TORONTO (miningweekly.com) – Canadian direct-shipping iron-ore producer Labrador Iron Mines (LIM) started its 2014 financial year with a bigger year-on-year first-quarter net loss.
For the quarter ended June 30, 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.
During the quarter, the company sold two shipments of iron-ore totalling 328 000 dry tonnes and reported revenue of C$17.9-million, which was 53% lower than the revenue of C$38-million earned in the same period a year earlier.
LIM, which owns a portfolio of direct shipping ore operations in the Labrador Trough, said its first quarter was characterised by a disproportionate amount of waste removal and lower-than-planned volumes of mining, railing and sales, resulting from slower-than-expected contractor mobilisation, in March, and challenging weather conditions in March and April.
As a consequence, train loading, railing and shipping volumes were limited to the availability of saleable product produced.
LIM incurred significant rail-related volume commitment penalties during the quarter and achieved sales of only two shipments, instead of the planned three shipments. The sale of the third shipment occurred shortly after the end of the quarter.
"LIM recognises its current cost structure is too high and has undertaken a number of immediate and decisive measures to reduce both capital and operating costs. The key to reducing operating costs is to maintain and increase production volumes of iron-ore.
“It is expected that, as production volumes increase during the remaining months of the operating season, a significant reduction in operating unit costs will be achieved in the second and third quarters," chairperson and CEO John Kearney said.
LIM said it was currently targeting output of 1.7-million tonnes of iron-ore in 2013, in a total of ten shipments. With the increase in production and railing volumes, a reduction in take-or-pay transportation penalties and the implementation of cost-savings initiatives, cash operating costs during the remaining three quarters of the fiscal year were expected to be substantially lower than in the first quarter.