme and cutting costs by 20%, with further cuts also targeted.
It also recently agreed a new USD25 million working capital facility and signed offtake facilities with agricultural trading group Cargill Inc and Swiss commodities trader The Vitol Group worth USD37 million in the period.
"There is no doubt the first half of 2014 has been a challenging one for the iron ore industry, Sierra Leone and indeed London Mining," said Graeme Hossie, chief executive of London Mining. "We have been resolutely focused on four things - improving liquidity, completing the ramp-up to 5.4mwmt per annum, reducing costs and keeping our employees safe, healthy and protected from the Ebola virus."