London (Platts)--8Nov2012/821 am EST/1321 GMT

Production in the third quarter from London Mining's Marampa iron ore mine in Sierra Leone fell 6% from Q2, according to its quarterly report.

Third quarter production was 373,000 wet metric tons (343,000 dmt) and sales were 298,000 wmt (273,000 dmt), with the latter down 14.86% on the previous quarter.

The company said its stockpile was "built allowing realization of higher pricing in Q4, 2012".

It also said the full-year production target of 1.5 million mt is "retained based on current production rates".

Chief executive officer Graeme Hossie said the completed studies [bankable feasibility study] for expansion to 9 million mt/year show "operating costs of $39/mt or $ mid-20s on an adjusted Fe equivalent basis".

The average concentrate grade shipped in Q3 was 64.1 % Fe. The report added that "Slightly lower concentrate grades over the third quarter were due to trials to optimize grade versus product volume but grade has now reverted to previous levels of over 65.5% Fe".

The average [Sierra Leone] FOB price (including hedges) was 97/dmt, down from Q2's $105/mt FOB. Looking ahead to the 9 million mt/year expansion plan, the report said that, using estimates from Raw Materials Group, it assumes "a long term grade premium of $5/Fe % above the Platts 62% Fe benchmark".

A report by Investec Thursday stated: "The company is facing a tough pricing environment during this critical ramp-up phase. Longer term, if the company seeks to expand to 9 million mt/year it will have to raise some very significant levels of capital, which from current levels may be a struggle".

As previously reported, the ramp-up should raise output to 1.5 million mt of concentrate in 2012, 4.2 million mt in 2013 and 5 million mt in 2014. In Colombia, the company produced 12,937 mt in Q3, 2.5% up on the previous quarter's 12,616 mt. --David Braid, david_braid@platts.com --Edited by Jeremy Lovell, jeremy_lovell@platts.com