London Mining (LOND) successfully met all of its objectives at its flagship Marampa iron ore mine in Sierra Leonne in the six months to 30 June. Production volumes increased 129 per cent year on year to 1.54m tonnes of iron ore (mtpa), while operating costs fell 18 per cent to $62 (£40) a tonne. What's more, the Marampa ramp up remains on track to reach a run-rate of 5 mtpa by the year-end, despite a particularly challenging rainy season this year, and costs are soon expected to fall to around $50 a tonne.
But despite a near tripling of revenues, which drove up cash cash profits to $24m from a $0.2m loss a year earlier, London Mining still recorded a net loss during the period. Servicing about $206m of net debt resulted in borrowing costs of $17m, which completely wiped out operating profits of $10.2m. This is somewhat worrying as iron ore prices have held up surprisingly well this year; volatility aside, the current level of around $139 a tonne is sharply above many analysts' expectations.
Broker Credit Suisse forecasts current year adjusted pre-tax profits of $26.8m and EPS of 6¢, rising to $34.9m and 12¢ in 2014 (from losses of $58m and 80¢ in 2012).
LONDON MINING (LOND) | ||||
|---|---|---|---|---|
| ORD PRICE: | 113p | MARKET VALUE: | £156m | |
| TOUCH: | 111-113p | 12-MONTH HIGH: | 190p | LOW: 86p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 146¢* | NET DEBT: | 116% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 58 | -19.0 | -12.0 | nil |
| 2013 | 142 | -5.0 | -2.0 | nil |
| % change | +146 | - | - | - |
£1=$1.56 *Includes intangible assets of $94m, or 68¢ a share | ||||
