London Mining Plc OPERATIONS UPDATE AND FINANCIAL REVIEW (6272K)

TIDMLOND

RNS Number : 6272K

London Mining Plc

23 August 2012

London Mining Plc

Quoted on London AIM (LOND LN)

("London Mining" or the "Company")

23 August 2012

OPERATIONS UPDATE AND FINANCIAL REVIEW FOR SIX MONTHS TO 30 JUNE 2012

Highlights (including post-period)

Marampa, Sierra Leone (100% owned)

-- Successful transition from development to production delivering high quality iron ore

   --              Production of 712,000wmt (670,000dmt) in H1 2012 
   --              Sales of 594,000wmt (559,000dmt) into Glencore offtake agreement

-- Operating costs before depreciation and royalties of USD 76/dmt in H1 2012 with path to unit cost reduction

-- On track to achieve production of 1.5Mt in 2012, with capacity of 5Mtpa expected in Q3 2013

-- Bankable Feasible Study ("BFS") for accelerated expansion to 9Mtpa expected by end of Q3 2012

Financial

   --              Fully funded for expansion at Marampa to 5Mtpa 
   --              Group H1 EBITDA(1) loss of USD 2.6 million (H1 2011 loss USD 20.5 million) 
   --              Marampa H1 EBITDA(1) of USD 13.1 million (H1 2011 loss of USD 7.1 million) 
   --              USD 151.3 million net cash inflow from financing 
   --              USD 113.9 million net cash out flow from investing activities 
   --              USD 91 million cash in bank at 30 June 2012

-- Appointment of Standard Chartered Bank ("SCB") as lead advisor to secure project debt finance for the 9Mtpa Marampa expansion

Post period

-- Appointment of Jim North as Chief Operating Officer ("COO"): Jim joins from BHP Billiton and has more than 20 years mining experience with extensive operating expertise in iron ore and Africa

-- Net cash proceeds of USD 110 million received from BlackRock World Mining Trust ("BlackRock") in return for a 2% revenue related royalty calculated on iron ore sales from Marampa

   --              Extension of USD 90 million corporate debt facility with SCB to October 2013

Commenting on the results Graeme Hossie, Chief Executive Officer ("CEO"), said: "We continue to execute our plans to develop high quality iron ore production through the operation and staged expansion of our Marampa mine in Sierra Leone. Whilst our initial focus has been to develop new capacity at low capital intensity, our focus is now to optimise operations and reduce unit costs as we expand to steady state production at 5Mtpa before moving to 9Mtpa at the appropriate time. Marampa retains its low operating cost potential by virtue of its large resource close to a tidewater location and simple beneficiation process to produce a high quality sinter concentrate.

Sales, through our guaranteed offtake agreement with Glencore, have ramped up in line with production over the first half and positive feedback has been received from end users. This consistent demand for our high grade product has allowed us to fund our growth plans with offtake agreements for our first 4Mtpa of production with Glencore and Vitol and latterly through a royalty agreement with BlackRock Mining Trust. This royalty agreement provides further funding strength and flexibility to London Mining as well as representing a clear endorsement of London Mining's execution capabilities, the Marampa asset and confidence in the market for iron ore. Importantly, these agreements are not dilutive to shareholders and allow us to retain strategic flexibility to fund our ultimate expansion plans at Marampa and Isua to over 30Mtpa.

We are pleased to announce the appointment of Jim North as COO, Renato Almeida as Chief Marketing Officer and Claude Perras as Head of Sustainability. The addition of their combined abilities in operations and development, gained in the world's leading mining companies, will further ensure London Mining's continued delivery of new high margin and sustainable iron ore production. We believe our ability to attract such high quality professionals is a clear sign of our growing reputation as a significant and fast growing new producer of iron ore".

London Mining will be hosting a webcast and conference call for the results of the first half 2012 today at 9:00am GMT (UK). Details for the webcast and conference call can be found on London Mining's homepage, www.londonmining.co.uk.

For more information, please contact:

 
 London Mining Plc 
  Graeme Hossie, Chief Executive Officer 
  Rachel Rhodes, Chief Financial Officer 
  Thomas Credland, Head of Investor Relations    +44 (0)20 7408 7500 
 Liberum Capital (Nominated Advisor/Broker) 
  Clayton Bush/Christopher Kololian              +44 (0)20 3100 2000 
 J.P. Morgan Cazenove (Broker) 
  Neil Passmore / Ignacio Borrell                +44 (0)20 7742 4000 
 Brunswick Group LLP 
  Carole Cable / Rosheeka Field                  +44 (0)20 7404 5959

About London Mining

London Mining is an expanding producer of high specification iron ore for the global steel industry and is focused on identifying, developing and operating sustainable mines. London Mining commenced sales from the Marampa mine in Sierra Leone in 2012 and expects to reach production capacity of 5Mtpa in 2013. A prefeasibility study was completed in 2011 which shows that Marampa has resources to support a staged expansion to over 16Mtpa. London Mining has also completed bankable feasibility studies outlining plans for a further 20Mtpa of iron ore production by developing two other mines in Greenland and Saudi Arabia. In addition London Mining is producing from a coke operation with coking coal resource potential in Colombia. The Company listed on AIM in London on 6 November 2009. It trades under the symbols LOND.L (Reuters) and LOND LN (Bloomberg). More information about London Mining can be found at www.londonmining.co.uk.

(1) Earnings before Interest, Tax, Depreciation, Amortisation and Exceptional Items

Click on, or paste the following links into your web browser, to view the associated PDF documents.

http://www.rns-pdf.londonstockexchange.com/rns/6272K_-2012-8-23.pdf

http://www.rns-pdf.londonstockexchange.com/rns/6272K_1-2012-8-23.pdf

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