London, England — 12 April 2012 – African Minerals “’ which is developing the Tonkolili iron ore mine in Sierra Leone “’ has cut its 2012 output forecast citing uncertainty ahead, from rail upgrades to operating through its first wet season, as it ramps up production.
Reuters reports that the miner “’ the largest of West Africa’s emerging iron ore producers, and sitting on one of the continent’s largest iron ore deposits “’ confirmed its target production rate of 20Mtpa by the fourth quarter of 2012.
The company had forecast late last year that it would produce and ship up to 15Mt for 2012. It trimmed that this week to around 10Mt “’ a more conservative level than most analysts had forecast, though several had expected a cut.
“It is conservative, I accept, but it is the right thing to do given the inherent uncertainties in the ramp-up period,” CFO Miguel Perry said, adding that guidance had already been deliberately removed in February, in an initial signal to the market.
The company expected operating costs to remain below US$30/t.
“Having been on site last month, we were expecting a small downgrade to production of two to three million tonnes, and would view the new guidance as a target to beat,” Canaccord analysts said in a note.
Iron ore production and trade has long been dominated by the three major producers – Vale, Rio Tinto and BHP Billiton. But African Minerals and rival London Mining, also operating in Sierra Leone, are among a cluster of emerging West African iron ore producers attracting the interest of strategic buyers and commodity traders.
African Minerals said current mine operations were “comfortably achieving” 8Mtpa, with the current port, rail layout and fleet complement capable of supporting 6 to 8Mtpa. Its first batch of iron ore shipped from Sierra Leone last year was the country’s first export of the steelmaking ingredient in almost three decades.
Source: Reuters. For more information, click here.