SIERRA RUTILE LTD London, UK, 31 March 2016: Sierra Rutile Limited ("Sierra Rutile", the "Company", or the "Group") is pleased to announce its results for the year ended 31 December 2015 and has today published its audited preliminary results on the Group's website at http://www.sierra-rutile.com/.
-
Major production milestone achieved with 126,021 tonnes of rutile
10% increase from prior year
Representing highest annual production since operations restarted
- Gangama dry mine project on track
Within budget and on-schedule expected for commissioning June 2016
Provide further dry mining production capacity in 2016
FINANCIAL HIGHLIGHTS2015
2014
% change
Revenue
105.8
117.8
(10%)
16.1
14.8
9%
Loss before tax
(9.4)
(8.9)
(6%)
17.3
6.7
158%
Production cash cost3 ($/t)
614
643
5%
Net debt4
46.4
36.4
(27%)
-
Improved financing arrangements
Standby Facility of $15 million
Working Capital and Standby Facilities extended to May 2017
Deferral of next repayment under Government loan to December 2016
STRATEGIC HIGHLIGHTS
-
Revised development programme
Focus on capital disciplined investment
Flexible dry mining units to match customer demand
-
Attractive growth projects with potential to produce over 200,000 tonnes by 2018
250tph bolt-on plant at Gangama being evaluated at capital cost of $12 million
Similar bolt-on plant being evaluated for Lanti dry mine
Sembehun pre-feasibility study completed
- further refinements being considered for added flexibility and reduced capital costs.
OUTLOOK
-
Current trading in line with expectations
Rutile production in Q1 2016 expected to be seasonally lower at around 26,000 tonnes
Approximately 11% ahead of Q1 2015 and 33% lower than Q4 2015
-
Market-led business model
Production guidance between 120,000 and 135,000 tonnes
-
Benefits from anticipated commissioning of Gangama dry mine
Production cash cost between $540/t and $590/t
1
1 EBITDA is measured as earnings/(loss) before finance income/costs, tax, depreciation, amortisation, share based payments, impairment charges and provision for obsolete inventory.
2 Free Cash Flow is calculated as EBITDA less stay-in-business capital expenditure, tax payments and working capital movements.
3 Production cash cost defined as the direct costs of production divided by tonnes of rutile produced.
4 Net debt is defined as gross borrowings less cash and cash equivalents.
Commenting on 2015 performance, Sierra Rutile CEO, John Sisay said: "We are delighted to have achieved our targets across the business last year. Production was towards the upper end of guidance, costs were rigorously managed and the business was cash generative. These favourable conditions allowed us to invest in the Gangama dry mining project which remains within budget and on-schedule for commissioning in June 2016. The marketplace for the mineral sands sector in general remains subdued, but the premium value attributed to our products and the deep relationships which have been developed with our customers over many years have permitted us to maintain sales at broadly consistent prices.
Going into 2016 and beyond, our market-led business model will allow us to align production to customer demand. The anticipated completion of the first stage of expansion of the Gangama dry mine in June, followed by the potential bolt-on expansions to Gangama and the Lanti dry mine, give the Group the added flexibility to respond to any increase in demand in a capital efficient and flexible manner. We are confident that a broad based pick-up in rutile prices is on the horizon and the business is well placed to capitalize on any improvement. We remain focused on delivering upon our plans to develop a business with industry leading shareholder returns, with our robust balance sheet as the foundation."
Sierra Rutile Limited Matthew Hird Chief Financial Officer | +44 (0)20 7074 1800 |
Investec Bank Nominated Adviser and Joint Corporate Broker Chris Sim/George Price/Jeremy Ellis | +44 (0)20 7597 4000 |
RBC Capital Markets Joint Corporate Broker Jonny Hardy | +44 (0)20 7653 4000 |
Numis Securities Limited Joint Corporate Broker John Prior/James Black/Paul Gillam | +44 (0)20 7260 1000 |
Kreab Marc Cohen/Christina Clark/Fiona Cumberland | +44 (0)20 7074 1800 |
Sierra Rutile produces titanium feedstock industrial minerals (primarily rutile, with some associated ilmenite), as well as smaller quantities of zircon. Sierra Rutile's mines, located in the south west of Sierra Leone, are based on 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 867 million tonnes (as at 30 September 2015).
This document may contain forward-looking statements. These forward-looking statements are made as of the date of this document and Sierra Rutile Limited (the "Company") does not intend, and does not assume any obligation, to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable securities legislation.
Forward-looking statements relate to future events or future performance and reflect Company management's expectations or beliefs regarding future events and future performance and include, but are not limited to, statements with respect to the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of mineral resources; possible variations in ore reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors detailed from time to time in the Company's interim and annual reports. These risks, uncertainties, assumptions and other factors could adversely affect the outcome and financial effects of the plans and events described herein.
Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
The date and location for the AGM of the Group will be announced shortly but it is expected to be held before the end of July 2016. Proxy cards will be distributed to shareholders with the Notice of the AGM.
Chairman's StatementIt is with great pleasure that I write my inaugural independent Chairman's statement for Sierra Rutile. I have only been with the Company for a short period of time, but I have already been extremely impressed by what I have seen from an excellent management team operating a world-class asset. Indeed, the reason I was motivated to join Sierra Rutile was the rare opportunity to be involved with furthering the development of such a quality asset, with the goal of ensuring it achieves its latent potential. I am very confident we as a team will be successful in this endeavour by combining expertise, responsible governance, a world-class asset, and excellent partner and local community relationships. I am especially pleased by Sierra Rutile's continued commitment to good corporate governance, exemplified by the decision to appoint an independent Chairman.
I have joined Sierra Rutile at a time when the price of mineral sands, consistent with almost all commodities, is going through a period of cyclical weakness. Whilst rutile has outperformed many other commodities, the market continues to remain challenging and pricing disappointed during 2015, with a 3% fall on 2014, for an average realized price of $775/t. That said, rutile and other high-grade feedstocks were the bright spot for mineral sands due to underlying robust demand and the positive impact of the more buoyant titanium metal sector. We see this outperformance continuing during 2016 as the destocking cycle draws to an end.
Sierra Rutile is better positioned than many companies to withstand these lower commodity prices, since it is already a low-cost producer. A strong focus on cost control meant that production cash costs were lowered further during the year to $614/t. This was particularly pleasing given that Sierra Rutile does not benefit directly from the strong US dollar in the way many of its peers do, and therefore the cost reductions were a direct result of efficiency savings achieved by management. Sierra Rutile will continue to focus on cost control and we expect to continue to find ways to further optimize the operation and increase efficiency, even prior to the introduction of Gangama dry mining, which we anticipate will be our lowest cost production unit yet.
Sierra Rutile also benefits from a strong balance sheet when viewed in the context of its sector peers. This has allowed us to continue operating and expanding our production base rather than having to focus on the servicing of legacy debt positions. We aim to enhance and extend our relationships with capital providers across all spectrums to ensure we continue to enjoy a stable and well-balanced financial platform.
Since joining, I have been impressed by the Company's long-term growth plans in an ever-changing environment, and I endorse those plans whole-heartedly. Management's long term strategic outlook, and the systems and processes that have been put in place are impressive. From market-led production to capital efficiency, balance sheet differentiation and an innovative culture, Sierra Rutile is unique in the sector. Sierra Rutile has added both an experienced and capable Chief Operating Officer and Chief Financial Officer during the past year, both of whom supplement an already strong team. It is a team that has admirably delivered on the promises it has made to both the Board of Directors and its shareholders, and I have every confidence that they will continue to do so in the future.
Sierra Rutile has entered into its 49th year of operations since the mine started in 1967, and therefore 2017 is of particular note since it will mark the Company's 50th year anniversary. I am excited to be joining the Company at this time as we embark upon an historical milestone. There are very few mining enterprises on the African continent that have been in operation for such a long time, and more importantly, likely to be in operation for decades to come for the benefit of all stakeholders. We are very proud of our position as a cornerstone of the Sierra Leonean economy, the support we have amongst the people and our positive impact on the local communities in which we operate.
In closing, I remain extremely positive on Sierra Rutile's near-term outlook and long-term future. The Company has already shown that it can operate effectively in this challenging commodity-price environment, whilst continuing to grow and progress. A strong, growth plan is in motion to further develop this world-class asset, and we have in place the team that can deliver. Sierra Rutile is not reliant on a recovery in commodity prices to aid its success and in this regard is firmly in control of its own destiny.
Robert Edwards
Non-Executive Chairman
Sierra Rutile Limited issued this content on 31 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 31 March 2016 06:21:25 UTC
Original Document: http://www.sierra-rutile.com/uploads/sierrarutilelimited2015preliminaryannouncement-30mar2016finalsignedwebsite.pdf
