July 17, 2014 / 7:10 AM / 4 years ago

UPDATE 2-London Mining boosts iron ore output in Sierra Leone

(Adds CEO and analyst comments, share movement)

By Abhiram Nandakumar

July 17 (Reuters) - London Mining Plc raised quarterly production at its iron ore mine in Sierra Leone after upgrading a processing plant and said it expected to find a strategic partner by the end of the year.

Iron ore production at the Marampa mine rose 21 percent in the second quarter. London Mining stood by its full-year 2014 production target of 4.9 million to 5.4 million wet tonnes of iron ore concentrate.

However, shares in the AIM-listed company fell as much as 3.5 percent after rising 6 percent in early trading. Traders and analysts attributed the fall to profit-taking after the stock gained 85 percent in a month from a life-low of 26.75 pence.

“Despite a good operational showing, the performance of the stock is likely to continue to be dictated by movements in the iron ore price,” Citigroup analyst Michael Flitton said in a note to clients.

Iron ore miners worldwide have been hit by weakening prices, even as major producers like Rio Tinto Plc and Vale SA ramp up output and cut costs.

Iron ore prices fell to a 21-month low of $89 a tonne in mid-June as supply continued to outpace demand in China.

Benchmark 62-percent grade iron ore for immediate shipment to China .IO62-CNI=SI was unchanged at $98 per tonne on Wednesday.

London Mining Chief Executive Graeme Hossie said the company was reacting well to lower iron ore prices.

“(We are) driving our costs lower and ensuring we can get more for our product, bringing the grade back higher and getting offtake partners that are paying us more per tonne,” he said.

The company, which started shipping ore from Marampa mine in 2011, produced 1.17 million wet metric tonnes in the second quarter, adding that it did not expect an outbreak of the Ebola virus in Sierra Leone to affect production at the mine.

London Mining, which earlier indicated that it planned to divest a minority stake in Marampa, said it was in talks with banks to secure a $25 million short-term loan. The miner had drawn down a $17.5 million loan from Swiss trader Vitol as part payment on 500,000 tonnes of future exports.

Shares of the London-based miner were down 2.5 percent at 48.25 pence at 1021 GMT. (Reporting by Abhiram Nandakumar in Bangalore; Editing by Robin Paxton and Gopakumar Warrier)

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