London Mining is expanding into coal. With a 2,360 Mt portfolio of iron assets supplying, and being developed for, the global steel industry, London Mining believes that an expansion into coal extraction can deliver significant value. Both the iron and coal divisions will be overseen at group level with the possibility of mutually beneficial funding, development and off take agreements being made for the complementary projects. Experienced technical and operating management teams shall operate at project level.  London Mining believes that its multi asset approach to supplying the steel industry with raw materials will enable it to establish favourable partnering agreements with steel producers and realise benefits from geographic and development stage diversification. With production and late stage development already successfully realised by the company, replicating that success in its coal division, as well as further building its base of iron ore assets, is the next strategic step.   The Iron Division:

• Strategic review of Brazilian iron ore operations continuing as planned, with review process expected to conclude before end of Q3 2008, at which stage London Mining will update the market
• Mexico development underway with first production expected early 2009
• Sierra Leone infrastructure program and port negotiations in progress
• Saudi Arabia and Greenland co-development assessment near completion

For the Coal Division, London Mining has reached agreement with Delta Mining Consolidated (DMC) to subscribe for up to 50.5% of DMC Energy, a subsidiary of DMC, for a total of up to $120million in staged payments, with the first such payment subject only to receipt of regulatory approvals in South Africa.  Following completion of an internal reorganisation by DMC, DMC Energy will own the following interests in South African mining assets:

• 70% of Ashante Mineral Resource, which holds the Rietkuil coal project  (Inferred In-Situ Resource of up to 288 Mt of coal). Rietkuil is situated 13 km from Eskom’s Kendel power station and 43 km from Eskom’s refurbished Grootvlei power station. Road, rail and power infrastructure is all available on site
• 30.35% (to increase to 69.65% upon completion of London Mining investment and DMC Energy reorganisation) of DMC Coal Mining, which holds the Limpopo coal project and the Pixley Ka Seme (PKS) coal and torbanite project. The potential resource of the Limpopo project is 426 Mt of in situ metallurgical and thermal coal. The PKS project includes a coal deposit in excess of 234 Mt in situ as well as 73 Mt torbanite (high yielding oil shale) with estimated yield of 1 barrel of synthetic crude per tonne of shale. Coal deposits include anthracite, steam coals and metallurgical coal

DMC has also secured an irrevocable 40 Mt/y port allocation through the future Porto du Bella Vista port in Mozambique and is in the process of acquiring additional coal exploration assets in Botswana (70%), Zimbabwe (65%) and Swaziland (70%). These assets will be transferred to DMC Energy after registration is complete and all coal projects developed by DMC shall be developed through DMC Energy.  

Under the terms of the subscription and loan agreement, London Mining has agreed:

• to acquire, through a wholly owned subsidiary, for an aggregate cash consideration of US$16.5million, 39.3% of DMC Coal by acquiring the entire issued share capital of Torbanite One, a company whose sole asset is a 39.3% holding of DMC Coal ;
• subject to regulatory approval, to make a secured loan to DMC Energy in the sum of $18.5million, to be drawn down as to $4.5million immediately upon receipt of South African regulatory approvals. This funding will be sourced from London Mining’s existing cash resources  
• upon receipt of South African regulatory approvals, and following completion of the internal reorganisation by DMC, to acquire 21% of DMC Energy, such subscription to be satisfied by way of the contribution of Torbanite One shares or the 39.3% interest in DMC Coal to DMC Energy and by conversion of $4.5 million of the loan to equity
• upon receipt of regulatory approvals and the parties having entered into a shareholders’ agreement in relation to DMC Energy, to increase its interest in DMC Energy shares to 28%, such further subscription to be satisfied by the conversion to equity of the balance of the loan, being $14 million, by the end of September 2008.

This funding will be used by DMC Energy for the following purposes:

1. To complete a Bankable Feasibility Study on the Rietkuil project and carry out preparation stages for the commencement of mining at Rietkuil targeted for late 2009
2. To acquire the shares in Rietkuil for DMC energy which are not already held by DMC Group
3. To extend the exploration programme on Limpopo
4. Acquisition of assets in Botswana and other areas
5. Project and support costs for existing projects
6. Acquisition of outstanding warrants in relation to DMC Coal shares
7. Funding of DMC Energy’s restructuring costs and certain transaction costs.