African Minerals Ltd cut its production forecast for its flagship Tonkolili iron ore mine in Sierra Leone for the second time this year, citing a severe wet season.
Shares in the miner fell nearly 17 percent on the news.
The company said it now expects to produce between 5 million and 6 million tonnes of iron ore for the full year, down from the 10 million tonnes that it forecast in April.
African Minerals had forecast late last year that it would produce and ship up to 15 million tonnes of iron ore this year.
The company, which expected to reach a production run rate of 20 million tonnes of ore at the mine by this year, now expects to achieve that target by the second quarter of next year.
“While these moves are clearly a negative, we believe that current targets are now significantly more attainable,” Jefferies’ analyst Seth Rosenfeld said. He maintained a “buy” rating on the company’s stock, but cut his price target to 550 pence from 800 pence.
African Minerals shares were down 13 percent at 261 pence at 0835 GMT on Friday and were the top percentage loser on the London Stock Exchange.
The miner, the largest of West Africa’s emerging iron ore producers and sitting on one of the continent’s largest iron ore deposits, said the current wet season in Sierra Leone was particularly severe and affected handling of materials and project execution.
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“I expect us to commence a steady production build-up in the coming weeks,” said Chief Executive Keith Calder, who was appointed at the miner’s helm last month.
African Minerals said that once its new wet process plant is operational at the site and a current mobile dry crushing plant is converted to a wet screening plant, difficulties in handling materials in the wet season will be removed.
“Some of it is due to the rains and some of it is just due to ongoing issues with completing the construction of the (wet process plant) which is over a year late now,” Renaissance Capital analyst Jim Taylor said.
The project has faced problems in keeping its construction on schedule, he said.
