Sierra Rutile Begins West African Mine Construction

AIM-quoted Sierra Rutile's open pit Gagama dry mine has entered the first stage of its development, which would involve the construction of a 500 tonne per hour operation, reports out on Tuesday said.

Mining Weekly reveals that the mine is expected to produce its first batch of rutile by the second quarter of 2016. The second phase of the development is also expected to create another 500 tonnes per hour unit. The company is investing US$77 million [$99 million] for the entire development.

The Financial Times notes that while the Ebola virus has complicated the business climate of the mining sector in Sierra Leone, it was low prices that ultimately forced some iron ore miners in the country to face administration. Low prices for rutile also impacted Sierra Rutile, and not the Ebola scare. The company declared that its Gangama project would allow it to cut down on operating costs and boost its output by one-sixth when it enters production next year.

"We are very excited to be embarking upon the next phase of expansion. The Gangama Dry Mine is an extremely compelling project that will drive down unit production costs and cement Sierra Rutile as the premier low-cost producer of high-grade feedstocks across the cycle," said Sierra Rutile's chief executive officer John Sisay in a statement.

"Progressing the project without the need of additional equity finance and without placing undue strain on our balance sheet is very important, and positions us well to fulfil our aspiration to become a mature, cash-generative company and, ultimately, a dividend-yielding company in the medium-term," he added.

Sierra Rutile’s operational mine in Sierra Leone produced 114,163 tonnes of rutile and 35,839 tonnes of ilmenite last year, according to Mining Weekly. The company is among the largest titanium players in the world, and supplies around 20 percent of the world's rutile.

One project that is set to rival Sierra Rutile's is White Mountain Titanium Corporation's (OTCQB:WMTM) Cerro Blanco asset. The project is located in the Atacama Region of Chile, and has a measured and indicated resources of 111.5 million tonnes grading 1.75 percent titanium dioxide at a cut-off grade of 1.0 percent titanium dioxide. The project's total resources stand at 180 million tonnes grading 2.1 percent titanium dioxide at a grade cut-off grade of 1.0 per cent titanium dioxide.

Meanwhile, Sierra Rutile's Australian competitor, Iluka Resources Ltd. (ASX:ILU), has also been upping the ante recently with its decision to restart one of its kiln. It's also eyeing Irish miner Kenmare to expand its business, despite the latter rejecting its US$800 million takeover bid.

To contact the writer: a.lu@ibtimes.com.au