London Mining CEO Says Sierra Leone Mine Partner Talks ContinueJesse Riseborough
London Mining Plc, the second-largest iron ore producer in Sierra Leone, said talks to find a partner to help fund a planned expansion of its Marampa mine are continuing.
“Our assets have substantial additional potential but they do require large capex to unlock,” Chief Executive Officer Graeme Hossie told reporters today on a conference call. “Whether and how quickly that strategic partnership funding plan will be realized is difficult to predict.”
Mining companies globally are facing rising construction costs and lower prices, prompting some to shelve expansions and sell assets. London Mining, which started production in December 2011, has estimated a cost of $860 million for the next planned expansion of Marampa.
The next expansion plan is to increase capacity from 5 million metric tons a year to 9 million tons. A planned second expansion phase to more than 16 million tons a year may cost $1.3 billion, according to Goldman Sachs Group Inc.
New iron-ore supplies and slower growth in steel demand will weigh on prices in the second half of this year, Greg Lilleyman, Rio Tinto Group’s president of Pilbara operations in Australia, said this week. Steel demand growth in China slowed from 20 percent in 2010 to 2.1 percent last year, according to Citigroup Inc.
“The fundamentals of the iron ore market will see continued demand,” Hossie said.
Iron ore has peaked and will decline over the rest of the year, Morgan Stanley said March 7, joining analysts from Deutsche Bank AG to Credit Suisse Group AG in forecasting lower prices.
London Mining today reported a net loss of $107.8 million for the year ended Dec. 31. That compared with a net loss of $60 million a year earlier. It also increased a corporate debt facility from $90 million to $165 million.
The stock dropped 1.7 percent to 132.25 pence at 11:13 a.m. London time, valuing the company at 183 million pounds ($278 million).