SCOPING STUDY RESULTS FOR 15MTPA OPERATION AT ISUA, GREENLAND
(Thomson Reuters ONE) -
* Capex of USD 2Bn for 15Mtpa project
* Capital intensity reduced by around 22% to USD 136/annual tonne of capacity
* Project estimated to produce post tax NPV of between USD 2.5 to 4.5bn with
high end of range assuming that production is marketed into Europe
* 15Mtpa operation now being considered in bankable feasibility study ("BFS")
* Bankable feasibility study scheduled to be completed by the end of 2011
* Construction estimated to start in 2012 with first production expected in
early 2015
* Permitting process proceeding according to schedule
* London Mining seeking additional funding at project level for BFS
London Mining today announces the results of a 15Mtpa scoping study for its Isua
Project in Greenland completed by SNC Lavalin. Isua is located 150km Northeast
of Nuuk and 100km from a proposed deep seawater port. Isua will produce a
premium quality 70% Fe pellet feed concentrate with low impurities and benefits
from its position in the warmer south-west corner of Greenland which allows for
year round shipping.
In March 2010 London Mining reported a JORC resource estimate completed by
Snowden Mining Industry Consultants of 951Mt at 36% Fe. A prefeasibility study
for a 10Mtpa open pit and processing operation from an initial 490Mt open pit
mine plan was completed by SNC Lavalin in June 2010. The June 2010 PFS
considered a 10Mtpa operation with a 21 year initial mine life and estimated
capital expenditure of USD1.7bn.
The scoping study reported today considers a 15Mtpa open pit and processing
operation with a 15 year initial mine life for estimated capital expenditure of
USD2.0 billion, representing a 22% reduction in capital intensity. Operating
costs have increased from USD27 to USD29/t mostly due to a 20% increase in fuel
costs. The scoping study is based on capital and operational cost estimates to a
level of accuracy of -30% to +40% and assumes Chinese contractors performing
work on major capital items. The new scoping study and detailed work undertaken
for the 10Mtpa PFS forms the basis of a 15Mtpa bankable feasibility study which
has already commenced and is scheduled to be completed by the end of 2011.
Highlights of the two studies are as follows:
+-----------------------------+------------------------+--------------+
| Study date | Scoping Study (15Mtpa) | PFS (10Mtpa) |
| | February 2011 | June 2010 |
+-----------------------------+------------------------+--------------+
| Annual production (Mtpa) | 15 | 10 |
+-----------------------------+------------------------+--------------+
| Mine life (years) | 15 | 21 |
+-----------------------------+------------------------+--------------+
| Opex (USD/t concentrate) | 29 | 27 |
+-----------------------------+------------------------+--------------+
| |
+-----------------------------+------------------------+--------------+
| Capex breakdown - USD'000 | | |
+-----------------------------+------------------------+--------------+
| Mine | 142,649 | 131,483 |
+-----------------------------+------------------------+--------------+
| ROM Crushing | 41,289 | 34,249 |
+-----------------------------+------------------------+--------------+
| Process Plant | 229,206 | 164,651 |
+-----------------------------+------------------------+--------------+
| Tailings | 11,179 | 9,368 |
+-----------------------------+------------------------+--------------+
| Product Delivery | 253,294 | 201,715 |
+-----------------------------+------------------------+--------------+
| Port | 162,510 | 132,439 |
+-----------------------------+------------------------+--------------+
| Project Sensitivities | 145,273 | 136,621 |
+-----------------------------+------------------------+--------------+
| Project Infrastructure | 396,348 | 358,395 |
+-----------------------------+------------------------+--------------+
| Project Indirect Costs | 397,853 | 345,314 |
+-----------------------------+------------------------+--------------+
| Subtotal | 1,779,602 | 1,514,235 |
+-----------------------------+------------------------+--------------+
| Contingency (15%) | 267,000 | 227,100 |
+-----------------------------+------------------------+--------------+
| Total | 2,046,602 | 1,741,335 |
+-----------------------------+------------------------+--------------+
| Capital Intensity (USD/tpa) | 136 | 174 |
+-----------------------------+------------------------+--------------+
The post-tax project economics based on new scoping study estimates and an
August 2010 price deck provided by Raw Materials Group ("RMG") are displayed
below. The value of the Isua Project is significantly increased if the Isua
concentrate is sold into Europe rather than China, based on a significant
freight differential of around USD25/wmt.
+-------------------------+--------------------------+-------------------------+
| | 100% of product sold in | 100% of product sold in |
| | China | Europe |
+-------------------------+--------------------------+-------------------------+
|NPV (USD billion) | 2.5 | 4.5 |
+-------------------------+--------------------------+-------------------------+
|IRR (%) | 23 | 33 |
+-------------------------+--------------------------+-------------------------+
|Payback period (months) | 25 | 36 |
+-------------------------+--------------------------+-------------------------+
|Average freight (USD/wmt)| 8 | 33 |
+-------------------------+--------------------------+-------------------------+
|Average netback (cdmtu) | 120 | 159 |
+-------------------------+--------------------------+-------------------------+
The product specifications provided by London Mining to RMG based on test work
by Studien-Gesellschaft für Eisenerz-Afbereitung ("SGA") were as follows:
+----------------------+-------+--------------+
| Fe (total) | % | 70.2 |
+----------------------+-------+--------------+
| FeO | % | 29.8 |
+----------------------+-------+--------------+
| S | % | 0.12 +/-0.06 |
+----------------------+-------+--------------+
| P | % | 0.09 |
+----------------------+-------+--------------+
| SiO2 | % | 1.9 |
+----------------------+-------+--------------+
| Al2O3 | % | 0.05 |
+----------------------+-------+--------------+
| MgO | % | 0.2 |
+----------------------+-------+--------------+
| CaO | % | 0.16 |
+----------------------+-------+--------------+
| TiO2 | % | 0.01 |
+----------------------+-------+--------------+
| Na2O | % | 0.005 |
+----------------------+-------+--------------+
| K2O | % | 0.006 |
+----------------------+-------+--------------+
| D80 | µm | 28.5 |
+----------------------+-------+--------------+
| Blaine value | cm2/g | 1,650 |
+----------------------+-------+--------------+
| Filter cake moisture | % | < 9.0 |
+----------------------+-------+--------------+
London Mining has now completed three seasons of exploration drilling, further
to previous drilling which took place during the 1970s, with drill holes from
the 2010 campaign to be included in a new resource estimate as part of further
feasibility work. The 2010 drill data will be augmented by a further campaign of
7,000 to 8,000m of drilling to be undertaken in 2011 to allow conversion of all
necessary resources currently in the Inferred category to be upgraded to
Indicated. In addition, all necessary base line data collections, advanced field
drilling programs, Environmental Impact Assessments (EIA) and Social Impact
Assessments (SIA) have been or are expected to be undertaken to allow completion
of a full bankable feasibility study by the end of 2011 with construction
estimated to start in 2012 and first production at the beginning of 2015. London
Mining is investigating strategies to fund the BFS programme by selling a
minority stake at project level and also plans to introduce a strategic partner
to provide funding for construction. A separate listing for Isua is also being
considered.
London Mining CEO Graeme Hossie said "Isua will be a significant new producer
from an important new iron ore province. We anticipate production of 15Mtpa
premium quality iron ore concentrate to start in early 2015, with an estimated
USD2.5 to USD4.5bn post tax NPV underlining the value of the project. Isua
compares favourably to other planned new capacity based on resource size,
capital intensity, scale and lead time to first production. We have the full
support of the Government of Greenland and are reviewing options around the
optimal funding structure for construction. This includes the introduction of a
strategic partner following the BFS which is expected by the end of 2011."
London Mining will present a detailed overview of the project in an analyst
workshop scheduled today. Materials from the workshop including the scoping
study for 15Mtpa will also be available on the London Mining website.
For more information, please contact:
London Mining Plc +44 20 7201 5000
Graeme Hossie, Chief Executive Officer
Rachel Rhodes, Chief Financial Officer
Thomas Credland, Head of Investor Relations
Liberum Capital (Nominated Advisor/Broker) +44 203 100 2000
Clayton Bush/Christopher Kololian
J.P. Morgan Cazenove (Broker) +44 207 742 4000
Adam Brett / Neil Passmore
Brunswick Group LLP +44 20 7404 5959
Carole Cable / Daniel Thöle
Crux Kommunikasjon AS +47 97 56 19 59
Charlotte Knudsen
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).
Neither the content of the Company's website nor the content of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement nor, unless previously
published by means of a recognised information service, should any such content
be relied upon in reaching a decision as to whether or not to acquire, continue
to hold, or dispose of, securities in the Company.
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
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
[HUG#1490758]
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Datum: 21.02.2011 - 08:00 Uhr
Sprache: Deutsch
News-ID 51719
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