Senegal – Mineral Deposits Limited (MDL) has announced that it is on track to produce in the order of 170 000t of heavy mineral concentrate (HMC) for the third quarter of 2015 from the Grande Côte mineral sands project (GCO) in Senegal.
Following a period of unplanned downtime in July due to a series of unrelated events, mining operations at the Grande Côte project have begun to perform at levels approaching nameplate capacity, the company said.
During August 2015, the operations produced over 80 000t of HMC compared to the previous best month of 55 000t of HMC in May 2015. The operations are on track to produce in the order of 170 000t of HMC for the quarter ending 30 September 2015, a marked improvement on the performance of the first quarter and second quarter 2015.
The strong recent performance is in part due to the actioning of a number of discrete commissioning projects foreshadowed in MDL’s second quarter operations review.
A key objective of these projects is to get the mining operations consistently producing at and above the level achieved in August.
These projects also extend to the Mineral Separation Plant where a number of initiatives have been designed to improve efficiencies as increased use of the plant results from improvements in the mining operations.
To assist the effective implementation of these commissioning projects, MDL has seconded its new Chief Operating Officer, Jozsef Patarica, to the operations. He will continue to work directly with GCO management until both MDL and ERAMET are satisfied that the operations are performing to expectations.
Patarica appointment and secondment to GCO, where he has assumed responsibility for final commissioning of the operations, has been an important contribution to the success of the current GCO management team in achieving the recent strong results.
Despite continued soft commodity prices, the operations generated a positive EBITDA for the month of August.
Meanwhile, the TiZir Titanium & Iron ilmenite upgrading facility (‘TTI’) in Tyssedal, Norway, owned in partnership with ERAMET of France has undergone a furnace reline and capacity expansion project. TTI is subsequently progressing on schedule following a successful shutdown in September.
MDL and ERAMET have committed US$25 million ($12.5 million from each party) to TiZir in the form of an additional subordinated loan.
Production issues recently experienced at GCO (including disappointing HMC production in July which has had flow‐on effects for finished goods production and shipments in August and September) and TTI (as mentioned in MDL’s 2Q Operations Review) has contributed to the funding requirement. This situation has been exacerbated by continued pressure being exerted on revenues as commodity prices remain soft.
In addition to the impact on cash flow, the production performance has also served to limit the borrowing base available to TiZir under GCO and TTI’s working capital facilities in September and October. In order to optimise the availability of finance under these facilities, a rebalancing of the intercompany cash arrangements between GCO and TTI was required.
For the remainder of 2015, MDL will continue to focus on completing all development activities at TiZir, namely the final commissioning of GCO and the reline and expansion project at TTI, such that TiZir enters 2016 best positioned to maximise its cash flow and financial returns.
The recent strong performance at GCO as well as the current status of the furnace reline and expansion project at TTI provide confidence that the company is on track to meet its objectives.
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