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REFILE-UPDATE 2-London Mining says Ebola outbreak could hit iron ore production
August 21, 2014 / 7:22 AM / in 3 years

REFILE-UPDATE 2-London Mining says Ebola outbreak could hit iron ore production

(Corrects to remove extraneous “Hossie” in third paragraph)

By Abhiram Nandakumar

Aug 21 (Reuters) - London Mining Plc, whose only operating mine is in Sierra Leone, reported a first-half loss due to a drop in iron ore prices and said the outbreak of the deadly Ebola virus across West Africa could hurt production in the second half.

The company’s shares fell as much as 19 percent to 32.50 pence on morning trading, making them the biggest percentage loser on the London Stock Exchange on Thursday.

Chief Executive Graeme Hossie said the Ebola outbreak was starting to affect the company’s operations.

“We are starting to see, because of things like travel restrictions and more difficulties with supply chains, some areas that will prevent us from being fully effective,” Hossie said in an interview.

London Mining said it had deferred a $175 million extension plan for its Marampa mine in Sierra Leone by two years because of weak iron ore prices.

It has also deferred more than $20 million of non-essential capital expenditure planned for the year until market conditions improve or it completes the search for a strategic partner that it began earlier this year.

The company cut the top end of its full-year iron ore production forecast to 5.1 million wet metric tonnes from 5.4 million, while maintaining the lower end at 4.9 million tonnes.

“With the benchmark iron ore price ... showing little signs of improvement and an ever-expanding net debt position, securing a strategic partner is becoming increasingly critical,” Investec analysts said in a note.

The company’s net debt rose to $282.2 million in the latest period from $265.3 million at the end of 2013.

Iron ore prices fell to a 21-month low of $89 per tonne in mid-June as supply continued to outpace demand in China.

Benchmark 62-percent grade iron ore for immediate shipment to China .IO62-CNI=SI fell 31 percent in the first six months of the year to average $111.5 per tonne.

The company, which is being advised by Goldman Sachs International and Standard Chartered Bank in its search for a partner, said it had received non-binding expressions of interest from several parties that it did not name.

London Mining posted a loss of $10.8 million before interest, tax, depreciation and amortisation for the six months ended June 30, compared with a profit of $24.0 million a year earlier.

Shares of the AIM-listed company were down 13.75 percent at 34.59 pence at 1005 GMT. (Reporting by Abhiram Nandakumar in Bangalore; Editing by Ted Kerr)

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