Funding for London Mining Progresses; Shares Hit Record Low
Iron ore miner London Mining PLC (LSE:LOND) has entered into detailed discussions with a potential strategic investor for the expansion of the company’s Marampa iron ore mine in Sierra Leone.
The LSE-listed company, which is battling record-low prices of iron ore, agreed last week to a $30 million revolving, two-year pre-export financing facility with Afreximbank that required approval from its existing lenders.
“[The] funds [secured] from Afreximbank are not expected to be available in the required time period with discussions on structure ongoing. The company's lenders are working constructively with us to enable investment into the group and, in addition, are currently considering the provision of further finance,” the company said in a statement.
Although it would take several weeks to implement, if the proposed investment comes through, it would enable a material cash injection into the company, significantly diluting the existing equity and lead to a revised capital structure of the company.
London Mining also announced its lenders were considering the provision of further finance and that they were supportive of the process.
"The requirement for a revised capital structure indicates that the banks need be involved in the strategic partner negotiations, presumably adding to the delay," analysts at Investec Securities said.
Shares hit record low
News of the company’s insufficient operating cash sent the miner’s shares plunging on Monday, falling 59 percent to a record low.
According to Reuter, London Mining has trimmed its full-year production forecast and deferred a $175 million extension at its Marampa mine by two years and put off a $20 million of non-essential capital expenses on the mine.
The news comes one week after it said it would end an iron ore supply contract with Glencore due to a payment dispute.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.