TIDMLOND
RNS Number : 8134O
London Mining Plc
25 September 2013
London Mining Plc
Quoted on London AIM (LOND LN)
("London Mining" or the "Company")
25 September 2013
RESULTS OF THE MARAMPA LIFE OF MINE STUDY
40 year operation at 6Mdmt/a with average life of mine operating
cost below USD45/dmt
Highlights
-- Probable JORC reserve reported of 539Mt at 31.1% Fe, sufficient for >40 year mine life
-- USD240 million to be spent in 2015 and 2016 to extend mine
life after depletion of tailings
-- USD40 million to be spent in 2014 on optimisation of
processing facilities to expand production to 6Mdmt/a
-- Life of mine average operating cost estimated to be between USD42/dmt to USD45/dmt
-- Life of mine strip ratio reduced from 1.2 : 1 to 0.5 : 1
-- No material increase in debt facilities required to fund life
of mine extension and expansion to 6Mdmt/a.
Graeme Hossie, Chief Executive of London Mining said:
"We are pleased to announce today, in line with previous
guidance, that an investment of USD240 million to upgrade the plant
to process all ore types will extend the Marampa mine life to over
40 years based on probable reserves of over 500Mt. Our life of mine
feasibility study has also shown that production at Marampa can be
increased further by simple optimisation of the existing plant to a
rate of 6Mdmt/a in 2014 at an estimated additional cost of USD40
million. The incremental expansion and other initiatives identified
by the feasibility study will reduce average operating costs to
USD42/dmt to USD45/dmt over the life of mine. This reduction in our
operating cost base, along with overhead reduction and a move to
larger vessels, will enable us to be profitable in most long term
downside pricing scenarios. We expect to be able fund our capital
programme through the reinvestment of cash flows from the expanded
operation requiring no significant increase to our total debt
facility position."
Jim North, Chief Operating Officer of London Mining said:
"The Life of Mine study shows that the Marampa operation can be
extended through a simple upgrade of the processing plant based on
proof of concept of the existing flowsheet and logistics. The
investment in a plant that can process all ore types has enabled us
to reduce the life of mine strip ratio by half. The production
increase to 6Mdmt/a is a low risk exercise achieved by optimisation
of the existing plant. We are now focussed on reducing unit costs
through economies of scale and a move to activity based contracts
where possible. We have commenced work on measures which should
enable us to load larger vessels in 2014."
Webcast and conference call
There will be a webcast and conference call for analysts and
investors hosted by Graeme Hossie (CEO), Rachel Rhodes (CFO) and
Jim North (COO) at 9.00am (BST) today.
The presentation will be available via a live and on-demand
webcast, a link to the webcast can be found on London Mining's
website here:
http://www.londonmining.com/investors/reports-and-presentations/.
The webcast will include audio from the conference call and
synchronised power point slides. You will not be able to post
questions through the webcast.
Please use the following numbers and Conference ID to dial in to
the conference call:
Dial-in details: International dial-in +44(0)20 3427 1918
UK Toll Free 0800 279 4841
USA Toll Free 1877 280 1254
Confirmation code 2025211
For more information, please contact:
London Mining Plc
Thomas Credland, Head of Investor Relations +44 (0)20 7408 7500
Liberum Capital (Nominated Advisor/Broker)
Tom Fyson +44 (0)20 3100 2000
J.P. Morgan Cazenove (Broker)
Ben Davies / 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 concentrate for the global steel industry and is focused
on identifying, developing and operating sustainable mines. London
Mining commenced sales from its 100% owned Marampa Mine in Sierra
Leone in 2012 and expects to reach production capacity of 6Mdmt/a
in 2014. Marampa has sufficient resources to support a staged
expansion to over 10Mdmt/a. London Mining has also completed
bankable feasibility studies outlining plans for a further 20Mdmt/a
of iron ore production by developing mines in Greenland and Saudi
Arabia. 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.com.
Marampa, Sierra Leone (100% ownership)
We started operations at our Marampa mine in December 2011,
doubled production and export volumes in the first six months of
2013 and are expanding production capacity to 5Mdmt/a over the
course of 2013. Marampa has a mineral resource of over 1 billion
tonnes of iron ore including a Probable ore reserve of 539Mt
grading 31.1% Fe, sufficient for over 40 years of production at a
6Mdmt/a production rate.
Results of the life of mine study
A definitive feasibility study to determine the cost and
operating parameters for Marampa incorporating all mineral resource
types has been completed by Tenova Bateman. The study shows that
the current operation can be expanded to 6Mdmt/a in 2014 through
the investment in additional beneficiation capacity for an
estimated capital cost of approximately USD40 million (-10%/+15%).
The capital expenditure programme to extend the mine life at the
increased production rate of 6Mdmt/a is now planned to commence in
2015 for a capital cost of USD240 million (-10%/+15%), including a
USD44 million contingency provision. Average life of mine operating
costs were estimated to be between USD42/dmt to USD45/dmt.
The table below shows Marampa expansion programme with
spent/estimated capital cost and installation date.
Concentrate Installed Capital Estimate
Resource Process (Mdmt/a) date (USDm)
Existing Tailings/ Magnetic separation 1.5 Dec 2011 340
weathered ore (first plant) (spent/
committed)
---------------- ------------------------------- ----------- ----------- ----------------
Magnetic separation 3.6 Jan 2013
(second plant)
---------------- ------------------------------- ----------- ----------- ----------------
Addition of spirals and ball 5 Q4 2013
milling
---------------- ------------------------------- ----------- ----------- ----------------
Life Of Mine extension Tailings/ Additional WHIMS and spirals 6 Q4 2014 40
weathered ore (BFS
forecast)
---------------- ------------------------------- ----------- ----------- ----------------
All ore types Addition of primary crusher, 6 H1 2016 240
SAG mill and regrind mills
(BFS forecast)
---------------- ------------------------------- ----------- ----------- ----------------
Mining
As part of the life of mine planning, Sound Mining completed an
ore reserve statement for Marampa. The Ore Reserve Statement is
reported in accordance with the JORC code and it supports the
economic viability of mining at least 539Mt of the total Indicated
mineral resource of 857Mt (See Appendix).
After tailings from previous operations are depleted by 2017,
mining will focus on the weathered and unweathered components of
the reserve by open cut methods using conventional 180t dump trucks
(an increase from the current truck size of 40t) and medium sized
hydraulic shovels. Mining will be undertaken under contract.
Significant advances to life of mine planning have been achieved as
a result of plans to build a processing plant capable of processing
all ore types (weathered and unweathered) rather than a staged
upgrading of the plant. This has resulted in a simplified mine and
waste rock disposal plan delivering a reduction in life of mine
waste strip ratio from 1.2 : 1 to approximately 0.5 : 1. Maximum
use is made of backfilling of mine waste to allow life of mine
waste dumping on site.
Processing
The process operation will be upgraded in two stages. Firstly
through an optimisation programme in 2014 to augment the wet high
intensity magnetic separation (WHIMS) and gravity circuits to
increase processing capacity to 6Mdmt/a. Secondly the addition of
further crushing and semi-autogenous grinding capacity to allow
processing of unweathered and weathered ore through the existing
plant after the exhaustion of tailings. The power plant will be
upgraded from 15MW to 50MW as part of this life of mine extension
programme to meet the additional power requirement necessary to
process unweathered ore types and will use medium fuel oil as per
current operations. A mass recovery of 40% is expected and grinding
costs are comparatively low compared to other processed iron ore
concentrates.
Logistics
Transport of concentrate will use the existing logistics
solution of road haulage to the Thofeyim River Terminal, followed
by barging to the Freetown harbour and transhipping. A programme to
allow loading of cape size vessels is underway and is expected to
be completed in 2014. The operation will use an improved barging
solution using pusher technology on activity based contracts to
increase capacity and reduce operating costs. We expect the first
pusher barges to be in operation by the end of 2013.
Permitting
Environmental permitting for the existing operation covers the
expanded operation and an updated Environmental and Social Impact
Assessment (ESIA) is being completed as part of our ongoing life of
mine feasibility work.
Funding
It is expected that the life of mine investment programme can be
achieved using cash flow and refinancing of existing debt
facilities, with cash flow potential strengthened from early
optimisation of the operation to 6Mdmt/a. Other non-dilutive
capital sources include offtake related funding. A lower expected
all in sustaining cost structure combined with a progressive
hedging policy in the investment period is aimed to provide
downside protection to margins.
Appendix
Table showing Marampa life of mine study operating cost.
% Total
Logistics 33
--------
Mining and Technical Services 31
--------
Processing 22
--------
General and Administration 14
--------
Total 100
--------
Table showing Marampa capital programme for the expansion to
6Mdmt/a and life of mine extension
2014 2015 and 2016 Total
USDm USDm
Structural(1) 12 70 83
----- ------------- -----
Equipment 16 43 59
----- ------------- -----
EPCM / Owners team 11 33 44
----- ------------- -----
Power - 22 22
----- ------------- -----
Contingencies 3 44 47
----- ------------- -----
Other(2) 1 24 25
----- ------------- -----
Total 44 236 280
----- ------------- -----
1 Structural includes SM&P, earth works, EC&I
2 Other includes insurance, commissioning, owners cost, vendor
assistance, pit de-watering allowance, relocation costs
Marampa reserve and resource statement at June 2013
Mineral resource as at 31 December 2012* Quantity Fe Al2O3 SiO2 MnO P
(Mt) (%) (%) (%) (%) (%)
Tailings
Indicated 34 22.5 9 51.4 1.1 0.1
---------- ------ -------- ------- ------ ------
Weathered ore***
Indicated 52 35.1 6.7 38 0.2 0.1
---------- ------ -------- ------- ------ ------
Inferred 21 33.7 7.3 39.5 0.3 0.1
---------- ------ -------- ------- ------ ------
Unweathered ore
Indicated 778 31.5 4.8 39.1 0.2 0.2
---------- ------ -------- ------- ------ ------
Inferred 187 30.3 5.3 41.1 0.3 0.2
---------- ------ -------- ------- ------ ------
Total Indicated Mineral Resource 864 31.4 5.1 39.5 2.73 0.1
---------- ------ -------- ------- ------ ------
Total Mineral Resource 1072 31.2 5.2 38.8 0.7 0.1
---------- ------ -------- ------- ------ ------
Ore Depleted from Inventory Quantity Fe Production from
(Mt) (%) January 2013 - June 2013
---------- ------ ---------------------------------
Tailings Mined 4.3 24.5
---------- ------ -------- ------- ------ ------
Weathered Ore Mined 2.3 29.6
---------- ------
Waste Mined 1.6 -
---------- ------
Indicated Mineral Resource less ore depleted 857.4 31.8
---------- ------ -------- ------- ------ ------
Ore Reserve Statement as at Quantity Fe Al2O3 SiO2 MnO P
30 June 2013** (Mt) (%) (%) (%) (%) (%)
---------- ------ -------- ------- ------ ------
Tailings
Probable 22.9 22.3 9.1 51.6 1 0.1
---------- ------ -------- ------- ------ ------
Weathered ore
Probable 42.7 34.1 6.5 37.8 0.3 0.1
---------- ------ -------- ------- ------ ------
Unweathered ore
Probable 473.1 31.3 4.8 29.7 0.6 0.1
---------- ------ -------- ------- ------ ------
Total Ore Reserve 538.7 31.1 5.2 31.3 0.6 0.1
---------- ------ -------- ------- ------ ------
*The Mineral Resource statement includes Ore Reserves as well as
the ore mined and processed during the first half of 2013.
**In addition to the above Ore Reserves, a further 17Mt of
weathered material at a grade of 32.6% and 56Mt of unweathered ore
at a grade of 30.0% has been depleted from the Inferred Mineral
Resource category as part of the mining plan from the open pit
operation. Production from the weathered Inferred Mineral Resource
constitutes 3% of the total metal production while that from the
unweathered Inferred Mineral Resource makes up 8% of the total
metal produced by the mining plan and production forecast.
***All of the weathered Mineral Resource is mined together with
dilution.
The information in this statement that relates to Ore Reserves
is based on information compiled by Malcolm Lotriet, of Sound
Mining Solution Pty Ltd. Malcolm Lotriet takes overall
responsibility for the Report as the Competent Person. He is a
registered professional engineer with the Engineering Council of
South Africa and a Fellow of The Southern African Institute of
Mining and Metallurgy and has sufficient experience, which is
relevant to the activity he is undertaking, to qualify as a
Competent Person in terms of the JORC Code. Malcolm Lotriet, has
reviewed this Ore Reserve Statement and given his permission for
the publication of this information in the form and context within
which it appears.
Malcolm Lotriet was assisted by Breton Scott, a Mining Engineer
and Competent Person, and various specialist consultants, who
undertook a review of the modifying factors used for the conversion
of the Mineral Resources to Ore Reserves. This information has been
confirmed with the company management as a fair reflection of the
existing and anticipated economic model and production plan.
This mineral resource and ore reserve statement is considered to
be materially correct, having made due enquiry into the underlying
data and the modifying factors that would otherwise influence the
integrity and accuracy of the qualities and quantities so
presented.
Glossary
Al O Alumina (Aluminium Oxide)
BIF Banded iron formation
Dmt Dry Metric Tonne
Fe Iron
JORC Code The 2012 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves as published by the Joint Ore Reserves Committee of the Australasian Institute of
Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.
Mineral Resource A concentration or occurrence of material of intrinsic economic interest in or on the Earth's
crust in such form, quality and quantity that there are reasonable prospects for eventual
economic extraction. The location, quantity, grade, geological characteristics and continuity
of a Mineral Resource are known, estimated or interpreted from specific geological evidence
and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence,
into Inferred, Indicated and Measured categories
Mn Manganese
Ore Reserve The economically mineable part of a Measured and/or Indicated Mineral Resource. It includes
diluting materials and allowances for losses, which may occur when the material is mined.
Appropriate assessments and studies have been carried out, and include consideration of and
modification by realistically assumed mining, metallurgical, economic, marketing, legal,
environmental,
social and governmental factors. These assessments demonstrate at the time of reporting that
extraction could reasonably be justified. Ore Reserves are sub-divided in order of increasing
confidence into Probable Ore Reserves and Proved Ore Reserves. A Probable Ore Reserve has
a lower level of confidence than a Proved Ore Reserve but is of sufficient quality to serve
as the basis for a decision on the development of the deposit.
P Phosphorus
SiO Silica
Wmt Wet Metric Tonne
WHIMS Wet High Intensity Magnetic Separation
This information is provided by RNS
The company news service from the London Stock Exchange
END
DRLPGUPPBUPWPUC
London Mining (LSE:LOND)
Historical Stock Chart
From Jun 2024 to Jul 2024
London Mining (LSE:LOND)
Historical Stock Chart
From Jul 2023 to Jul 2024
