IRC eyes fivefold iron ore increase with new mine

PUBLISHED : Thursday, 23 February, 2012, 12:00am
UPDATED : Thursday, 23 February, 2012, 12:00am


IRC, an iron ore miner in Far East Russia that serves the northeast China market, plans to spend US$360 million to get a second mine ready for production by 2014 - a move that could increase its output of ore fivefold by the following year.

The miner, which is controlled by the British Hambros family via London-listed gold and minerals miner Petropavlovsk, yesterday posted its maiden net profit of US$1 million for last year, compared to a loss of US$82.4 million in 2010.

Stripping out non-operational gains of US$12.7 million and financial items, it was still loss-making at an operational level to the tune of US$9.6 million, albeit down from an operational loss of US$71.9 million in 2010. The gains included US$7.5 million of a discharged payable item related to the acquisition of know-how, and the write-back of a US$3.2 million provision for bourse listing expenses.

Revenues jumped 4.7-fold to US$122.2 million, from US$25.8 million in 2010 as iron ore concentrate sales rose to 0.77 million tonnes from about 0.15 million tonnes in 2010, and the average selling price rose about 10 per cent to US$143 a tonne.

Sales of ilmenite - titanium oxides used to make glass and paint - jumped to 18,187 tonnes from 2,726 tonnes in 2010, with the selling price averaging US$215 a tonne last year.

IRC's total cash production cost was US$66.20 a tonne and its shipping cost was US$43 a tonne.

Chief financial officer Raymond Woo said the company budgeted US$220 million and US$140 million for this year and next, respectively, to explore for new mine sites and develop its second mine.

The mine will be called Kimkanskoye & Sutarskoye and is expected to come on stream in the first half of 2014.

IRC has also entered into a three-year leasing agreement to lock in half its rail capacity demand with long-term prices, after experiencing shortages of rail wagons last year.