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The London-listed miner said that its board had decided to place the company into administration following a longer-than-expected period of negotiations between senior lenders to the miner and potential buyers of its Marampa mine.
London Mining said that it would work with the administrator to maintain the Marampa mine as a going concern.
“The Marampa mine retains excellent fundamentals and it is our sincere wish for it to find the appropriate financial support to continue operating over the longer term,” ceo Graeme Hossie said in the statement.
A casualty of the 'perfect storm' of the recent dramatic crash in iron ore prices and the worsening outbreak of ebola in West Africa, London Mining's share value tumbled to a low of 0.75 pence on October 8 after the miner said that its stock would hold "no value" unless a new investor could be found.
The miner advised investors in September that it would not be able to continue operations.
Offtake partner Glencore refused to make a cash pre-payment for a shipment of iron ore from the mine in September, a move which London Mining says caused it immediate cashflow problems and precipitated its move into administration.
Market sources said that Glencore decided not to make the payment based on the belief that London Mining’s financial situation would mean that it went bankrupt within the month.
Glencore declined to comment.
A spokeswoman for London Mining said that mining operations at Marampa and iron ore shipments were continuing "as normal" while discussions between the debt-ridden miner’s four African lending banks and a possible buyer of the miner continued.
“How long this can go on for, we cannot say, but it will be a finite period of time,” the spokeswoman said.
Indian steel conglomerate JSW Steel has been reported to be interested in buying the mine, which produces high-grade iron ore concentrate.
London Mining started producing iron ore at Marampa in late 2011, when 62% Fe iron ore prices were close to $140 per tonne on a cfr China basis.
The miner announced in August that it would raise guidance on output costs and lower guidance on production output for 2014.
It said the revisions were based not only on the drop in iron ore prices, but on the ebola outbreak in West Africa, which has so far killed more than 4,000 people across Sierra Leone, Guinea and Liberia since the first case was reported in Guinea at the end of 2013.
Sierra Leone-focused iron ore producer London Mining has filed for administration, the company said in statement on its website on Thursday October 16.