10 Apr 2012 07:00
Sierra Rutile Limited
Sierra Rutile Provides Production Update
London, UK, 10April 2012: Sierra Rutile Limited (AIM:SRX) ("SRL") is pleased to provide an update on its Q1 2012 activities.
Highlights:
·; Rutile production increased 48% to 20,693 tonnes vs. 13,977 tonnes in Q1 2011.
·; Ilmenite production up 57% to 4,960 tonnes vs. 3,155 tonnes in Q1 2011.
·; Full-year 2012 rutile production guidance of approximately 80,000 tonnes maintained.
·; Significant cash generated in the quarter. Cash balance of $35.1 million (as of 5 April 2012) vs. $10.7 million at 31 December 2011, after spending $10.4 million on capital and the D3 feasibility study during the quarter.
·; Expansion projects on track, first items of plant and machinery now landed in Sierra Leone.
·; Due to strong cash generation, SRL does not anticipate it will need further financing to fund the dry mining or Mogwbwemotailings projects.
Production
Q1 2012 rutile production was on budget at 20,693 tonnes, 47% above the 13,977 tonnes produced in Q1 2011, continuing the positive production trend achieved in the second half of 2011. Full-year production guidance remains at 80,000 tonnes. Q1 ilmenite production was on budget at 4,843 tonnes, 54% above the 3,155 tonnes produced in Q1 2011.
Financing
As at 5 April 2012, SRL has $35.1 million of cash on hand, having spent a further $10.4 million on capital expenditures and expenditures associated with the new dredge (D3) study during the quarter. This significant cash generation has occurred from a starting point of $10.7 million cash on hand at 31 December 2011.
As a result of the ongoing positive production performance and exceptionally strong sales environment, SRL does not anticipate that it will require any external sources of financing to complete the dry mining or Mogbwemotailings (D2) expansions. Whether any financing of the new large-scale dredge project (D3) is required will be considered once the feasibility study is completed.
Mineral resource expansion
In March 2012, the Board approved a budget of $4.0 million for additional mineral resource exploration. Currently less than 20% of SRL's license area has been systematically explored, meaning SRL believes there exists high potential for resource expansion. The money will be spent on drilling rigs, staffing and laboratory equipment and will enable the company to explore at 2.5 times its current rate. The first results of the expanded exploration program are expected to be available during the fourth quarter.
Commenting on SRL's Q1 performance, John Sisay, SRL Chief Executive said, "I am pleased to be able to report that good progress is being made on all our growth projects, supported by a solid performance from current operations. We are also very pleased that Q2 pricing to date is substantially above prices achieved in Q1. We are utilizing the current strength in our markets and strong cash generating capabilities to continue our long-term investments in growth from our world-class asset base."
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For further information:
Sierra Rutile Limited Telephone: +44 (0)20 7074 1800
John Sisay, Chief Executive Officer /
Joe Connolly, Chief Financial Officer
Collins Stewart Europe Limited Telephone: +44 (0)20 7523 8350
John Prior / Adam Miller
Kreab Gavin Anderson Telephone: +44 (0)20 7074 1800
Fergus Wylie / Rupert Trefgarne sierrarutile@kreabgavinanderson.com
About Sierra Rutile Limited
Sierra Rutile produces titanium feedstock industrial minerals (primarily rutile, with some associated ilmenite), as well as smaller quantities of zircon. Sierra Rutile's mine, located in the south west of Sierra Leone, is one of the largest natural rutile deposits in the world, with a JORC-Compliant Mineral Resource for measured, indicated and inferred resources for the Sierra Rutile mine of over 600 million tonnes (as at February 2011).
www.sierra-rutile.com