ASX-listed Sierra Rutile has set its production guidance for the 2023 financial year at between 140 000 t and 144 000 t.
This after it produced 136 000 t of rutile at its operations in Sierra Leone in the 2022 financial year.
In a report to shareholders for the quarter ended December 31, the company notes that production of 37 000 t of rutile for the quarter was 32% higher than in the third quarter of the year.
“Operating performance during the December quarter was significantly better than the previous quarter as production normalised after the especially heavy rains of the 2022 wet season,” comments Sierra Rutile MD and CEO Theuns de Bruyn.
Rutile sales of 41 000 t for the quarter were also higher quarter-on-quarter.
Sierra Rutile says selling prices have been steady during the quarter but that sales volumes of industrial-grade rutile were below expectations as a result of weak industrial, manufacturing and infrastructure activity impacting on European welding-related demand.
“Pigment customers, especially in Europe, also came under increased pressure during the quarter, curtailing production in response to deteriorating consumer demand impacted by rising inflation, high energy costs and increasing interest rates.
“This is expected to manifest in softer pigment demand during early 2023. [However,] interest in rutile remains robust despite lower pigment production rates, since Western titanium sponge manufacturers have increased output to meet growing requirements of civil and military aerospace customers and as a result of constrained global rutile supply,” the company points out.
To meet its production guidance for this year, Sierra Rutile plans to build material ore stockpiles during the first half of the year to enable production to be maintained through the wet season.
Meanwhile, the company plans to spend between $32-million and $36-million in capital expenditure (capex) this year, compared with the capex of $20-million invested in the 2022 financial year.
“Sierra Rutile will make material capital investments during 2023, both in completing the Sembehun definitive feasibility study and in maximising the efficiency of remaining Area 1 operations,” it states.
The company considers Sembehun to be one of the largest and highest-grade natural rutile resources in the world and says its development will extend Sierra Rutile’s mine life by at least 13 years.