London Mining on Tuesday released its Operational Update detailing the company’s activities and plans as it moves closer to ore exportation from its Sierra Leone Marampa mine. The company it also appears is faced with legal tussle with a China based venture “partner” over alleged “breach of fiduciary duty”.
LM said ramp-up continues at Marampa and approximately 57,000t concentrate has been produced as of 16th January 2012. It confirmed a product specification of 66.2% Fe, 1.88% silica and 1.02% alumin disclosing that its first ore exportation barge has been loaded and is awaiting first shipment in the Freetown Bay.
The first shipment LM went on is confirmed for Europe and will be handled by Swiss based company Glencore. The ship is expected to arrive in Freetown on the 23rd January 2012 with the trans-shipment vessel expected in Sierra Leone by end of Q1 2012.
LM Production target is slated at 1.5Mt in 2012 with 3.5Mt expected in 2013 and 4.6Mt expected in 2014 from Phase 1.
On its expansion drive, estimated cost of expansion has increased from $234 million to $300 to $310 million, the company said. LM revealed that highly weathered material increased by over 350% from 21Mt to 75Mt, to be processed in Phase 1 with total JORC resources increasing to approximately 1,078Mt at 31.2% Fe with 81% in the indicated category.
The Iron miner also stated in its production update that inclusion of gravity circuit “potentially increased” Phase 1 production capacity to up to 5Mtpa, adding that Bankable Feasibility Study, expected end Q2 2012 adding that it is considering low cost expansion of Phase 1 to 9Mtpa.
LM also disclosed that term sheets received from potential offtake partners for USD45m prepayment is linked to Phase 1 expansion. Cash at end December 2011 of USD70m, including USD15m of restricted cash. The company also reported the appointment of Group Head of Sustainability and Group Head of Human Resources.
Commenting Graeme Hossie, Chief Executive Officer of London Mining said: “Production ramp-up continues on schedule and we have now commissioned all aspects of the Marampa logistics required to load seagoing vessels. The availability of a further 54Mt of highly weathered material along with test work supporting the use of a gravity circuit represents a significant breakthrough in production potential at Marampa with full initial production from Phase 1 now expected to total up to 5Mtpa. The Bankable Feasibility Study for Marampa will now consider an additional expansion of the reconfigured Phase 1 plant to 9Mtpa utilising existing infrastructure with the addition of new crushing, grinding and gravity separation circuits to the processing plant. In addition, I am happy to announce the further expansion of the executive team to support our continued growth.”
London Mining has also refuted a U.S. lawsuit filed by a joint venture partner seeking damages of “at least $650 million” citing breaches of fiduciary duty.
LM said the counterclaim followed its own efforts in December to recover a $1 million loan due from Wits Basin Precious Metals, a partner in the Xiaonanshan iron ore mine in China, which stopped operations in 2010.
“London Mining firmly believes that the answer and counterclaim are merely a tactic to avoid repayment of the $1 million loan and are completely without merit,” the miner said.
“London Mining also believes that there is no valid defence against repayment of the $1 million loan which is now due and payable. Accordingly it intends to strongly refute the answer and counterclaim.” Shares in London Mining were down 3.7 percent at 289.5 pence at 1220 GMT on Monday.
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