JOHANNESBURG (miningweekly.com) – Aim-listed London Mining improved its performance during the 2013 wet season, with a 250% year-on-year increase in iron-ore concentrate produced at its Marampa mine, in Sierra Leone, during the three months ended September.

The company stated that production, which amounted to 948 000 wet metric tons (wmt), was in line with expectations, as initiatives implemented as a result of its experience in the previous year led to a marked improvement in performance over the wet season.

Production was down 1.6% quarter-on-quarter in 2013 compared with a quarter-on-quarter decline of 7% in 2012, despite 20% higher rainfall over the same period.

Further, volume and product grades fell in the quarter as processing of more competent weathered ore started, but the grade was expected to improve as the milling circuit was brought on line in the fourth quarter.

Full-year production at the mine was expected to be between 3.6-million wet metric tons and 3.9-million wet metric tons, or 3.3-million dry metric tons and 3.6-million dry metric tons.

Meanwhile, third-quarter sales volumes also increased by 300%, compared with the prior corresponding period to 890 000 wmt, demonstrating improved logistics through the wet season with the additional barging capacity now in operation.

London Mining said it maintained its full-year sales guidance at between 3.9-million wet metric tons and 4.1-million wet metric tons, or 3.6-million dry tons and 3.8-million dry metric tons.

"I am pleased with our improved performance through the 2013 wet season. This demonstrates that our simple and flexible logistics solution can accommodate increased concentrate volumes. The plant upgrades are progressing well and we expect to meet our targeted 5.4-million wet metric tons a year, or five-million dry metric tons a year, production run-rate and an operating cost target of about $47/wmt as we exit 2013,” London Mining CEO Graeme Hossie commented.

Further, a life-of-mine (LoM) study completed during the quarter demonstrated that production at Marampa could be increased further by improving the efficiency of the existing plant to a rate of 6.5-million wet metric tons a year in 2014 at an estimated additional cost of $40-million.

“We also expect an investment of $240-million to upgrade the plant to process all ore types and extend the LoM to over 40 years based on probable reserves of over 500-million tons,” the company said.

The incremental expansion and other initiatives identified by the feasibility study were further expected to reduce average operating costs to between $39/wmt and $42/wmt over the LoM.

Meanwhile, London Mining was granted an exploitation licence for the Isua project, in Greenland, in October.

Within the exploitation licence, London Mining had agreed to incorporate a royalty structure with the government of Greenland.

The Royalty, based on sales, would be payable if combined withholding tax and corporation taxes were less than the calculated royalty in a particular year, such that the government received a minimum amount.

The royalty was structured with escalating rates, with the first five years at 1%, years six to ten at 3% and years 11 to 15 at 4%, rising to 5% after year 16.

The lower rate in the earlier years recognised the need to protect the payback period for initial development investment once the mine was brought into production, the company said, adding that the fiscal agreement would have no material adverse impact on the net present value of the project.

London Mining on Thursday also announced that its CFO Rachel Rhodes was stepping down with immediate effect owing to personal reasons.

Rhodes would be replaced by executive board director and head of corporate development Benjamin Lee; however, she would remain available to the company until the end of the year to ensure a smooth transition.