TORONTO (miningweekly.com) – The TSX-listed stock of Labrador Iron Mines (LIM) on Tuesday continued on its downward spiral, losing 18.92% in morning trade, after the company last week announced that it would need about C$30-million in additional capital to be able to successfully restart mining during the 2014 season.

The Toronto-listed company on Thursday reported that it had achieved its 1.7-million in iron-ore sales guidance for 2013; however, the ore sold was lower in value than in previous years owing to lower grade and a higher-silica content.

LIM said the James mine was nearing depletion, the Redmond mine contained higher clay than expected and ore from waste ore stockpiles was of lower grade than grades expected in the new deposits. LIM did not provide production guidance for 2014.

The company's direct-shipping operations run from April through November, with a planned winter closure from December to March. LIM said it was assessing a variety of operating scenarios for the coming 2014 operating season, and would be focusing on cost reduction and product quality.

The company’s options include mining from the nearly depleted James mine, the high-clay Redmond mine, low-grade historical ore stockpiles, or developing the Houston deposit as a feed for the Silver Yards plant.

In LIM’s management discussion and analysis for the quarter and nine months ended December 31, which was published on Thursday, management estimated that a revised plan to develop Houston would defer the construction of a new wash plant and would include hauling ore (after dry screening on site) to Silver Yards for processing and rail loading.

Analysts at Desjardins Capital Markets said in a note to clients on Tuesday that development of the Houston mine would be the best long-term solution as it was expected to be relatively long-lived, as compared with LIM’s other alternatives.

However, despite development of Houston being the preferred alternative, analyst Jackie Przybylowski said they did not believe that it was the likely near-term outcome as the company was not expected to be able to raise the C$30-million required to prepare Houston for start-up under management’s revised plan, including stripping, a haulage road and bridge construction.

“We expect that the most likely operating plan in 2014 will be a continuation of 2013 operations at the James mine and historical ore stockpiles.

“LIM is continuing its downward spiral. The company continues to deplete its existing mines and we do not believe it will be able to raise the capital required to develop new operations. Management estimates that it will require an additional C$20-million to fund working capital for 2014 start-up and an additional C$30-million to fund development of Houston,” Przybylowski said.

In the third quarter ended December 31, LIM reported a net loss of C$31.3-million, or C$0.25 a share. Net revenues in the quarter were C$28.4-million.

Desjardins maintained its ‘sell – speculative’ rating, and had reduced its target to C$0.25 a share, down from C$0.30 a share.

LIM’s TSX-listed stock on Tuesday afternoon traded at C$0.15 apiece, having lost 74% over the last year.