Labrador Iron Mines loss soars to $31.7 million in third quarter amid low prices

TORONTO – Labrador Iron Mines Holdings Ltd. (TSX:LIM) had a $31.7-million net loss in its second quarter, or 47 cents per share — falling well short of analyst estimates.

The lncreased loss and lower-than-expected revenue was attributed to a 33 per cent decline in iron ore prices amid a slowing global economy and lower demand.

The company recognized $33 million of revenue during the July-September quarter, down from $38 million in the previous quarter.

A consensus estimate compiled by Thomson Reuters called for a loss of 32 cents per share, on an adjusted basis, and $51.8 million of revenue.

Labrador Iron’s year-earlier results are less relevant than the quarter-to-quarter performance since its James mine was still ramping up in the comparable period last year and had no revenue then.

LIM posted a $10.5 million loss from May-June this year, or 16 cents per share, and a $7 million loss or 13 cents per share in the July-September period in 2011.

The Toronto-based company expects to make one last shipment for the 2012 operating season — the tenth — before shutting down for the winter

It says the spring startup planned for next April will depend on LIM’s confidence that the spot price will be US$110 per tonne or higher for the 2013 season.

Labrador Iron has been reselling its ore on the Chinese spot market through the Rio Tinto marketing organization.

The company announced in September that it had reviewed its 2012 capital spending plan and deferred work on the Silver Yards procession plant and development of the Houston iron deposit.

The company said at the time that about $52 million of capital investment would be deferred into 2013 and the 2012 exploration program had been reduced to $5.3 million, in order to conserve LIM’s cash reserves.

It said Thursday it had completed a $30-million equity financing in November but hasn’t concluded any agreements for the sale of any iron ore beyond 2012.

“The company continues to review its options for marketing its iron ore production in future years and is evaluating the optimum route to achieve these sales, while still maintaining maximum flexibility and independence,” the company said in a management analysis accompanying its financial report.

“Marketing discussions are continuing with potential customers, both in Europe and in Asia and the company is also continuing discussions with a number of internationally recognized commodity traders with specialist knowledge of the iron and steel industry.”