Kumba announces that Sishen mine continues to perform well against its operational plan and remains on track to increase production to 35 Mt in 2014, 36 Mt in 2015 and 37 Mt from 2016. Kolomela mine’s life of mine (LoM) production capacity has been increased to 11 Mtpa from 2015. Studies are in progress at Kolomela, which could result in increasing production further to 12 Mt in 2016 and to 13 Mtpa from 2017.
At Sishen, the Operating Model, which was implemented in August 2014 at the ore and internal waste mining operations at North mine, is already yielding results including:
- Improving scheduled work to increase efficiencies
- 50% reduction in waiting time on shovels
- 23% efficiency improvement in total tonnes handled since June 2014
In 2015, the Operating Model is expected to be rolled out to the pre-stripping operations at Sishen mine to meet ramp up requirements, and to the Kolomela plant to increase throughput to 13 Mtpa in the medium term.
Kumba aims to deliver ~5 Mt low capex production growth, which includes 2 Mt from Kolomela and the remainder from Sishen.
Kumba anticipates total iron ore production of ~47Mt in 2014, 47 – 48 Mt in 2015, 48 – 50 Mt in 2016 and 48 – 50 Mt in 2017. Blended free on board (FOB) cash costs are expected to be $35/tonne in 2014, $39/tonne in 2015, $40/tonne in 2016 and $41/tonne in 2017.
In the current low price environment, which is expected to persist, Kumba is reviewing all aspects of its business including:
- Optimising its production portfolio, focusing on low cost production, to optimally fill the rail line capacity.
- Assessing Thabazimbi mine as part of the portfolio.
- Reviewing capital expenditure requirements and costs. Based on the current review, the Company is planning to reduce SIB capex (including deferred stripping at Sishen and Kolomela) by approximately 20% and a further 10% in 2015 and 2016 respectively when compared to SIB capex guidance disclosed in the 2013 Anglo American Investor Day presentation.
- Reducing exploration, technical and project studies expenditure by ~ 50%.
- Proposed restructuring to deliver on the revised portfolio, potentially reducing Head Office roles by ~40%.
The Company will provide more details at the Anglo American plc (“Anglo American”) investor presentation this afternoon in London. The presentation will begin at 15:30 CAT and end at approximately 18:15 CAT, and will be webcast live via the Anglo American website [www.angloamerican.com]. The presentation slides will be available on Kumba’s website [www.angloamericankumba.com] from 13:30 CAT today.
A further operational update will be given at the Company’s 2014 annual results presentation on 10 February 2015.
This announcement contains forward-looking statements and is subject to a number of risks and uncertainties, many of which are beyond Kumba’s control and all of which are based on the Company's current beliefs and expectations about future events. The operational and financial forecasts provided in this announcement are estimates and have not been reviewed and reported on by the Company’s external auditors.
Centurion
9 December 2014