London Mining Plc, the second-largest iron ore producer in Sierra Leone, is considering paying a first dividend as output at its Marampa mine expands and prices rise.
Growth to a production rate of 5 million metric tons a year by the fourth quarter will bolster profit and enable payment of a dividend “at the right time,” Chief Executive Officer Graeme Hossie said today in an interview in Cape Town, South Africa.
Rising output, up 46 percent last quarter, will help it post net income of $69 million this year after a $68 million loss, according to estimates from Jefferies Group Inc. analyst Seth Rosenfeld. “Focus on operational improvements in 2013 rather than further expansion projects should limit execution risk and improve free cash flow,” he said today in a note. Higher cash flow “may pave the way for shareholder returns.”
London Mining fell 1.9 percent to 165.25 pence by 2:46 p.m. in the U.K. capital. The company, which has sales agreements for its ore with Glencore International Plc and Vitol Group, has a market value of 229 million pounds ($360 million).
Talks with a potential Chinese investor to help fund an expansion of Marampa to 20 million tons a year are continuing. The mine produced 1.6 million tons last year, the company said last month. Iron ore prices averaged $125 a ton last quarter, up from $117 a ton in the previous three months, it said Jan. 24.
London Mining will report full-year results on March 21.