Nov. 5 (Bloomberg) -- London Mining Plc, a developer of iron ore deposits, said it held talks with Chinese commodity trading companies Sinosteel Corp. and China Minmetals Corp. over tying-up on the company’s Marampa project in Sierra Leone.

“We’re having these discussions now,” Chief Executive Officer Graeme Hossie said in an interview. “I’m confident they will lead to potential cooperation which could include investments to accelerate production or a joint venture.”

London Mining, which has begun work developing the project and expects annual production of 1.5 million metric tons in 2011, is also talking with China National Railways, Hossie said on Nov. 3 in London. Sinosteel is China’s biggest iron-ore trader and Minmetals the nation’s largest metals trader.

The U.K. miner, which last year made a $664 million profit selling its Brazilian unit to ArcelorMittal, the world’s biggest steelmaker, will more than double output at Marampa from 2013, Hossie said. The company in August ended a dispute with African Minerals Ltd. over mining rights at the project.

The $85 million cost of the mine’s first phase will be funded from London Mining’s $230 million of cash reserves, Hossie said. The company and U.S. partner Wits Basin Precious Minerals Inc. also plan to expand the Xiaonanshan mine in China by buying two adjacent deposits, Guqiao and Sanbanqiao, he added. Xiaonanshan produces 400,000 tons a year.

London Mining and Wits aim to sell shares of their joint venture in an initial public offering in Hong Kong to raise funds for the expansion, Hossie said. The companies hired ABN Amro Holding NV to work on the IPO, he said.

Hong Kong IPO

London Mining said yesterday in a statement that 37.2 million shares held by its three largest shareholders were placed with U.K. investors. The shares were sold at 1,924 pence ($31.88) each and will begin trading in London tomorrow.

Management asked the shareholders “to sell down and to provide liquidity and to enable us get a more widespread quality shareholder base in London,” Hossie said. London Mining isn’t planning to delist in Oslo for the time being, he said.

Li Kejie, a Sinosteel spokesman, and Jiao Jian, a spokesman at Minmetal, couldn’t be reached when Bloomberg News called their Beijing offices after regular business hours.

The company’s shares gained 0.9 krone, or 4.9 percent, to 19.4 kroner by the close of Oslo trading.

To contact the reporter on this story: Firat Kayakiran in Istanbul at fkayakiran@bloomberg.net

Last Updated: November 5, 2009 12:20 EST