RESULTS FOR THE QUARTER ENDING 30 SEPTEMBER 2010
(Thomson Reuters ONE) -
Highlights (including post-period)
Marampa, Sierra Leone
Phase 1
* Phase 1 production expected in Q2 2011, initial run rate increased from
1.5Mta to 1.8Mtpa
* Peak production of 3.6Mtpa up from 3Mtpa
* Mine and processing plan modified to accommodate high grade ore and
expansion
* Capex increased by USD22m to USD136m including rod mill and extended
dedicated haul road to enable additional production capacity. Resulting
capital intensity falls from USD76/t to USD75/t
* Improved headgrade and recoveries may enable reduction in operating cost to
less than USD29/t from USD 32/t with further reductions expected from
expansion to 3.6Mtpa
* Evidence of increased weathered primary ore, with potential to extend Phase
1 beyond current mine plan
* Pilot plant testwork by Outotec produces 1,361kg of 65.5% Fe concentrate
suitable for use as sinter feed
Phase 2
* JORC resource of over 0.5 billion tonnes to date
* 93 Mt of Ghafal Hill resource upgraded from Inferred to Indicated
* Further exploration target identified within mine lease of 250-350 Mt with a
grade of 28 - 32 % Fe
* Exploration target expected to be upgraded to JORC Inferred category by end
of year
* Increased resource supports PFS for up to 16Mtpa operation (previously
9Mtpa), PFS results expected Q1 2011
Corporate
* Cash position at 30 September 2010 of USD114m
* Company planning to raise additional debt finance primarily to fund expanded
Marampa Phase 1; total Group borrowings not expected to exceed USD150m
Commenting on the results, Chief Executive Officer Graeme Hossie said:
"We are pleased to announce plans to increase production from Marampa Phase 1 to
1.8Mtpa and then to 3.6Mtpa in 2012. This has a significant positive effect on
the project both in terms of reduced operating cost and lower capital intensity.
We are also encouraged by results from our recent drilling campaign which have
identified a 250 to 350Mt exploration target with a grade ranging 28 - 32 % Fe
to the north of Masaboin Hill. These results form the basis of a PFS for Phase
2 on a 16Mtpa project which we now expect to announce in Q1 2011. We continue to
progress mine, plant and logistics work for first production from Marampa in Q2
2011."
Operations Review
The principal activities of the Group during the period were the development and
operation of mines for the global steel industry, conducted through its four key
iron ore properties in Sierra Leone, Greenland, Saudi Arabia, and China as well
as through its coke project in Colombia.
Summary data for these key projects are:
+---------------+------------+--------+-----------+------------+---------------+
| |Sierra Leone|Colombia| Greenland|Saudi Arabia| China|
+---------------+------------+--------+-----------+------------+---------------+
| Project | Marampa| Socha| Isua|Wadi Sawawin| CGMR|
+---------------+------------+--------+-----------+------------+---------------+
| Ownership (%) | 100| 100%| 100| 25| 50|
+---------------+------------+--------+-----------+------------+---------------+
| | P1: sinter| | | | |
| Product | feed| Coke|Pellet feed| DR pellets| Magnetite|
| | P2: pellet| | | | concentrate|
| | feed| | | | |
+---------------+------------+--------+-----------+------------+---------------+
| First | | | | | |
|production | 2011| 2011| 2015| 2014| 2012|
|(year) | | | | | |
+---------------+------------+--------+-----------+------------+---------------+
| Target | | | | | |
|production | 16| 0.4| 10| 5| 0.4 to1|
|capacity (Mtpa)| | | | | |
+---------------+------------+--------+-----------+------------+---------------+
Total resources as at November 2010
+-------------------+---------+------+--------+---------+----------+----------+
| Asset |Ownership|Cutoff|Measured|Indicated| Inferred| Total|
+-------------------+---------+------+--+-----+---+-----+-----+----+-----+----+
| | %| % Fe|Mt| % Fe| Mt| % Fe| Mt|% Fe| Mt|% Fe|
+-------------------+---------+------+--+-----+---+-----+-----+----+-----+----+
| Marampa (tailings)| 100| 15| 0| 0| 37| 22| 0| 0| 37| 22|
+-------------------+---------+------+--+-----+---+-----+-----+----+-----+----+
| Marampa (primary) | 100| 15| 0| 0| 93| 30| 440| 31| 533| 31|
+-------------------+---------+------+--+-----+---+-----+-----+----+-----+----+
| Wadi Sawawin | 25| 30| 0| 0|248| 40| 135| 39| 382| 40|
+-------------------+---------+------+--+-----+---+-----+-----+----+-----+----+
| Isua | 100| 20| 0| 0|114| 37| 837| 36| 951| 36|
+-------------------+---------+------+--+-----+---+-----+-----+----+-----+----+
| Total (100% basis)| | | 0| 0|492| 37|1,412| 35|1,904| 35|
+-------------------+---------+------+--+-----+---+-----+-----+----+-----+----+
Marampa, Sierra Leone (100%)
Work continues on three fronts at Marampa: construction and optimisation of
Phase 1; resource definition and exploration for Phase 2; and completion of a
prefeasibility study ("PFS") for the Phase 2 expansion to exploit the primary
orebody.
Construction continues on Phase 1 with the effects of higher grade resources now
fully understood and included in the new mine plan with improved head grades and
metallurgical recoveries shown to have significant effects on production volumes
and operating cost. The identification of a significant exploration target means
that the PFS for Phase 2 is now expected in Q1 2011 and is considering steady
state production of up to 16Mtpa increased from 9Mtpa.
Resources
As announced in the Q2 2010 interims, the total mineral resource at Marampa
stands at 533 Mt of primary ore and 37Mt of tailings. Recent drilling has
allowed 93 Mt of the Ghafal resource to be upgraded to the Indicated category
and also identified an exploration target to the north of Masaboin Hill
("Masaboin NE"). Snowden Mining Industry Consultants estimate this exploration
target to be in the order of 250-350Mt, with a grade ranging 28 - 32 % Fe. This
target is located in a previously unmined area of the Marampa mining lease and
drill logs indicate the presence of higher grade weathered primary ore which
could be included in the Phase 1 mine plan.
As a result, the drilling programme has been expanded to 50,000m (44,152m was
completed at 294 sites at the end of October) with a further 10,000 - 15,000m to
be completed in 2011.
This drilling is intended to increase the confidence of existing resource
estimates. Ongoing work will delineate the new exploration target to the north
of Masaboin ("Masaboin NE") to at least the inferred category by the end of the
year. It is anticipated that this work will allow a resource of up to 850Mt
tones to be considered in the Phase 2 PFS.
Resources are reported in accordance with the JORC Code 2004.
Total Marampa resource as at November 2010 reported at a 15% Fe cutoff
+------------------+---------+---+----+-----+----+---+----+----+----+
|Deposit |Category |Mt |Fe |Al2O3|SiO2|CaO|MnO |P |S |
+------------------+---------+---+----+-----+----+---+----+----+----+
| | | |(%) |(%) |(%) |(%)|(%) |(%) |(%) |
+------------------+---------+---+----+-----+----+---+----+----+----+
| | | | | | | | | | |
+------------------+---------+---+----+-----+----+---+----+----+----+
|Tailings |Indicated|37 |22.3|9.1 |50.8|0.1|1.03|0.05|0.01|
+------------------+---------+---+----+-----+----+---+----+----+----+
| | | | | | | | | | |
+------------------+---------+---+----+-----+----+---+----+----+----+
|Ghafal Hill |Indicated|93 |30.2|4.9 |40.6|2.5|1.31|0.15|0.01|
+------------------+---------+---+----+-----+----+---+----+----+----+
|Ghafal Hill |Inferred |60 |31.1|4.8 |39.9|2.5|0.73|0.14|0.01|
+------------------+---------+---+----+-----+----+---+----+----+----+
|Masaboin Hill |Inferred |269|30.5|5.0 |40.8|2.5|0.58|0.14|0.03|
+------------------+---------+---+----+-----+----+---+----+----+----+
|Campbelltown Ridge|Inferred |48 |34.8|4.3 |38.6|1.7|0.05|0.19|0.01|
+------------------+---------+---+----+-----+----+---+----+----+----+
|Hospital Ridge |Inferred |63 |32.3|4.2 |36.8|3.2|1.30|0.10|0.01|
+------------------+---------+---+----+-----+----+---+----+----+----+
|Total Primary | |533|31.0|4.8 |40.1|2.5|0.83|0.14|0.02|
+------------------+---------+---+----+-----+----+---+----+----+----+
Material with elevated manganese concentrations is noted in the Ghafal Hill
deposit and the un-weathered portion of the Hospital Ridge deposit. The elevated
manganese levels in Ghafal Hill are restricted to the higher Fe grade outer
zone. The outer high grade zone represents 47.7 Mt of the Indicated Resources
grading 32.2% Fe and 2.3% MnO and 38.1 Mt of the Inferred Resources grading
31.8% Fe and 2.0% MnO. Appropriate blending strategies, processing routes and/or
marketing options will be explored to optimise the potential of this material to
the proposed operation.
Phase 1 (Tailings) progress and optimisation
The Phase 1 production schedule and operating cost have now been confirmed with
the full effects of the weathered primary ore now incorporated. The first
production module (Phase 1a) is scheduled to achieve first production of
concentrate in Q2 2011. However improved head grade and recovery mean that 1a
will now, with some modification to the plant, enable production of 1.8Mtpa of
concentrate. Capex for Phase 1a has been revised to include installation of
additional power capacity in anticipation of the expansion to 3.6Mtpa, the
upgrade and refurbishment of 22km of an old public road to create a complete,
dedicated haulage route for London Mining from mine to port and the addition of
a rod milling circuit to process higher grade, weathered primary ores. As a
result, total capex for Phase 1a is now estimated to be USD135.7m, up from
USD113.8m however with the increased capacity, the resulting capital intensity
falls from USD76/tonne to USD75/tonne. As of 30 September 2010, USD 64.5m had
been committed including USD24.4m already spent.
Construction of the second 1.8Mtpa module incorporating a rod mill (Phase 1b)
will commence on a self funded basis in H1 2012. However, in the event that
London Mining raises further debt finance, construction would be expected to
start as early as Q3 2011 with commissioning expected in Q2 2012. Ausenco
estimates capex for Phase 1b at USD63m, reducing total capital intensity down to
USD55/tonne.
The current mine plan is based on the assumption that the process plant will be
fed a blend of tailings and higher grade, weathered primary resource at a
70:30 ratio with 25% of moderately weathered ore stockpiled for processing
through the Phase 2 processing circuit.
Pilot Plant testwork completed at Outotec in Jacksonville, USA, on a bulk sample
of tailings produced 1,361 kg of concentrate with a metallurgical iron recovery
of 88%. The concentrate had a size of <1mm and produced the following
specification:
+-+----+----+-----+----+----+----+----+----+----+-------------+----------------+
|C| Fe |SiO2|Al2O3|MgO |CaO |Na2O|K2O |TiO2|MnO |P2O5 (P) |Loss on ignition|
+-+----+----+-----+----+----+----+----+----+----+-------------+----------------+
|%|65.5|2.28|1.30 |0.16|0.09|0.03|0.28|0.32|0.82|0.033 (0.016)|0.53 |
+-+----+----+-----+----+----+----+----+----+----+-------------+----------------+
The pilot plant confirmed the results of previous testwork carried out on a
laboratory scale with different samples.
Initial testwork on samples of weathered primary ore indicate that grinding at
least to a p80 of 250 micron is required to produce a concentrate with
acceptable levels of silica and alumina for use in blends of sintering plants.
The following table shows the potential resource and throughput for the extended
and optimised Phase 1 with tailings being blended with the higher grade,
weathered primary ore. This production profile assumes funding of the Phase 1b
expansion through incremental cash flow. Commissioning of Phase 1b can be
accelerated by at least six months if additional external funding is secured.
Phase 1 production profile - assuming financing of expansion from cash flow and
tailings resource at 10% Fe cut off
YEAR 2010 2011 2012 2013 2014 2015 2016 2017
-----------------------------------------------------------------
Resource (Mt) 57.1 54.5 49.5 39.5 29.5 19.5 9.5 3
Resource Fe grade (%) 26.7 26.7 26.7 26.7 26.7 26.7 26.7 26.7
Throughput (Mtpa) 2.6 5.0 10.0 10.0 10.0 10.0 6.5
Head grade (%Fe) 26.7 26.7 26.7 26.7 26.7 26.7 26.7
Recovery (% Fe) 80 88 88 88 88 88 88
Concentrate grade (% Fe) 65.5 65.5 65.5 65.5 65.5 65.5 65.5
Concentrate produced (Mtpa 0.8 1.8 3.6 3.6 3.6 3.6 2.3
dry)
The private haulage road section 18 km from Rogberi to Tawfayim is 95% complete
and surveying of further 22km dedicated haul road from Rogberi to Lunsar has
commenced. London Mining has signed a Memorandum of Understanding with the
Sierra Leone Road Authorities (SLRA) that grants its permission to upgrade and
use the road to create a dedicated haulage route for London Mining's exclusive
commercial use. Major earthworks have been completed at both the port site at
Tawfayim and at the plant site at Marampa. The principal long lead items namely
the heavy oil generators and WHIMS plant have been ordered from Hyundai and
Outotec respectively and are now expected to be on site from the end of
December. Structural steel and fabrication of key equipment such as filters,
belt conveyors and the barge loader is on schedule. The major outstanding items
for the project are the appointment of the mining contractor and completion of
the concrete works to allow installation of the plant and power generation
facilities. All work is expected to be completed to allow first production in Q2
2011.
An operating cost of USD34.7/t of concentrate is expected initially for Phase 1
(which includes commissioning and ramp-up costs) but is expected to fall to
USD29 /t at the 1.8Mtpa run rate with the potential to fall further at a steady
state run rate of 3.6Mtpa.
Status of permitting and EIAs
All Environmental Impact Assessments (EIAs) for London Mining's complete mining
and logistics solution have been completed by qualified environmental
consultants recognized by the Sierra Leone Environmental Protection Agency
(SLEPA). These EIAs cover mining and processing (including the tailings
facility), haul roads, dredging and barging operations. The EIAs have been
compiled in accordance with the national policies, legislations and
institutional framework and make reference to other appropriate IFC/World Bank
policies and guidelines.
London Mining is in the advanced process of converting all its EIAs into
environmental permits and expects to complete this during Q4 2010.
Phase 2 (Primary Ore)
London Mining now expects to complete the Marampa PFS that assumes increased
optimized production of up to16 Mtpa, previously 9 Mtpa, for the primary ore
expansion in Q1 2011. Based on recent indications of additional resources,
London Mining is now planning, subject to prefeasibility results, a staged
expansion to up to 16Mtpa starting in 2014. The PFS will consider a staged
commission of the grinding and beneficiation circuits to optimise the capital
spending schedule. Five lines of crushing/grinding plus WHIMS each with capacity
of 3.2Mtpa are required to reach 16Mtpa. The scheduling of the Phase 2 capacity
will be determined in the PFS.
Colombia (100% ownership)
London Mining is currently constructing coke ovens with a capacity of 200ktpa in
the Boyaca region of Colombia, a region with significant local production of
high quality coking coal. Construction of the coke ovens started in October,
following three months of preparatory earthworks, and is expected to completed
in Q2 2011, with first coke production also expected in Q2. Full capacity of
200ktpa is expected to be reached in Q3 2011, following which the Company
expects to commence a second phase of construction, increasing capacity to
400ktpa of coke. The capex for the first phase is now estimated at USD27
million.
The Company is also undertaking a drilling programme on concessions that it owns
and is in the process of investigating the potential of further concessions both
in proximity to the coke ovens and also in other areas with high coking coal
potential. At the end of October, 2,369m of diamond drilling and 1,836m of RC
drilling had been completed.
Isua, Greenland (100% ownership)
5,200m of drilling was completed over the summer season. This work is expected
to result in further conversion of results from the JORC Inferred to Indicated
categories to be reported at year end.
Following completion of a PFS for the project in June, London Mining is now
seeking partners to fund and develop the project. London Mining intends to bring
in a potential partner to fund the full feasibility study in exchange for equity
at the project level. All necessary base line data collections, advanced field
drilling programs, Environmental Impact Assessment (EIA) and Social Impact
Assessment (SIA) have been or will be undertaken to allow completion of a full
feasibility study by the end of 2011 with construction able to start in 2012,
subject to financing and first production at the beginning of 2015. This
timeline will be confirmed once financing has been secured and a construction
partner selected.
Wadi Sawawin, Saudi Arabia (25% ownership)
In July 2010, London Mining announced the results of an updated bankable
feasibility study ("BFS") for Wadi Sawawin and a revised ownership agreement
with its joint venture partner National Mining Company ("NMC").
The updated BFS resulted in a material improvement in the project economics
based on a reduction in capex and the increase in long term price forecasts.
Potential opportunities exist for further improvement through third party
provision of power, desalination and port facilities and the expansion of the
project to 10Mtpa.
The updated BFS enhances the feasibility of the Wadi Sawawin project at 5Mtpa of
DR pellets and extends the mine life to 20 years. The key economic parameters,
based on the detailed analysis undertaken in the BFS, were:
* Total capex including power and desalination plant of USD 1.9 billion (a USD
0.1 billion reduction from the previous BFS reported in December 2009)
* Capex for power and desalination plant of c.USD 0.3 billion
* Initial operating costs of USD 48.3/t pellets (increased from USD 47.4/t)
The Company also announced in July 2010 that under a new agreement signed on
20th July 2010, in return for no further material funding requirements and no
further dilution in subsequent equity fund raisings, London Mining will now
receive a direct interest of 25% of the Wadi Sawawin project through NMC. The
transaction is now expected to close in Q1 2011 following the receipt of the
necessary government approvals.
NMC and London Mining continue to work jointly on the ongoing application to the
Deputy Ministry for Mineral Resources for an exploitation licence for the
proposed 5Mtpa 20 year operation and on the process to secure the funding of the
Wadi Sawawin project.
CGMR, China (50% ownership through a joint venture)
Mining operations have not resumed since May 2010 due to matters raised by the
regulatory authorities for mining in Anhui Province, which included amongst
operational issues, the continued delay in consolidating the mines situated on
the CGMR license. As reported previously, the granting of the larger mining
lease for the area, incorporating the neighbouring mines in addition to the
original license, required consolidation either through acquisition or
amalgamation.
London Mining's JV partner, Wits Basin Precious Minerals Inc, has been
unsuccessful to date in raising the finance to consolidate the larger mining
license, which was anticipated to cost up to USD36 million and as such,
consolidation has not yet occurred. Furthermore, as a result of failures in
delivering the agreed business plan, the operator agreement was terminated
during the period. In addition, the arbitration claim from the original vendor
regarding the timing for payment of deferred consideration of USD17 million
remains unresolved, with an initial hearing date anticipated in December 2010.
London Mining is in direct negotiations with the vendor regarding the
arbitration.
As a result of the financing delay, operational issues and the ongoing
arbitration claim, London Mining has now initiated direct discussions with
potential finance providers, is exploring opportunities for installation of a
new management team and is in direct discussions with the original vendor on
resolving these issues.
London Mining's business plan continues to be to raise funds for CGMR to
consolidate the licensed region and expand the mining operations. In the event
that CGMR is unable to raise the necessary funds, London Mining will likely
dispose of the CGMR investment. London Mining has no intention to commit
material new funds to the CGMR joint venture.
Chile (50% ownership through a joint venture)
As announced on 30th July 2010 London Mining has entered into a joint venture
with a Chinese and Chilean based partner to take advantage of several iron ore
opportunities in the Atacama region of Chile. Under the agreement, London Mining
has subscribed for 50% of the shares of the joint venture company, Atacama
Mining Resources Corporation ("Atacama"). Atacama holds options over concessions
to iron ore deposits in the Atacama region of Northern Chile, an area of known
iron ore resources. Atacama is evaluating the concessions with a view to
defining a sizable resource to enable offtake and strategic partner investment.
The concessions are located within a short distance from a number of existing
ports and logistics arrangements for export to China are being investigated.
Michael Andrew, Divisional Manager Applied Geosciences of Snowden Mining
Industry Consultants BSc, MAUSIMM, who meets the criteria of a qualified person
under the AIM Rules - Guidance for Mining, Oil and Gas Companies, has reviewed
and approved the information that relates specifically to the reporting of
resources for Marampa, Wadi Sawawin and Isua projects contained within this
announcement.
Please find the full operations and financial review, as well as the company's
presentation of the period enclosed.
The Company's Website can be found at: www.londonmining.co.uk
For more information, please contact:
London Mining Plc
Graeme Hossie, Chief Executive Officer +44 20 7201 5000
Rachel Rhodes, Chief Financal Officer
Thomas Credland, Head of Investor Relations
Liberum Capital (Nominated Advisor/Broker)
Clayton Bush/Ellen Francis +44 20 3100 2000
Crux Kommunikasjon AS
Charlotte Knudsen +47 97 56 19 59
Brunswick Group
Carole Cable / Daniel Thöle +44 20 7404 5959
About London Mining
London Mining is focused on identifying, developing and operating mines to
become a mid-tier supplier to the global steel industry. Its five assets in
Sierra Leone, Colombia, Greenland, Saudi Arabia and China all have deliverable
production with potential for expansion. The Company listed on the Oslo Axess on
9 October 2007 and on AIM in London on 6 November 2009. It trades under the
symbols LOND.L and LOND.NO (Reuters) and LOND LN and LOND NO (Bloomberg).
This information is subject of the disclosure requirements acc. to §5-12 vphl
(Norwegian Securities Trading Act)
[HUG#1462344]
Third quarter 2010 report:
http://hugin.info/137683/R/1462344/401330.pdf
Third quarter 2010 presentation:
http://hugin.info/137683/R/1462344/401331.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: London Mining Plc via Thomson Reuters ONE
Unternehmensinformation / Kurzprofil:
Datum: 15.11.2010 - 08:01 Uhr
Sprache: Deutsch
News-ID 48754
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contact information:
Town:
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Kategorie:
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"RESULTS FOR THE QUARTER ENDING 30 SEPTEMBER 2010"
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