African Minerals hit by rain, downgrades production target

Iron ore group African Minerals saw its shares plunge nearly 17 per cent on Friday after the firm admitted current severe wet season has resulted in material handling issues and delay in project execution, prompting it to reduce its guidance for the year to between five and six million tonnes, compared to the eight previously stated.

The company now expects to achieve a sustainable run rate of 20m tonnes per annum during the second quarter of 2013, a target it had previously set for the end of 2012. Export tonnage will depend on the progression of production ramp up.

More positively, the company has neared completion of the construction and commissioning of phase one on its Tonkolili iron ore project in Sierra Leone. Most aspects have now been commissioned on a dry basis, and are entering the wet commissioning stage, with production to begin ramping up at the end of the current quarter.

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Chief Executive Officer, Keith Calder, said: "As we near completion of Phase 1 development, we are experiencing some final challenges, not unusual for a project of this scale. I expect us to commence a steady production build-up in the coming weeks and I am confident that we will achieve our targeted 20Mtpa sustainable run rate in the first half of next year."

The share price fell 16.68% to 249.75p by 14:00.

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