16th Oct 2014 16:20
LONDON (Alliance News) - London Mining PLC Thursday said it will enter administration, following a longer-than-expected period of negotiations between senior lenders and the potential acquirers of the Marampa mine, as well as a lack of liquidity due to the dramatic fall in iron ore prices.
In a statement, London Mining said it will be working with the administrators to maintain the Marampa mine in Sierra Leone as a going concern, although at this time this is not confirmed.
London Mining later confirmed that it has appointed Russell Downs and Peter Dickens of PricewaterhouseCoopers as its joint administrators. Following PwC's appointment as administrators, Liberum Capital Ltd has resigned as the company's nominated adviser and broker with immediate effect, London Mining said. If it doesn't appoint a new nominated adviser within one month, its shares will be cancelled from trading on AIM.
"The collapse in iron ore prices and the resulting impacts on this business have been very dramatic, and our focus is to ensure that a buyer is found for the Marampa Mine operations given it is such an important part of the Sierra Leone economy. We are liaising with key stakeholders and asking for a short window of forbearance as we look to conclude a transaction," Russell Downs, joint administrator and partner at PwC, said in a statement.
London Mining Chief Executive Graeme Hossie said: "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," Hossie added.
The news comes after London Mining shares were last week suspended from trading at the company's own request, as the company revealed that the only investors participating in talks about its future were those not expected to allow for its continuation in its current state.
That development followed a warning by the company to its investors that there would likely be little or no value left in its shares and other securities under the proposals that were being discussed over its refinancing.
The company has been hit hard by the slide in iron ore prices this year, which put its Marampa operation in Sierra Leone under "considerable" financial strain. It has also been hit by the Ebola outbreak in West Africa, as Sierra Leone is one of the countries worst hit by the deadly virus.
London Mining's plight last week prompted BlackRock World Mining Trust PLC to assess the impact of its stake in London Mining on its 2014 income, after the trust was forced to write down its investment in the iron ore producer. Nevertheless, the trust said that, barring unforeseen circumstances, and by utilising part of the brought-forward revenue reserves if necessary, it expects to recommend a final dividend for 2014 of 14 pence per share, thereby maintaining the same rate of dividend as was paid for 2013.
By Samuel Agini; [email protected]; @samuelagini
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