PERTH (miningweekly.com) – ASX-listed Sierra Rutile has reported lower profits and revenue for the half-year ended June as production fell.

The company previously noted that rutile and ilmenite production was impacted by the mineral separation plant (MSP) at its Sierra Leone operations being offline for most of June as a result of power generation constraints.

Full power was restored in August.

Rutile production in the half-year ended June reached 57 000 t, with sales amounting to 59 999 t, down from the 68 000 t reported in the previous corresponding period. The declining sales volumes saw revenue decline from the A$122.9-million in the first half of 2022, to A$108.3-million in the first half of the 2023 financial year.

Gross profits in the same period declined from A$33-million to A$30.5-million while net profits after tax declined from A$53.5-million to A$0.6-million following an impairment charge of A$28.8-million.

“The half-year 2023 was a resilient financial performance with continued positive operating cashflow generated to support ongoing capital investment. This was despite weakening demand in the pigment market, and some interruptions to production during the half,” said Sierra Rutile MD and CEO Theuns de Bruyn.

“2023 production commenced in line with expectations but was subsequently impacted by power supply issues in June. Revenue was down around 12% but gross profit was down only 8%, reflecting a focus on cost management.

“Uncertainty regarding continuation of the Third Amendment Agreement tax concessions applicable to Area 1 has led to the decision to delay execution of the Mogbwemo Tails project and, combined with challenging market conditions, this has resulted in an impairment charge of A$28.8-million against Area 1 property, plant and equipment and intangible assets,” said De Bruyn.

“The Mogbwemo Tails project is an excellent opportunity to reduce operating costs at Area 1 and, if needed, could provide extra runway for the development of Sembehun. We hope to proceed if the current uncertainties regarding market conditions and the Third Amendment Agreement tax concessions for Area 1 are resolved.”

For the full year, Sierra Rutile has set a production target of between 124 000 t and 126 000 t, at a net unit cost of between $990/t and $1 055/t.