TORONTO (miningweekly.com) – Canadian direct-shipping iron-ore producer Labrador Iron Mines (LIM) on Friday said it had slightly narrowed its quarter-on-quarter loss, as higher iron-ore prices were offset by lower grades from its James mine, and by higher ocean freight costs.

For the company’s second quarter ended September 30, it reported a net loss of C$24.9-million, or C$0.20 a share, which included a depletion and depreciation charge of C$20.7-million, or C$0.16 a share.

This compared with the first quarter ended June 30, when LIM reported a loss of C$28.5-million, or C$0.23 a share, which included a depletion and depreciation charge of C$5.6-million and rail take-or-pay transportation penalties of C$6.2-million.

LIM sold four shipments of iron-ore totalling 652 000 dry tonnes during the second quarter and reported revenue of C$40.3-million, which was up 22% quarter-on-quarter from C$33-million.

The price of iron-ore (CFR China 62% iron (Fe) content) averaged about $133/t in the quarter, compared with about $113/t in the same quarter of 2012. Benchmark prices for 62% Fe iron-ore in the Chinese market remained above $130/t since the quarter ended.

The company expected two more shipments for the year to meet its output guidance of 1.7-million wet tonnes.

At the James deposit, mining took place deeper in the pit where the company found lower in situ iron grades, and the ore contained a greater fines component than previously experienced.

For this reason, LIM said production from the James mine would continue until the end of the 2013 operating season, after which an assessment would be undertaken to evaluate the economics of extracting the remaining ore and the down-dip extensions of the higher-grade portions of the deposit in 2014. The valuation would look at whether continuing pit dewatering during the winter months and additional stripping would be economically justified, or if the pit should be permanently closed.

Beyond 2013, LIM's operations would be focused on the company's Stage 1 deposits, including the James mine, the Redmond mine and other smaller satellite deposits and stockpiles, all located within a 15 km radius of the Silver Yards processing plants.

LIM was also currently evaluating an interim plan to haul Houston ore to the Silver Yards process and rail loading facilities in 2014 as a first stage, lower initial capital approach for development of the Houston project.

LIM's ongoing 2013 exploration programme is focused on the Howse, Houston and Gill deposits and would consist mainly of delineating diamond drilling with a target of about 14 000 m of core.

During the quarter, LIM completed a joint venture agreement with Tata Steel Minerals Canada for the exploration and development of LIM's Howse deposit, for which it received $30-million in cash.

The company’s TSX-listed stock closed down 8.47% at C$0.27 apiece on Friday.