London Mining has completed the sale of its Brazilian operations to ArcelorMittal for a total cash consideration of $809.9 million. Subsequent to the transaction, some of the proceeds will be used fororking capital for the Wadi Sawawin, Isua and Marampa iron ore projects; potential funding for the balance of the conditional DMC Energy (up to $99 million); a project loan to the El Artillero iron ore project in Mexico (up to $7 million); possible purchase of an operating iron ore mine, subject to final due diligence (about $46 million); and a possible coal acquisition in South America currently under consideration (up to $75 million).

The Transaction marks the conclusion of the Brazilian strategic review which the company commenced in April 2008. The Board initiated the strategic review following the receipt of expressions of interest in the Brazilian assets and in response to the high levels of strategic interest in Brazilian iron ore assets. The objective of the review was to determine how best to maximise value in respect of these assets, principally through an assessment of the relative merits of a sale of all or part of London Mining’s Brazilian operations versus the retention of these operations to full production.

Since acquiring the Brazilian operations in May 2007 for US$89 million, London Mining has realised a substantial return through applying management expertise and capital investment to deliver a significant increase to the resource base (from 268 Mt at 47.2% Fe to 1,059 Mt at 37.96% Fe) and the development of modern production facilities to support a scalable production capacity. The company will remain focussed on delivering value for its shareholders by developing mines around the world for the steel industry. In particular, it will: 

• Complete a Definitive Feasibility Study on a 5 Mt/y concentration and pelletising facility at the Wadi Sawawin project in Saudi Arabia, as well as a major exploration program on the Isua project in Greenland. The company expects to make further announcements over the next 12 months on how these major projects will be integrated and how the capital costs will be funded
• Begin production of 3 Mt/y of iron ore at the company’s Marampa tailings operation in Sierra Leone once Government approvals have been granted to use the port and railway and construction and repairs of the mine, rail and port have been completed
• Develop El Artillero iron ore mine in Mexico into production
• Complete the assessment of the new iron ore investment opportunity referred to above, with a view to establishing a balanced portfolio of assets with cash flow being generated over time to support the group’s development activities
• Continue to diversify London Mining’s operations into coal. The company has already entered into a conditional agreement to subscribe for up to 50.5% of the shares of DMC Energy, with coal assets in Africa, and London Mining’s new coal division is actively reviewing other potential acquisitions.