Hi s4120249 , the scoping study for "our" Marampa only a little...

Hi s4120249 , the scoping study for "our" Marampa only a little bit late , should be coming out soon and we'll see then it's impact. Here's an article on London Mining and "their" Marampa and the scoping study from another of their projects just released. cheers

February 21, 2011

London Mining Sets Out Its Stall As A Potential Producer Of 31 Million Tonnes Of Premium Grade Iron Ore Per Year.

By Alastair Ford / www.minesite.com

The City gave a reasonably upbeat initial response to London Mining's new scoping study for its Isua iron ore project in Greenland, when the details were released early on Monday 21st February. The study investigated the potential for a 15 million tonnes per year operation, and reckoned the likely development costs at around US$2 billion. Under these parameters, Isua would likely have a net present value (NPV) of between US$2.5 billion and US$4.5 billion, depending on whether the final product goes to Europe or China. Previously, the likely output had been pegged at 10 million tonnes per year, and analysts liked the bigger numbers. Numis called it "a fairly healthy upgrade", while Liberum spoke of an increase to the production parameters as likely to affect capital intensities "positively". In early trade, though, the shares were virtually unchanged, off by a miniscule 5p to 404p, on a flat day on the markets.

But the market response may well build in the days and weeks ahead, as the company starts to showcase Isua in a big way. That process got underway immediately the details of the scoping study were released, with an analyst teach-in hosted by London Mining's chief executive Graeme Hossie. "We're really bringing Greenland out front and centre, now", Graeme told Minesite. And the reason? "We're looking at bringing in some external money." To be sure, US$2 billion is a big ask for a company capitalised in London at a relatively modest 460 million pounds.

But it's got big backers too. A recent US$110 million issue of convertible bonds was arranged by JP Morgan Cazenove and Liberum, two of the plummiest brokerages in town, and with the iron ore price riding high, the moment couldn't be more opportune to be putting together a big iron ore project. The plan now is to complete a bankable feasibility study by the end of this year, and close of some of the 30 to 40 per cent variability allowed in the scoping, and then to move to construction in 2012. First production is currently slated for 2015, although with a project this complex, and ahead of the completion of a full feasibility study, such a timetable must be taken as an approximation only.

Still, one worry that's concerned investors in other projects in Greenland won't be a problem here. The new government in Greenland has had its doubts about uranium mining, and held up studies and development work on one or two projects where uranium hasn't even been the primary product. But there's no uranium involved here. By contrast, the government is falling over itself to move this project forwards. Government representatives are willing and able, says Graeme, to attend meetings with potential funding partners to provide reassurance on this point.

For Isua, Graeme draws comparisons with Consolidated Thompson's iron ore operations in Canada, but London-based investors will be watching development at London Mining's own Marampa project in Sierra Leone with just as much interest. It was for Marampa that London Mining raised the US$110 million convertibles, and it's been on Marampa that, to date, most of the attention has been focussed. So, while Isua will be a second major string to the company's bow, while operations in Columbia and Saudi Arabia will add a third and a fourth, progress at Marampa is, for now, likely to be the key driver.

And on the current schedule London is likely to ship its first concentrate from Marampa by the end of this year, and then move to ramp up to an initial 3.6 million tonnes. Thats phase one. Phase two will involve a production step-change, and take the Marampa operation up to a targeted 16 million tonnes per year, which, when combined with the 15 million tonnes now slated to come from Isua, will start to make London into a serious iron ore player.

Perhaps it's hardly worth mentioning that Graeme himself remains a convinced iron ore bull. He accepts that prices may weaken from their current highs, but cites, in support of the long-term bull-case, recent commentary from Jim Lennon of MacQuarie Bank which argues that the price is likely to hold up well over the next decade. In any case, there's plenty of wriggle room, as London Mining's projects all offer a premium grade ore, at a relatively low cost. All told, some pretty strong tailwinds are likely to push the London story along this year, not the least of which will be production at Marampa in the third quarter. As Graeme says, it's going to be "quite transformational". Watch this space.