Sierra Rutile, which is listed on the Australian Stock Exchange, had a difficult quarter when it was forced to revise its full-year production guidance.
In the three months to June, rutile production fell to 25000 tons from 32000 tons in the previous quarter, while ilmenite production fell from 12000 tons to 9000 tons over the same period.
The production of rutile and ilmenite was affected by the Mineral Separation Plant (MSP), which operates in Sierra Leone, which was offline for most of June due to power generation restrictions. Power generation is expected to return to full capacity in the third quarter of this year.
Meanwhile, rutile sales fell only slightly to 28000 tonnes in the quarter from 30, 000 tonnes in March, while ilmenite sales rose from 11000 tonnes to 16000 tonnes.
Theuns de Bruyn, General Manager and CEO of Sierra Rutile, said: "despite some specific operational challenges and weak industry-wide demand, Sierra Rutile maintained good sales and cash flow in the June quarter to support Sembehun's growth.
The development of Sembehun continues, with customers in 17 different locations testing laboratory samples, getting good feedback and confirming the high purity of rutile. In the next 6 to 9 months, we plan to complete the final feasibility study and move towards a strong financing plan and extending the life of the mine.
"the power supply problem in June affected production; however, we expect this situation to be corrected at the beginning of the second half of the year and the recently established inventory of heavy mineral concentrates will be processed into marketable products. In view of the current weak rutile market, we choose to give priority to the production of heavy ore concentrate rather than rutile production and build up large ore stocks before the rainy season. This is also expected to significantly reduce mining costs in the third quarter. "
Due to production restrictions in June and July, Sierra Rutile has reduced its production guidance from a previous estimate of 136000 tons of rutile to 124000 to 126000 tons of rutile, with a corresponding increase in full-year net unit cost guidance to $990 to $1055 per ton.
"although production in the quarter was lower than we expected, we continued to operate profitably and generate cash to reinvest in future growth. "We have drilled area 1 projects at the Ndendemoia, Pejebu and Mogbwemo deposits, and these findings will be included in the new resource statement in the third quarter," De Bruyn said.
"Mogbwemo tailings can supplement the ore of the original deposit and has considerable advantages. The actual pricing of rutile improved in the quarter due to a decline in sales to the better performing sponge titanium / titanium market and China.
"We are looking to diversify our customer base, to the extent that we recently made our first major sale to a new Chinese customer. Due to continued economic uncertainty in an inflationary environment, the pigment market remains weak, particularly in Europe, which may affect sales in the second half of 2023.
"as an important global manufacturer of natural rutile, we believe that the long-term prospects of our industry and our company are still positive. The development prospects of the Sembehun project are very attractive and we are taking steps to maintain our competitive position. "
