Sheffield Resources (ASX:SFX) reports production and product shipments are ramping up from its Thunderbird Mineral Sands Mine in Western Australia.
So far this quarter, Thunderbird has achieved production totalling 1.35 million tonnes — a substantial increase over the previous quarter — 750,000 tonnes of which was produced this month.
Sheffield, which has a market capitalisation of $194.61 million, says the latest mine production is consistent with the ramp-up schedule to achieve an annual mining rate of 10 million tonnes per year.
As a result of increased mine production, concentrate production has also increased to 650,000 tonnes of ilmenite produced this quarter — 37,000 tonnes of which has been produced in May.
The total production of zircon concentrate measured 20,000 tonnes this quarter —12,000 tonnes of which was produced during May.
Executive Chairman Bruce Griffin says the ramp-up at Thunderbird shows the company is moving forward towards its nameplate capacity, in line with Sheffield’s original plans.
“Whilst we have observed cost pressure and near term pressure on realised zircon concentrate pricing, Thunderbird remains a world-class mineral sands asset capable of solid production and cost performance across many decades to come,” he says.
However, due to oversized material, additional costs have been incurred, associated with inconsistent mining rates.
In addition, scope changes to mining and logistics contracts, including wider inflationary cost pressures as observed throughout the mining sector in Western Australia, have resulted in further cost increases.
As a result, privately held Kimberly Mineral Sands (KMS) — the joint venture between Sheffield and Yansteel that operates Thunderbird — expects near-term operating costs to range between $55 million and $60 million per quarter.
Sheffield says KMS remains funded to sustain the Thunderbird ramp-up, but said it is capable of providing sufficient working capital alongside Yansteel.
Meanwhile, product shipments for the second quarter continue to grow as 55,000 tonnes of ilmenite concentrate has been dispatched to Yansteel, while 33,000 tonnes of ilmenite concentrate is currently being loaded.
Further, Sheffield is continuing negotiations with Capital Metals (AIM:CMET), the owner of the Eastern Minerals Project in Sri Lanka, regarding a potential acquisition by the company of an interest in Eastern Minerals.
While due diligence and associated activities are well advanced and continuing, there is no guarantee that Sheffield will be able to conclude an agreement with Capital Metals on terms acceptable to the company.
Write to Aaliyah Rogan at Mining.com.au
Images: Sheffield Resources
