By Alex MacDonald
LONDON--U.K.-listed iron ore miner London Mining PLC (LOND.LN)
said Monday it lacks sufficient liquidity to allow it to continue
to trade without raising further finance as it seeks to finalize
negotiations with a potential investor for a cash injection.
London Mining, which owns the Marampa mine in Sierra Leone, said
the deal structure with the potential unnamed strategic investor
envisages funding the mine's expansion while making a material cash
injection into the company that would result in a significant
dilution to existing equity and change in capital structure.
The deal is expected to take a number of weeks to implement and
there is no certainty that the discussions will be successful, the
company said. This follows an announcement last week that London
Mining had entered discussions with its lenders to provide
short-term liquidity after commodities trader Glencore PLC
(GLEN.LN) refused to make a cash payment that was part of a
long-term iron ore purchase agreement.
"At present, the company does not have sufficient liquidity to
enable it to continue to trade through this period [of discussions]
without raising further finance," London Mining said in a statement
Monday, adding that funds from Afreximbank, which had been lined up
previously to alleviate a short-term liquidity crunch, aren't
expected to be available before negotiations conclude with the
strategic investor.
London Mining said the lenders are working to enable the
strategic investment to take place and are considering providing
further finance.
The miner also said that while the lenders remain supportive of
the strategic investment, there can be no certainty that further
financing can be put in place to facilitate such an investment.
Write to Alex MacDonald at alex.macdonald@wsj.com
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