London Mining May See Africa Banks Exposed to $200 Million Loan

London Mining Plc, a Sierra Leone iron-ore producer running out of funds as Ebola deters investors and the steelmaking ingredient’s price drops, may default on a $200 million loan provided by four banks, RMB Morgan Stanley said.

FirstRand Ltd., Africa’s largest lender by market value, Togo’s Ecobank Transnational Inc. and Nigeria’s FBN Holdings Plc helped fund the loan, Greg Saffy, analyst at the Johannesburg-based equity research company, said in an e-mailed note today. Standard Chartered Plc was also involved in the loan, which was drawn down in full in December, according London Mining’s annual financial statements.

“London Mining may announce that it is going into administration today,” Saffy said. A spokeswoman for London Mining declined to comment.

The producer said Sept. 29 it didn’t have sufficient cash without raising further funds as the Ebola outbreak made it more difficult to lure investors and iron-ore prices fell to a five-year low. The virus has killed more than 4,000 people in Sierra Leone, Guinea and Liberia this year. Iron ore is Sierra Leone’s biggest export earner and accounts for 16 percent of its economy.

Outside of banks, BlackRock World Mining Trust Plc has been forced to write down the value of a royalty contract it bought from London Mining in 2012, according to an Investec Plc note.

Talks with strategic investors who may have injected more capital ended on Oct. 10, according to London Mining, and the company asked for its stock in the U.K. to be suspended.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE