Sierra Rutile 2023 Full Year Result Overview

Sierra Rutile Holdings Limited (ASX: $SRX) has reported its 2023 full year results, with a decrease in revenue to $176.3 million and an EBITDA of $22.1 million. The net loss after tax amounted to $20.7 million, and rutile production decreased to 112.6 kt. The company's operations at Area 1 will be suspended from 11 March 2024 due to ongoing discussions with the Government of Sierra Leone (GoSL) regarding the applicable fiscal regime.

Sierra Rutile Managing Director and CEO Commentary

Despite challenging market conditions, our management team and Board have consistently worked towards maximising value from our operations at Area 1 and advancing the Sembehun project. We have continued to leverage our market-leading presence as the world's largest natural rutile supplier, optimising operations to extend the mine life at Area 1. However, global reductions in pigment demand and internal challenges, such as power supply disruptions at Area 1, have impacted our revenue. This has resulted in revenue of $176.3 million and a Net Loss After Tax of $20.7 million. EBITDA declined to $22.1 million, largely impacted by a decrease in revenue and lower production levels over the year. While operating cash flow decreased due to inventory build-up, Sierra Rutile closed the year with no debt, and $7.8 million in cash. We take pride in our industry and country-leading safety performance, which has significantly improved throughout the year. As a major private sector employer in Sierra Leone, training, employing local staff and safety is paramount. This achievement can be largely attributed to improved contractor management and onboarding processes. The recent correspondence received from the GoSL on the Area 1 fiscal regime was extremely disappointing, and we are engaging with the GoSL on the matter as a priority. In the meantime, our operations at Area 1 will be suspended as of 11 March 2024. We will keep shareholders updated as discussions progress. Sembehun continues to advance, with the DFS expected to be delivered during 1H 2024. A key milestone was achieved post-period end with the approval of the ESHIA and ESHMP for Sembehun. Looking at the macroeconomic outlook, demand for pigment continues to face pressure in Europe and China. Despite being weaker than in previous years, the US market appears to be in a relatively better condition. However, we believe that market conditions primarily reflect a cyclical decline in demand rather than indicating a long-term trend.

Sierra Rutile 2023 Full Year Result Summary

Sierra Rutile's 2023 full year results reflect a decrease in revenue to $176.3 million, impacted by reduced global pigment demand and power supply disruptions at Area 1. The company reported an EBITDA of $22.1 million and a net loss after tax of $20.7 million. Rutile production decreased to 112.6 kt, and the realised rutile price was $1,371/t. The company's operations at Area 1 will be suspended from 11 March 2024 due to ongoing discussions with the Government of Sierra Leone regarding the applicable fiscal regime. The Sembehun project continues to advance, with the DFS expected to be delivered during 1H 2024. Sierra Rutile recognizes the importance of resetting its cost base to match prevailing market conditions and has given notice of a redundancy program anticipated to impact 25-30% of the workforce. The company will keep investors updated on negotiations with the GoSL, decisions regarding operations at Area 1, and the outcome of the Sembehun DFS.