Legal proceedings against rutile miner Sierra Rutile (ASX: SRX) in 2018 are to finally reach a conclusion with the High Court of Sierra Leone ruling against the producer, ordering the company to pay USD $1.16 million (approx. AUD $1.8m) to Transcend International Resources.
The judgement ruled in favour of Transcend which lodged a claim totalling USD $816k and was also awarded a further $350k in general damages. The claim related back to Sierra’s supply and delivery of zircon middling, and included an allegation that Sierra had handled Transcend’s equipment illegally or wrongfully which caused damage to equipment.
In addition to the judgement, the High Court has imposed an exceptionally high 25% per annum interest rate on the damages awarded, to be dated back to January 2018. Sierra Rutile expressed concerns about the exorbitant interest rate and intends to take steps to challenge and potentially reduce it.
Sierra Rutile is primarily engaged in mining operations for rutile, for which it has reached production to be generating revenue.
As a key component in pigments, rutile enhances the whiteness and opacity of paints, plastics, and paper. It also finds application in manufacturing titanium dioxide, a vital ingredient in sunscreen and white pigment production. With its versatility, rutile plays a pivotal role in diverse industries, including aerospace, electronics, and cosmetics, contributing significantly to the global economy.
Rutile is a mineral composed mainly of titanium dioxide, recognised for its distinctive reddish-brown to black colour. Mined primarily for its high titanium content, rutile serves as a crucial source for titanium metal production.
As of 30 September 2023, Sierra Rutile had USD $20 million in cash at bank but has been stockpiling ore at its production site.
“Operating performance for the September Quarter was a major improvement on the corresponding period last year,” said Sierra Rutile CEO, Theuns de Bruyn.
“Whilst final product production was similar, the cost efficiency of operations was greatly improved due to the availability of ore stockpiles reducing the need to continue mining during the worst of the wet season.
“Unfortunately, as outlined in prior announcements, the macro environment in the Titanium Dioxide pigment market, the major application for our product, was much more challenging than a year ago. The average rutile sales price was down since, unlike in Q2, there were no sales to the higher value sponge market during the quarter to compensate.
“As a result, we elected to moderate production levels and warehouse some finished product. We see prices levelling out and anticipate improved sales volumes in Q4.”
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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