July 17 (Bloomberg) -- London Mining Plc, which sells iron ore to the world’s biggest commodity traders including Glencore Plc and Cargill Inc., is in talks with investors to help fund a $400 million expansion of its Marampa operation in west Africa.
“We’ve had incoming interest and we have additional interest and we’re working through a process to bring on investment,” Chief Executive Officer Graeme Hossie said today in a phone interview in London, adding the company is in talks with a number of parties. “There’s good interest and we expect to complete the process before the end of the year.”
Declining iron ore prices have dragged down the shares of London Mining 57 percent in London trading this year, giving it a market value of 66 million pounds ($113 million). The second-largest producer of the steelmaking material in Sierra Leone is also seeking to pay down net debt, which stood at $265.3 million at the end of last year.
The company today affirmed its production guidance for the year of 4.9 million wet metric tons to 5.4 million wet tons. It’s seeking funds to expand to a production rate of 8 million wet tons a year.
It reported a 30 percent increase in production in the second quarter from the earlier period to 1.2 million wet tons. Sales fell 6 percent due to a dispute over a shipment and repairs to a vessel involved in ship loading.
The decline in sales was “disappointing” and is “no doubt putting pressure on working capital,” Investec Bank Plc analyst Hunter Hillcoat wrote today in a note. The company agreed to a new $17.5 million prepayment facility with Vitol Group for 500,000 tons of production. Separately, it’s in talks for a new $25 million loan, it said today.
The stock retreated 3 percent to 48 pence at 9:39 a.m. London time.
London Mining doesn’t expect the outbreak of the Ebola virus in Sierra Leone to impact production, and Hossie said today the company hadn’t detected a single case at Marampa. Isolation facilities, screening and education programs for workers and communities have been put in place, London Mining said.
The outbreak has killed at least 118 people, according to the nation’s Health Ministry. President Ernest Bai Koroma today called for international support to help combat the virus.
African Minerals Ltd., which exports iron ore from the Tonkolili mine, is the biggest iron ore producer in Sierra Leone.
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