By Alex MacDonald
LONDON--Sierra Leone iron ore producer London Mining PLC
(LOND.LN) warned Wednesday that it is struggling to alleviate its
financial strain following a drop in the iron ore price to a
five-year low and the ebola outbreak.
The U.K.-listed miner, which operates the Marampa mine in Sierra
Leone, said detailed discussions are ongoing with potential
strategic investors and the company's group of lenders, but "under
the structures currently proposed, the Board believes that there
will be little or no value remaining in the equity of the Company
and the other listed securities of the Group."
London Mining said its lenders remain supportive of the
restructuring process, but will no longer provide any further
short-term funding to fill the gap until a deal is secured with a
strategic investor. The company added that "there can be no
certainty at this time on the likelihood or timing of such an
investment."
Iron ore miners in West Africa have been struggling to keep
afloat after the iron ore price fell this month to its lowest level
since 2009. The outbreak of Ebola in the country has also posed
additional challenges, disrupting several of the supply routes to
the mines. Fellow peer African Minerals Ltd. (AMI.LN), which
operates the Sierra Leone Tonkolili mine, has also hired banks to
restructure amid similar challenges.
London Mining said the Ebola outbreak has introduced significant
challenges both in terms of securing a strategic investor, a
process which began in May, and to the ongoing operational
performance of the business. It said the financial strain on London
Mining's operations became more severe when commodities trader
Glencore PLC (GLEN.LN) refused to make a cash payment last month
related to a long-term iron ore purchase agreement.
The company said it is searching for a strategic investor to
inject cash into the business so it can expand the production
capacity of its Marampa mine in order to become a lower-cost
producer in the current weak iron ore price environment.
London Mining shares have fallen 97% since the beginning of the
year to 3.1 pence a share, resulting in a market capitalization of
GBP4.29 million, or $6.9 million.
Write to Alex MacDonald at alex.macdonald@wsj.com
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