London Mining says Ebola now impacting output, costs

London Mining says Ebola now impacting output, costsLondon Mining's (LON:LOND) announced Thursday production volumes at its Marampa Mine in Sierra Leone jumped 24% to 2.1 million tonnes in the six months to end-June, but warned the outbreak of the Ebola virus in the West African country is beginning to impact operations.

Graeme Hossie Chief Executive of London Mining said in a statement the company has "begun to experience disruption to the supply chain and to a number of services" due to the epidemic.

As a result of a slower than expected ramp-up of its plant to 5.4 million tonnes per year and Ebola, the company narrowed its 2014 production guidance to the lower end of the range.

Based on the current expected level of Ebola-related impact output of between 4.9 million tonnes and 5.1 million tonnes is now expected for the full year.

The company predicts operating cost of around $50 a tonne, with $1 a tonne in Ebola related costs.

Revenue of $110.6 million for the six months were down 22% as 5% increase in sales volumes was offset by lower market prices.

Weak iron ore prices have also forced the company to defer for two years a $175 million “Life of Mine” extension capital programme.

Marampa, which boasts a billion tonne resource, is about 120 km from Freetown, the capital of the West African nation.

The Marampa mine is a brownfields site formerly operated by the Sierra Leone Development Company (DELCO) and William Baird between 1933 and 1975.

Marampa reached a peak production of 2.5mtpa before low iron ore prices forced its closure.

Continuing weak market economics and civil war prevented redevelopment of the mine until the mining licence was acquired by London Mining in 2006.

London Mining is also developing projects in Greenland and Saudi Arabia.

marampa mine london mining iron ore

London Mining acquired Marampa Mine in 2006.

Image by Mohand Yahiaoui