London Mining Plc 22 August 2013 FINANCIAL RESULTS FOR … · 2013. 8. 21. · London Mining Plc...

London Mining Plc

Quoted on London AIM (LOND LN) ("London Mining" or the "Company")

22 August 2013

FINANCIAL RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2013

Group EBITDA of USD 24.0 million achieved as costs fall and production volumes double

Operational Highlights

Marampa, Sierra Leone (100% owned)

Zero fatalities and lost time injuries

Production volumes up 129% year on year to 1,535Mdmt

Successful commissioning and ramp up of second processing plant with capacity of 3.6Mdmt/a now installed

Wet season mitigation measures in place and delivering as expected

Run rate of 5Mdmt/a expected to be achieved by year end

Life of mine study will be completed in Q3 2013 Financial Highlights

Group EBITDA of USD 24.0 million, an increase of USD 24.2 million from H1 2012 (loss of USD 0.2 million)

EBITDA contribution from Marampa of USD 39.3 million a 200% increase from H1 2012 (USD 13.1 million )

Loss before taxation reduced by USD 14.0 million to USD 5.0 million (H1 2012 : USD 19.0 million)

Revenue of USD 142.1 million at Marampa up 146% compared to the corresponding period

Operating cost of USD 62/dmt, down 18% year on year from USD 76/dmt

Remaining capex of USD 48 million to complete expansion to 5Mdmt/a, total capex of USD 340 million is reiterated

1.1Mdmt of H2 2013 sales hedged at an average price of USD 120/dmt CFR, 0.7Mdmt of H1 2014 sales hedged at USD 118/dmt CFR

Drawdown of restructured corporate facility of USD 180 million, permitted consolidation of unsecured loans

Strong balance sheet to complete expansion with USD 71.8 million cash at end of June

Graeme Hossie Chief Executive of London Mining said:

”Today’s results show that London Mining continues to make excellent progress as we focus on our Marampa operation and establishing it as a solid and sustainable long term cash producing business. We are pleased to report our first Group operating profit since starting production and remain focused on our continuous improvement plan and reducing costs. We reached the 3.6Mdmt/a production rate in H1 and we are on track to achieve our target run rate of 5Mdmt/a by year end with estimated capital expenditure unchanged. Operating costs for the first half of 2013 were USD 62/dmt as expected and we are on track to achieve an operating cost of around USD 50/dmt as we exit 2013. In addition, corporate cost saving initiatives are being implemented and we look forward to updating investors on our plans for the life of mine operation in Q3 2013 to show how we will deliver sustainable margins at long-term consensus pricing.”

Earnings Summary

Six months ended 30 June

2013 2012

USD’000 USD‟000

EBITDA (continuing operations) 24.0 (0.2)

Sierra Leone 39.3 13.1

Greenland (0.3) (0.6)

Saudi Arabia (0.1) (0.4)

Corporate – excluding non-cash share-based payments (10.1) (11.6)

Corporate – share-based payments (4.8) (0.7)

Depreciation and amortisation (13.8) (5.4)

Profit/(loss) from operations 10.2 (5.6)

Please find the full operations and financial review, as well as the company’s presentation of the period enclosed. Webcast and conference call

There will be a webcast and conference call for analysts and investors hosted by Graeme Hossie (CEO), Rachel Rhodes (CFO) and Jim North (COO) at 9.00am (BST) today. The presentation will be available via a live webcast, a link to the webcast can be found on London Mining's website, www.londonmining.com. The webcast will include audio from the conference call and synchronised power point slides. You will not be able to post questions through the webcast. Please use the following numbers and conference ID to dial in to the conference call: Country Number

International dial-in +44(0)20 3427 1901 UK Toll Free 0800 279 4992 Confirmation code 9657125

There will be a replay facility available on London Mining‟s website after the webcast.

http://www.londonmining.com/

For more information, please contact:

London Mining Plc

Graeme Hossie, Chief Executive Officer Rachel Rhodes, Chief Financial Officer Thomas Credland, Head of Investor Relations

+44 (0)20 7408 7500

Liberum Capital (Nominated Advisor/Broker)

Christopher Kololian / Tom Fyson

+44 (0)20 3100 2000

J.P. Morgan Cazenove (Broker)

Ben Davies / Ignacio Borrell

+44 (0)20 7742 4000

Brunswick Group LLP

Carole Cable / Rosheeka Field

+44 (0)20 7404 5959

About London Mining

London Mining is an expanding producer of high specification iron ore for the global steel industry and is focused on identifying, developing and operating sustainable mines. London Mining commenced sales from the Marampa Mine in Sierra Leone in 2012 and expects to reach production capacity of 5Mdmt/a in 2013. Marampa has sufficient resources to support a staged expansion to over 16Mdmt/a. London Mining has also completed bankable feasibility studies outlining plans for a further 20Mdmt/a of iron ore production by developing mines in Greenland and Saudi Arabia. The Company listed on AIM in London on 6 November 2009. It trades under the symbols LOND.L (Reuters) and LOND LN (Bloomberg). More information about London Mining can be found at www.londonmining.com.

http://www.londonmining.com/

Operations Marampa, Sierra Leone (100% ownership)

We started production at our Marampa mine in December 2011 and achieved our target of over 1.5Mdmt of high quality iron ore in 2012. We doubled production and export volumes in the first six months of 2013 and are expanding production capacity to 5Mdmt/a over the course of 2013. Marampa has a resource of over 1 billion tonnes of iron ore.

Marampa production statistics

H1 2013 H1 2012 FY 2012

Concentrate produced (dmt) 1,535,000 670,000 1,522,000

Average daily production rate (wmt/d) 10,337 3,912 4,530

Sales (dmt) 1,483,000 559,000 1,191,000

Average concentrate grade sold (Fe%) 64.0 65.5 64.9

Moisture content (%) 7.5 5.9 6.7

Average FOB price (including hedges) (USD/dmt)

96 105 104

Average freight (USD/dmt) 34 43 39

Mining

Following the appointment of new mining contractors at the end of 2012, activity increased to open mining faces, expose in-pit weathered ore stocks and establish a run of mine stockpile of all ore types ready for processing. These and other measures including implementation of a dewatering plan to improve pit access combined with efficient mine scheduling, mean that mining operations have been largely unaffected by the rainfall in the early part of the wet season. Processing

The ramp up of the second plant was completed during the first six months of 2013, an estimated six weeks ahead of schedule, and installed capacity is now 3.6Mdmt/a. Planned upgrades to plant capacity will be completed to achieve production from the gravity circuit and ball mills in Q4 2013 with a run rate of 5Mdmt/a expected to be achieved by the end of the year. The ball mills and gravity circuit are on site and installation of this equipment is progressing according to schedule. As previously disclosed in July, production is now expected at the higher end of previous guidance of 3.3 to 3.6Mdmt due to the early ramp up of the second plant and good progress made on the plant upgrade programme. The commissioning of ball mills is expected to increase concentrate grades to 65% Fe over Q4 2013. Logistics As a result of the excellent performance of the second plant, we had a stockpile approximately equivalent to one month‟s sales at the end of the half year. Improvements to the haul road made since last year have enabled consistent ore movements from the Marampa Mine to the Thofeyim River Terminal during the initial months of the wet season. The contact road haulage fleet is being expanded to move additional production and the new units are expected to arrive in Q3 2013. The Pride of Marampa floating offshore transhipment platform (FOTP) is now fully operational and loading ungeared vessels. A second transhipment unit arrived in May and commenced operation within days of arrival. Annualised export volumes of over 4Mwmt/a were achieved over the quarter following the arrival and operation of the first self-propelled barge (SPB) in mid-April. As planned, a second SPB arrived in June and additional barging capacity will be mobilised in line with increased production volumes over the second half of 2013. We are therefore well

positioned to deplete the stockpile over the coming months, despite expected lower export volumes related to the wet season in Q3. Sales guidance of 3.6 to 3.8Mdmt is reiterated for 2013. The upgraded transhipment solution is expected to deliver lower seaborne freight costs over the remainder of 2013, due to the loading of ungeared vessels, with further freight savings expected once loading of larger vessels commences. Sales, pricing and hedging A progressive hedging programme to provide downside protection to margins in a key period of investment commenced in Q4 2012. 0.9Mdmt of H1 2013 sales have been settled at an average price of USD 130/dmt CFR. 1.1Mdmt of H2 2013 sales have been hedged at an average price of USD 120/dmt CFR and 0.7Mdmt of H1 2014 sales have been hedged at an average price of USD 118/dmt. Operating and capital costs

Operating costs for H1 2013 were USD 62/dmt, down from USD 76/dmt in the corresponding prior period, in line with previous guidance and we continue to expect operating costs to fall to around USD 50/dmt as we exit 2013. The total capital cost estimate for 5Mdmt/a remains unchanged at USD 340 million. As at 30 June 2013 USD 292 million of the 5Mdmt/a project cost (including initial optimisations) had been paid or accrued. Remaining capital expenditure in 2013 for completion of the 5Mdmt/a project cost is therefore expected to be USD 48 million. A study on the investment in the life of mine operation at Marampa will be completed in Q3 2013.

Health and safety

We are pleased to note zero lost time injuries in the first six months of 2013 but are monitoring our all injuries rate and continue to focus on continuous improvement in all levels of our health and safety performance.

Q2 2013 Q1 2013

LTI 0 0

All Injuries 12 7

Fatalities 0 0

LTIFR 0.00 0.00

Other projects

Isua, Greenland (100% ownership)

Negotiations with the Government of Greenland have advanced and we continue to expect issuance of the exploitation permit by the end of 2013. Isua is located 150km north-east of Nuuk and 110km from a proposed deep seawater port. The project will produce a premium quality 70% Fe pellet feed concentrate with low impurities. In addition, Isua benefits from its position in the warmer south-west corner of Greenland which allows for year round shipping. A bankable feasibility study (BFS) was completed in 2012 and identified for a 15Mdmt/a operation based on a resource of over 1.1 billion tonnes.

Wadi Sawawin, Saudi Arabia (right to free carried 25% interest)

Wadi Sawawin is of strategic and economic importance to Saudi Arabia as it will provide a domestic source of direct reduction (DR) pellets for use in the direct reduced iron (DRI) steel plants which account for 90% of steel production in the Middle East and North African region. Progress at Wadi Sawawin continues to be limited and further development depends on a dispute being resolved between our Saudi partners. Colombia (100% owned)

Following a review of the business, the Colombian operation was placed into care and maintenance in January 2013. An active programme to sell the business continues.

Financial review Highlights

First Group operating profit of USD 10.2 million, a USD 15.8 million increase from prior period (2012: loss USD 5.6 million)

Group EBITDA increased by USD 24.2 million to USD 24.0 million (2012 loss of USD 0.2 million)

Marampa EBITDA increased by USD 26.2 million to USD 39.3 million (2012 USD 13.1 million)

Drawdown of restructured Corporate facility of USD 180 million permitted consolidation of unsecured loans

USD 72 million in cash in bank at 30 June 2013 Financial information is presented in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union. Earnings are assessed on the basis of EBITDA (earnings before interest, taxation, depreciation and amortisation) before exceptional items that due to their nature or frequency are presented separately on the face of the income statement. 2013 saw the successful commissioning and ramp up of the second process plant. From 1 February the plant has been considered to be in commercial production and depreciated accordingly. On 17 May 2013 the Group drew down in full on its revised USD 180 million Corporate debt facility with Standard Chartered Bank (SCB), FirstRand Bank Limited (RMB) and Ecobank. Proceeds were used to repay the previous USD 90 million facility with SCB and the USD 55 million unsecured loan with Vitol (USD 60.6 million including rolled up interest). After issue costs this resulted in additional liquidity of USD 23.5 million. The revised facility has a tenure of two years and ten months ending in January 2016 with the first repayment due in April 2014. London Mining is committed to reducing costs at both the operational and corporate level. Initiatives have already been enacted and further initiatives are planned over the coming months targeting a steady state head office cash overhead of less than USD 15 million.

1. Earnings summary

Period ended 30 June

2013 2012

USD’000 USD‟000

EBITDA (continuing operations) 24.0 (0.2)


Greenland (0.3) (0.6)

Saudi Arabia (0.1) (0.4)

Corporate – excluding non-cash share-based payments (10.1) (11.6)

Corporate – share-based payments (4.8) (0.7)

Depreciation (13.8) (5.4)

Profit/ (loss) from operations 10.2 (5.6)

Fair value gain (Blackrock royalty agreement) 10.5 0.6

Net finance charge1 (25.7) (14.1)

Taxation credit 2.1 2.5

Net loss after tax (continuing operations) (2.9) (16.6)

Result from discontinued operations (2.1) (2.0)

Loss for the year (5.0) (18.6)

1Includes USD 5.7 million non cash finance charges relating to the unwinding of the discount on royalty agreements

Group EBITDA

Group EBITDA from continuing operations for the period of USD 24.0 million represents an improvement of USD 24.2 million from the prior period after a contribution of USD 39.3 million EBITDA from the Marampa operations: Marampa operations:

Period ended 30 June 2013

USDm kdmt

Revenue 142.1 Production 1,535

Royalty (5.3) Sales 1,483

Operating costs (95.1) Concentrate stockpile 355

Inventory movement (2.4)

EBITDA 39.3

Revenues were USD 142.1 million (after USD 2.8 million hedge loss), on total sales of 1,483,000 dmt of concentrate. Revenue is recorded net of freight and marketing related costs and represents an average freight on board (FOB) realised price for the period of USD 96/t (after hedging). London Mining successfully commissioned and ramped up the second processing plant, achieving production of 1.5Mt for the period. Installed capacity is now 3.6Mt and is on track for 5Mdmt/a capacity by the end of the year. Attributable operating costs (before royalties and depreciation) for the period were USD 62/t during this ramp up phase and the Group is on track to reduce costs to around USD 50/dmt as we exit 2013.

Group EBITDA: Other corporate costs reflected in Group EBITDA include USD 10.1 million of costs excluding non cash share based payments (prior period USD 11.6 million) and USD 4.8 million of non cash share based payments (prior period USD 0.7 million)

Corporate cash overheads of USD 10.1 million have reduced by USD 1.5 million (prior period USD 11.6 million) largely due to a reduction in legal costs and travel savings

USD 4.1 million increase in non-cash share-based payment charges, which includes a charge of USD 1.4 million for the Fraser Turner settlement in 2012 and charges relating to options issued to employees during 2012 and 2013.

Net finance costs

Net finance costs of USD 25.7 million (prior period USD 14.1 million) have increased by USD 11.6 million and include USD 5.5 million non cash unwinding of the discount recognised in respect to non recourse royalty funding agreements (prior period USD nil). Of the remaining USD 20.2 million interest charge:

USD 17.0 million borrowing costs (prior period USD 12.3 million) being interest payable under the re-structured corporate facility, the convertible and the Vitol facility (now repaid in full). As construction is nearing completion, interest capitalised has reduced in the period to USD 0.9 million (prior period USD 1.6 million)

USD 2.1 million finance lease charges (prior period USD 1.9 million) relating to the Pride of Marampa transhipment vessel

Taxation

The Group has recorded a taxation credit of USD 2.1 million for the period (prior year USD 2.5 million) recognising deferred tax assets in respect of tax losses in Sierra Leone which are now expected to be utilised at increased corporate tax rates. Discontinued operations

As reported in the results for the year ended 31 December 2012; following a strategic review the Colombia operations were placed on care and maintenance with a view to divesting the asset such that the Group can focus on its core iron ore assets. Therefore the Colombia business is included with discontinued operations in the income statement and as available for sale on the balance sheet as it is expected the asset will be sold.

2. Balance sheet Non-current assets

30 June 2013 31 December 2012

USDm USDm


Greenland 65.9 65.1

Saudi 26.0 25.9

Other 0.4 0.5

Total Intangible assets and Property, Plant & Equipment 551.9 517.4

Other and deferred tax asset 15.9 13.7

Total non current assets 567.8 531.1

Non-current assets have increased by USD 36.7 million to USD 567.8 million driven by the ongoing development and expansion of the Marampa project. Marampa assets increased by USD 33.7 million primarily as a result of continued development of Phase 1 to reach the forecast 5Mdmt/a capacity. Total Marampa net capital additions of USD 33.7 million included:

USD 33.0 million capital cost (including optimisations) as we continue to ramp up to a capacity of 5Mdmt/a.

USD 10.3 million owners team construction cost and capitalised overheads

USD 3.2 million Marampa development studies

(USD 13.4 million) depreciation charges Total capital cost for 5Mdmt/a is expected to be USD 340 million. As at 30 June 2013 USD 292 million of the 5Mdmt/a project cost (including initial optimisations) had been paid or accrued. Remaining capex for completion is therefore expected to be USD 48 million.

Liabilities

30 June 2013

31 December

2012

USDm USDm

Trade and other payables 70.2 71.4

Current borrowings 24.3 116.2

Finance lease 0.8 0.8

Other current liabilities 8.0 9.4

Liabilities held as available for sale 0.5 2.6

Current liabilities 103.8 200.4

Non-current borrowings 252.8 131.0

Deferred tax and provisions 3.9 3.9

Finance lease 17.3 17.8

Other non-current liabilities 126.2 134.9

Non-current liabilities 400.2 287.6

Total liabilities 504.0 488.0

i) Trade and other payables Trade and other payables include USD 20.9 million (2012: USD 25.0 million) prepayments of Marampa iron ore concentrate under the terms of the Glencore working capital facility. Also included are creditors due in respect of Marampa operational and capital expansion activities. ii) Borrowings

As at 30 June 2013 borrowings relate to the USD 180 million corporate facility and the USD 110 million convertible bond. Current borrowings include interest and the first amortisation payment due in April 14 under the corporate facility of USD 180 million. iii) Finance lease

In January 2012 the Group completed a sale and leaseback agreement for the transhipment vessel „Pride of Marampa‟ under which the Group received net proceeds of USD 18.4 million. The agreement represents a finance lease and is recognised on balance sheet at the minimum value of future lease payments.

iv) Other liabilities

Included within other liabilities are net proceeds received of USD 108.9 million from the BlackRock royalty financing in return for a 2% royalty calculated on iron ore sales from Marampa. The financing arrangement is non-recourse and is re-stated to fair value at each reporting date. The total liability at 30 June 2013 is USD 104.4 million, of which USD 8.0 million is current. The royalty is only due and payable on tonnes sold. Also included in other non-current liabilities is the Anglo Pacific Royalty agreement in respect of Isua (USD 29.7 million).

Net debt

30 June 2013

31 December 2012

USDm USDm

Cash 71.8 92.7

Bank loans (177.5) (91.4)

Convertible bonds (99.6) (97.6)

Offtake financing – unsecured loan - (58.2)

Finance lease (18.2) (18.5)

Total Net Debt (223.5) (173.0)

Pro-forma net debt has increased during the period to USD 223.5 million following the drawdown of the USD 180 million corporate facility, which was used to repay unsecured offtake financing, and a reduction in cash balance following the continued development of the Marampa mine. The royalty agreements in respect of Marampa (Blackrock) and Isua (Anglo Pacific) are not considered as debt as these are effectively non-recourse and cash is paid only as generated from future operations. 3. Cash flow

Total cash decreased during the period by USD 19.4 million to USD 71.8 million.


2013 2012

USDm USDm

Cash flow from operating activities 26.1 (14.0)

Cash flow from investing activities (52.5) (113.9)

Cash flow from financing activities 5.5 151.3

Increase/ (decrease) in cash (20.9) 23.4

Opening cash 92.7 67.8

Closing cash 71.8 91.2

i) Operating activities


2013 2012

USDm USDm

Group EBITDA profit/ (loss) 24.0 (0.2)

Non cash share-based charges 4.8 0.7

Movement in receivables (13.5) (21.4)

Movement in inventory 2.4 (9.0)

Movement in payables 5.9 23.7

Cash from operating activities (continuing operations) 23.6 (6.2)

Cash flow from discontinued operations 2.5 (7.8)

Cash flow from operating activities 26.1 (14.0)

Cash flow from operating activities has improved by USD 40.1 million to USD 26.1 million, resulting from the positive EBITDA contribution from increased Marampa production. A USD 13.5 million increase in receivables includes USD 4.5 million for revenue receivables following the ramp up in exports and USD 4.9 million in deferred contractor mobilisation payments relating to Marampa operations. ii) Investing activities

Net cash outflow from investing activities was USD 52.5 million (prior period USD 113.9 million) and relates mainly to Marampa development, with minimal expenditure in relation to other projects in the period.

iii) Financing activities

Net cash inflow from financing activities of USD 5.5 million (prior period USD 151.3 million) included:

USD 84.1 million received from the USD 180 million corporate facility, after issue costs and repayment of the USD 90 million facility

(USD 55 million) repayment of unsecured offtake financing

(USD 17.6 million) interest paid on borrowings, including USD 5.6 million deferred interest on unsecured Vitol facility

(USD 1.9 million) paid under the BlackRock royalty agreement 4. Liquidity and Going concern

As at 30 June 2013, the Group had cash on hand of USD 71.3 million. On 17 May 2013 London Mining drew down in full on a revised corporate debt facility of USD 180 million which replaced the previous USD 90 million Corporate facility and enabled the consolidation of certain unsecured loans into the one secured facility. The revised facility has a tenure ending in January 2016 with the first repayment due in April 2014. The Group has sufficient cash resources to expand Marampa to a target production of 5Mdmt/a and to fund the other committed activities of the Group for at least 12 months from the date of these financial statements. Project funding for the more capital intensive projects in Greenland and Saudi Arabia will be sought from external sources into these projects directly, with financial and strategic partners being considered. The Group has borrowing facilities which are subject to certain financial covenants related to financial performance and position. The Group‟s forecasts and projections are very sensitive to key assumptions including commodity prices and production. Taking account of reasonably possible changes in trading performance and the timing of project commissioning, the forecasts and projections show that the Group has sufficient liquidity to fund its committed expenditure and to meet all covenants on its borrowing facilities. The Directors are therefore satisfied that the Group will continue in operational existence for the foreseeable future; and accordingly the Group continues to adopt the going concern basis 5. Treasury management and financial instruments

London Mining has entered into commodity price derivatives under the terms required for the new corporate facility. As a requirement of our new financing facility, the Group continues to execute its ongoing hedging programme to protect against downside iron ore price movements. Currently hedges are in place relating to 539,000 dmt of Q3 2013 production at USD 120/t, 608,000 dmt of Q4 2013 production at USD 120/t, 558,000 dmt of Q1 2014 production at USD 119/t and 144,000 dmt of Q2 2014 production at USD 115/t.

6. Related party transactions

Related party transactions are disclosed in note 16. 7. Forward looking information

This financial report contains certain forward looking statements with respect to the Group‟s financial condition, results, operations and business. These statements and forecasts involve risk and uncertainty because they relate to events that depend on circumstances in the future. There are a number of factors that could cause actual results or developments to differ from those expressed or implied by these forward looking statements.

London Mining Plc

Responsibility statement

We confirm to the best of our knowledge:

(a) the condensed set of financial statements has been prepared in accordance with IAS 34 „Interim Financial

Reporting‟;

(b) the operating and financial review contains a fair review of the information required by DTR 4.2.7R

(indication of important events during the first six months and description of principal risks and uncertainties

for the remaining six months of the year); and

(c) the operating and financial review includes a fair review of the information required by DTR 4.2.8R

(disclosure of related parties‟ transactions and changes therein).

By order of the Board,

Chief Executive Officer Chief Financial Officer

Graeme Hossie Rachel Rhodes

22 August 2013 22 August 2013

London Mining Plc

Independent review report to London Mining Plc

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly

financial report for the six months ended 30 June 2013 which comprises the condensed consolidated income

statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance

sheet, the condensed consolidated statement of changes in equity, the consolidated cash flow statement and

related notes 1 to 19. We have read the other information contained in the half-yearly financial report and

considered whether it contains any apparent misstatements or material inconsistencies with the information in the

condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK

and Ireland) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”

issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company

those matters we are required to state to it in an independent review report and for no other purpose. To the fullest

extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our

review work, for this report, or for the conclusions we have formed.

Directors’ responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are

responsible for preparing the half-yearly financial report in accordance with the AIM Rules of the London Stock

Exchange.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as

adopted by the European Union. The condensed set of financial statements included in this half-yearly financial

report has been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting,”

as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the

half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland)

2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the

Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making

inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other

review procedures. A review is substantially less in scope than an audit conducted in accordance with International

Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would

become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit

opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial

statements in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in all material

respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the AIM

Rules of the London Stock Exchange.

Deloitte LLP

Chartered Accountants, London UK

22 August 2013

London Mining Plc

Condensed consolidated income statement


2013

2012

Restated1

Continuing operations Note USD’000 USD‟000

Revenue 3 142,136 57,667

Cost of sales (116,283) (49,702)

Gross profit 25,853 7,965

Administrative expenses (15,609) (13,557)

Profit / (Loss) from operations 5 10,244 (5,592)

Finance income 653 504

Finance costs 6 (26,425) (14,543)

Fair value gains 7 10,516 589

Loss before taxation (5,012) (19,042)

Taxation 8 2,085 2,476

Loss after taxation from continuing operations (2,927) (16,566)

Loss after tax from discontinued operations 9 (2,053) (2,034)

Loss attributable to owners of the Company (4,980) (18,600)

Basic and diluted loss per share (USD per share)

From continuing operations 10 (0.02) (0.12)

From discontinued operations 10 (0.01) (0.02)

From continuing and discontinued operations (0.03) (0.14)

Condensed consolidated statement of comprehensive income (unaudited) Six months ended 30 June

2013 2012

Note USD’000 USD‟000

Loss for the period (4,980) (18,600)

Items that may subsequently be reclassified to the income statement:

Net gain / (loss) on cash flow hedges 3,020 (772)

Net gain / (loss) recognised directly in equity 3,020 (772)

Transferred to income statement: hedge ineffectiveness 7 - (589)

Transferred to income statement: realised hedge losses / (gains) 3 2,771 (2,237)

Total transferred to / (from) equity 2,771 (2,826)

Total comprehensive gain / (loss) for the period 811 (22,198)

1 The Colombia operations are considered discontinued. See note 9.

London Mining Plc

Condensed consolidated balance sheet

30 June 31 December

2013

(Unaudited)

2012

(Audited)


Intangible assets 94,117 93,237

Property, plant and equipment 11 457,783 424,263

Deferred tax asset 8 12,437 10,351

Loans and receivables 210 200

Inventories 3,220 3,056

Non-current assets 567,767 531,107

Inventories 21,064 23,666

Current loans and receivables 41,399 29,768

Derivative financial instruments 2,231 -

Cash and cash equivalents 71,308 92,652

Assets held for sale 9 2,389 6,419

Current assets 138,391 152,505

Total assets 706,158 683,612

Trade and other payables (70,229) (71,450)

Other financial liabilities 12 (7,990) (9,435)

Borrowings 13 (24,323) (116,157)

Obligations under finance leases (836) (750)

Liabilities directly associated with assets held for sale 9 (476) (2,640)

Current liabilities (103,854) (200,432)

Borrowings 13 (252,813) (131,014)

Obligations under finance leases (17,339) (17,760)

Other financial liabilities 12 (126,146) (134,986)

Restoration and decommissioning provision (3,882) (3,882)

Non-current liabilities (400,180) (287,642)

Total liabilities (504,034) (488,074)

Total net assets 202,124 195,538

Share capital 488 488

Share premium account 117,513 117,513

Merger reserve 12,000 12,000

Shares held in employee benefit trust (3,566) (3,919)

Other reserves 49,493 38,406

Retained earnings 26,196 31,050

Equity attributable to equity holders of the parent 202,124 195,538

London Mining Plc Condensed Consolidated statement of changes in equity to 30 June 2013

Share

capital

Share

premium

account

Merger

reserve

Shares

held in

employee

benefit

trust

Retained

earnings

Warrant

and

option

reserves

Convertible

debt

reserve

Hedging

and

foreign

exchange

reserve

Equity

attributable

to equity

holders of

the parent

USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000

Balance at 31 December 2011 (audited) 412 25,021 12,000 (4,180) 138,058 12,653 17,556 14,254 215,774

Changes in equity for the six months ended 30 June 2012

Total comprehensive loss for the period - - - - (18,600) - - (3,598) (22,198)

Issue of share capital 76 92,251 - - - - - - 92,327

Recognition of share-based payments - - - - 850 1,850 - - 2,700

Balance at 30 June 2012 (unaudited) 488 117,272 12,000 (4,180) 120,308 14,503 17,556 10,656 288,603

Changes in equity for the six months ended 31 December 2012

Total comprehensive loss for the period - - - - (89,251) - - (8,680) (97,931)

Issue of share capital - 241 - - - - - - 241

Recognition of share-based payments - - - 261 (7) 4,371 - - 4,625

Balance at 31 December 2012(audited) 488 117,513 12,000 (3,919) 31,050 18,874 17,556 1,976 195,538

Changes in equity for the six months ended 30 June 2013

Total comprehensive gain for the period - - - - (4,980) - - 5,791 811

Recognition of share-based payments - - - 353 126 5,296 - - 5,775

Balance at 30 June 2013 (unaudited) 488 117,513 12,000 (3,566) 26,196 24,170 17,556 7,767 202,124

London Mining Plc

Condensed consolidated statement of cash flows (unaudited)


2013

2012

Restated1


Cash in/(out)flow from continuing operating activities 14 23,579 (6,138)

Cash in/(out)flow from operating activities – discontinued operations1 9 2,491 (7,813)

Cash in/(out)flow from operating activities – total Group 26,070 (13,951)

Payments in relation to intangible assets (1,540) (6,160)

Purchase of property, plant and equipment (50,658) (97,537)

Cash outflow from investing activities – continuing operations (52,198) (103,697)

Cash outflow from investing activities – discontinued operations1 9 (273) (10,215)

Net cash outflow from investing activities – total Group (52,471) (113,912)

Cash flows from financing activities

Interest received 26 103

Interest paid (17,626) (7,650)

Repayments of obligations under finance leases (2,299) (1,658)

Net cash inflow on share capital issued - 87,103

Net cash inflow on share capital issued on exercise of options - 1,514

Repayment of other financial liabilities (1,910)

Net proceeds from debt restructuring 13 84,105 -

Net (repayment) / proceeds from offtake financing 13 (55,000) 53,350

Proceeds from sale-and-leaseback transactions - 18,430

Cash inflow from financing activities – continuing operations 7,296 151,192

Cash (out)/inflow from financing activities – discontinued operations1 9 (1,836) 107

Net cash inflow from financing activities – total Group 5,460 151,299

Net (decrease) / increase in cash and cash equivalents (20,941) 23,436

Cash and cash equivalents at beginning of the period 92,794 67,832

Exchange differences (6) (93)

Cash and cash equivalents at the end of the period 71,847 91,175

Included within assets held for sale 539 2,480

Group cash and cash equivalents 71,308 88,695


London Mining Plc

Notes to the condensed consolidated financial statements for the six months ended 30 June 2013

1. General information

London Mining plc is a Company incorporated in the United Kingdom under the Companies Act and listed on the

AIM stock exchange. The address of the registered office is 103 Wigmore Street, London, W1U 1QS. The

consolidated financial statements of the Company as at and for the six months ended 30 June 2013 comprise the

Company, its subsidiaries and its share of jointly controlled entities (together referred to as “the Group”) and the

Group‟s interest in associates.

The financial information for the six months ended 30 June 2013 and 2012 does not constitute statutory accounts

as defined in section 435 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2012

have been delivered to the Registrar of Companies and are available on the Group‟s website

www.londonmining.co.uk. The auditor reported on those accounts and its report was unqualified. It did not draw

attention to any matters by way of emphasis and did not contain a statement under section 498 (2) or (3) of the

Companies Act 2006.

The Directors have a reasonable expectation that the Company and the Group have adequate resources to

continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of

accounting in preparing the condensed financial statements. Further details are included in the “Liquidity and going

concern” section of the Operations and Financial Review.

2. Accounting policies

Basis of preparation

The annual financial statements of London Mining plc are prepared in accordance with International Financial

Reporting Standards as adopted for use by the European Union (IFRSs). The condensed consolidated financial

statements included in this report have been prepared in accordance with International Accounting Standard 34

'Interim Financial Reporting', as adopted by the European Union.

The same accounting policies, presentation and methods of computation are followed in these condensed

consolidated financial statements as applied in the Group's financial statements for the year ended 31 December

2012.

Adoption of new and revised International Financial Reporting Standards

The following accounting amendments, standards and interpretations became effective in the current reporting

period but have not had a material impact on the financial statements of the Group. All other accounting policies,

presentation and methods of computation in these condensed consolidated financial statements are as applied in

the Group's financial statements for the year ended 31 December 2012.

• IAS 1 Presentation of Items of Other Comprehensive Income – Amendments to IAS 1. Items that may be

reclassified (or recycled) to the income statement at a future time are separately presented to those that will not be

reclassified.

• IFRS 13 Fair Value Measurement. An amendment to IAS 34 resulting from this single framework for measuring

fair value has resulted in some IFRS 13 disclosures being included in these condensed financial statements.

• IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine. In periods where there is benefit of waste

removal (stripping) during the production phase of a surface mine, the stripping costs are accounted for as the cost

of inventory (where the stripping activity is realised in the current period) or as a non-current asset (where the

benefit is deferred to future periods). Non-current stripping assets would then be depreciated on a unit of production

basis from the identified component of the ore body to which that stripping made accessible.

http://www.londonmining.co.uk/

London Mining Plc


3. Revenue

The Group‟s revenue all relates to continuing operations and arises from the sale of 1,483kdmt (2012: 559kdmt) of

iron ore (these figures are neither audited nor reviewed) to China from the Group‟s Marampa iron ore mine in Sierra

Leone with all revenue in the period attributable to two external customers (Glencore International AG and Vitol SA).

On 1 February 2013 the second plant at the Marampa iron ore mine entered commercial production with all sold

production from this date included within revenue.

A portion of the Group‟s revenue from the sale of goods is cash flow hedged and meets the criteria for hedge

accounting. A USD 2.8 million loss (2012: USD 2.2 million gain) has been recycled through revenue on hedges

settled in the six months ended 30 June 2013.

4. Segment reporting

The Group has continuing operations in three principal geographical areas, Sierra Leone, Greenland and Saudi

Arabia.

Segment revenues and results

The following is an analysis of the Group‟s consolidated results by reportable segment. The key segment result

presented to the Board of Directors for strategic decision making and allocation of resources is EBITDA. Group

EBITDA represents earnings / losses from consolidated operations excluding depreciation and amortisation. Group

EBITDA is analysed below.

London Mining Plc


4. Segment reporting (continued)

The analysis of the Group‟s segmental result by reportable segment for the six months ended 30 June 2013 is as

follows:


2012

2013

(Unaudited)

(Unaudited)

Restated1


Revenue - Sierra Leone 3 142,136 57,667

Segment result

Sierra Leone 39,296 13,104

Greenland (322) (632)

Saudi Arabia (79) (366)

Unallocated (including Corporate) (10,136) (11,585)

Unallocated share-based payments charges (4,784) (674)

Group EBITDA 23,975 (153)

Depreciation and amortisation – Sierra Leone (13,442) (5,140)

Depreciation and amortisation – other (289) (299)

Profit / (loss) from operations 10,244 (5,592)

Finance income 653 504

Finance costs 6 (26,425) (14,543)

Fair value gains 10,516 589

Loss before taxation (5,012) (19,042)


EBITDA includes corporate costs for non-cash charges in relation to share based payments (note 5). There are no

other material non-cash charges included in EBITDA.

Whilst certain activities at the Group‟s operations are subject to the effects of seasonality, the effect on the results of

the Group is minimal.

London Mining Plc


4. Segment reporting (continued)

Segment assets and liabilities

Segment assets Segment liabilities

30 June

2013

31 December

2012

30 June

2013

31 December

2012

(Unaudited) (Audited) (Unaudited) (Audited)

USD’000 USD‟000 USD’000 USD‟000

Sierra Leone 541,392 500,653 (188,207) (195,552)

Greenland 66,448 65,646 (29,988) (30,223)

Saudi Arabia 26,096 25,987 (15) (15)

Unallocated including corporate 69,833 84,907 (285,348) (259,644)

703,769 677,193 (503,558) (485,434)

Discontinued operations: Colombia 2,389 6,419 (476) (2,640)

Total 706,158 683,612 (504,034) (488,074)

5. Profit / (Loss) from operations (unaudited)

Profit / (Loss) from operations is stated after charging:


2013

2012

Restated1

USD’000 USD‟000

Share-based payments 4,784 674

Depreciation and amortisation 13,731 5,439


London Mining Plc


6. Finance costs (unaudited)


2013

2012

Restated1

USD’000 USD‟000

Borrowing costs 17,042 12,271

Finance expense on other financial liabilities 5,705 408

Interest on obligations under finance leases 2,079 1,949

Other finance expense 1,952 880

Exchange losses 502 657

27,280 16,165

Less: interest expense capitalised as intangible assets (249) (408)

Less: interest expense capitalised as property, plant and equipment (606) (1,214)

Total interest expense 26,425 14,543


7. Fair value gains (unaudited)


2013

2012

Restated1

USD’000 USD‟000

Fair value gain on revaluing other financial liabilities (note 13) 10,516 -

Gain on ineffective portion of cash flow hedge - 589

10,516 589


8. Taxation (unaudited)

In the six months to 30 June 2013 the Group has recognised a net deferred tax credit of USD 2.1 million (six

months to 30 June 2012 USD 2.5 million credit) arising from the effect of differing corporation tax rates on changes

to the expected timing of utilising tax losses in Sierra Leone.

9. Discontinued operations

Following a strategic review in December 2012 and focus on the Group‟s core iron ore business, the Colombian

operation was placed into care and maintenance. In the financial statements for the year ending 31 December 2012

the business was presented as a discontinued operation and asset held for sale.

London Mining Plc


9. Discontinued operations (continued)

The Directors consider that the business meets the criteria to be classified as held for sale at the reporting date as:

- An active sales programme is ongoing and the Directors are committed to selling the operation;

- The operation is available for immediate sale and can be sold in its current condition; and

- The Directors believe it is highly probable a sale is expected in the foreseeable future (within 12 months).

The single amount on the face of the condensed consolidated income statement comprises the post-tax result of

the discontinued operations, with the value of the assets in the business remaining as USD nil (other than inventory;

trade receivables and cash held in the business) whilst a buyer is sought.

10. Earnings per share (unaudited)

Basic

Basic earnings per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted

average number of ordinary shares outstanding during the period, excluding shares held by the Employee Benefit

Trust („EBT‟).

From continuing operations


2013

2012

Restated1

USD’000 USD‟000

Loss attributable to equity holders of the Company (2,927) (16,566)

Weighted average number of ordinary shares in issue 137,167,362 131,444,507

Loss per share USD (0.02) (0.12)


From discontinued operations


2013

2012

Restated1

USD’000 USD‟000

Loss attributable to equity holders of the Company (2,053) (2,034)

Weighted average number of ordinary shares in issue 137,167,362 131,444,507

Loss per share USD (0.01) (0.02)


Diluted

The outstanding options, warrants, LTIP awards and convertible loan notes at 30 June 2013 and 2012 represent

anti-dilutive potential ordinary shares. Therefore, basic and diluted earnings per share are the same for the current

and prior periods.

London Mining Plc


11. Property, plant and equipment

Land and

buildings

Mineral

properties

Plant and

equipment Other1 Total

USD’000 USD’000 USD’000 USD’000 USD’000

Cost at 1 January 2013 (audited) 46,307 186,300 69,525 137,610 439,742

Additions 590 1,180 242 44,657 46,669

Stock transfers - - 512 - 512

Disposals - - (265) - (265)

Transfers 12,913 43,007 32,274 (88,194) -

30 June 2013 (unaudited) 59,810 230,487 102,288 94,073 486,658

Depreciation at 1 January 2013 (audited) 2,153 1,638 11,343 345 15,479

Charge for the period 5,965 1,039 6,025 488 13,517

Disposals - - (121) - (121)

30 June 2013 (unaudited) 8,118 2,677 17,247 833 28,875

Net carrying value

1 January 2013 (audited) 44,154 184,662 58,182 137,265 424,263

30 June 2013 (unaudited) 51,692 227,810 85,041 93,240 457,783

1 Included within other is work-in-progress (“WIP”) of USD 69.3 million that is not being depreciated.

12. Other financial liabilities

2013 2012

(Unaudited) (Audited)

USD’000 USD‟000

Current

Royalty funding arrangement – Sierra Leone 7,990 5,875

Derivative financial instruments - 3,560

7,990 9,435

2013 2012


USD’000 USD‟000

Non-current

Royalty funding arrangement – Sierra Leone 96,402 105,491

Consideration for royalty payments – Greenland 29,744 29,495

126,146 134,986

London Mining Plc


12. Other financial liabilities (continued)

The liability for royalty payments for the Sierra Leone project relates to the USD 110 million non-recourse funding

received from BlackRock in return for a 2% royalty on net revenues from all sales at the Marampa mine over the life

of mine. The liability is held at fair value through profit and loss with payments made in the period (USD 1.9 million)

deducted from the liability. The fair value is re-assessed at the reporting date, in accordance with IFRS, for the

impact on the movement in forecast forward prices and other variables on future royalty payments, discounted at a

rate reflective of the time value of money and project risk and net of tax. This has resulted in a non-cash finance

cost of USD 5.5 million and a non-cash fair value gain of USD 10.5 million.

The liability for future royalty payments for the Greenland project relates to the Anglo Pacific („AP‟) funding for the

Bankable Feasibility Study („BFS‟). In return for the consideration of USD 30 million, AP is entitled to 1 – 1.4% of all

future revenues of the Isua project in Greenland. The USD 30 million has no interest accruing and is otherwise

repayable in cash or share equivalent if milestone targets are not met by pre-agreed dates:

- An exploitation licence obtained by 31 December 2013;

- Commercial production not occurring before the long stop date of 30 June 2017;

- A change in control; or

- The revocation of any right of London Mining to the area defined in the mining licence.

The consideration was received in August 2011 net of issue costs of USD 1.6 million at USD 28.4 million. Until

commercial production when the liability will be extinguished and treated as a disposal of the Group‟s economic

interest in the Greenland project, a future repayment obligation exists for USD 30 million. This has been treated as

a financial liability at amortised cost, being the principal less transaction costs plus accretion of the issue costs, as

the impact of discounting to a market rate of interest is immaterial. Capitalised accretion in the period was USD 0.2

million.

London Mining Plc


13. Borrowings

Bank loans1

(secured)

USD’000

Offtake

financing1,2

(unsecured)

USD’000

Convertible

bonds

(unsecured)

USD’000

Total

USD’000

At 31 December 2012 (audited) 91,393 58,170 97,608 247,171

Effective interest 4,816 2,403 4,830 12,049

Interest paid (6,209) - (4,400) (10,609)

Prior to debt restructuring 90,000 60,573 98,038 248,611

Gross proceeds 180,000 - - 180,000

Issue costs (5,895) - - (5,895)

Principal repayment (90,000) (55,000) - (145,000)

Effective interest 3,383 - 1,610 4,993

Interest paid - (5,573) - (5,573)

At 30 June 2013 (unaudited) 177,488 - 99,648 277,136

Due within one year 21,023 - 3,300 24,323

Due greater than one year 156,465 - 96,348 252,813

177,488 - 99,648 277,136

1 On 18 March 2013 the Group completed a USD 165 million (with the option taken to increase to USD 180 million)

restructuring of the previous USD 90 million corporate debt facility, with Standard Chartered Bank, FirstRand Bank

Limited and Ecobank. On 17 May 2013 London Mining drew down the facility in full (USD 180 million) and repaid

the previous facility of USD 90 million and the USD 55 million unsecured offtake financing with Vitol. The facility has

a tenure to January 2016 and is subject to financial and non-financial covenants.

2 On 3 June 2013 London Mining signed a new unsecured financing agreement with Vitol Group for a USD 25

million Prepayment Agreement regarding the offtake of 2 million wmt of iron ore per annum over 6 years. The first

utilisation of the prepayment was post-period end (note 19).

London Mining Plc


14. Cash outflow from operating activities (unaudited)


2013

USD’000

2012

USD‟000

Reconciliation of the loss for the period to cash outflows

from operating activities

Loss for the period from continuing operations (2,927) (16,566)

Adjusted for:

Depreciation and amortisation 13,731 5,439

Finance income (653) (504)

Finance costs 26,425 14,543

Fair value gains (10,516) (589)

Share-based payments expense 4,784 674

Taxation (2,085) (2,476)

28,759 521

Increase in non-current receivables - (700)

Increase in current loans and receivables (13,515) (20,692)

Decrease / (Increase) in inventories 2,438 (9,005)

Increase in payables 5,897 23,739

Cash in/(out)flow from operating activities 23,579 (6,138)

15. Financial instruments

Classification of financial instruments All

2013

(Unaudited) 2012

(Audited) USD’000 USD‟000 Current Financial assets Cash and cash equivalents 71,308 92,652

Derivative financial instruments (in designated hedge accounting relationships1) 2,231 -

Loans and receivables 24,429 16,127

Financial assets held for sale 1,154 142

99,122 108,921 1 The derivative financial instruments are valued using unadjusted quoted prices in active markets for identical

financial instruments (Level 1) and are classified as at fair value through profit and loss. Included within cash and cash equivalents is USD 7.8 million (2012: USD 7.8 million) of cash held as collateral for letters of credit.

London Mining Plc


15. Financial instruments (continued)

The carrying amount of financial assets is deemed to be approximate to fair value. All are classified as loans and receivables and considered Level 1 assets per IFRS 7 hierarchy unless separately noted.

2013 (Unaudited)

2012 (Audited)

USD’000 USD‟000 Financial liabilities At fair value through profit and loss:

Derivative financial instruments (in designated hedge accounting

relationships1)

- 3,560

Royalty payments – Sierra Leone2 104,392 111,366

At amortised cost:

Borrowings3 277,136 189,001

Trade and other payables3 49,287 46,488

Royalty payments - Greenland 29,744 29,495

Obligations under finance leases 18,175 18,510

Financial liabilities directly associated with assets held for sale 476 2,640

479,210 401,060 1

The derivative financial instruments are valued using unadjusted quoted prices in active markets for identical financial instruments (Level 1). 2 The future value of royalty payments to BlackRock (see note 12) has been determined using a valuation technique

where at least one input (which could have a significant effect on the instrument‟s valuation) is not based on observable market data, and is therefore a Level 3 financial instrument. Where inputs can be observed from market data without undue cost and effort, the observed input has been used. Otherwise, management determines a reasonable estimate for the input. 3 Excludes liabilities that will be settled under offtake agreements.

All financial liabilities held at amortised cost are considered to be approximate to their fair value.

16. Related party transactions

At 30 June 2013 the Directors of the Group and their related parties, and entities in which they had a beneficial interest, controlled 6.7% (31 December 2012: 6.5%) of the ordinary shares of the Company. The Group has a related party relationship with its subsidiaries, joint venture and its associates. Transactions between Group entities eliminated on consolidation are not included in this note. On 30 March 2010, London Mining acquired the remaining 80% of ICC (now “London Mining Colombia”). Graeme Hossie, the Chief Executive Officer of London Mining Plc, had a beneficial interest of 12% in ICC and therefore received 15% of the consideration paid for the remaining 80% and will receive 15% of any deferred contingent consideration. At 31 December 2012 and 30 June 2013 the Group recognises and has paid no deferred consideration.

London Mining Plc


17. Capital commitments

30 June

2013

31 December

2012


USD’000 USD‟000

Commitments for the acquisition of tangible assets 24,026 7,833

18. Contingent liabilities (unaudited)

The Group is subject to various claims which arise in the ordinary course of business. As part of the disposal of the Brazilian operations in 2008, London Mining granted certain warranties and indemnities to the purchaser, ArcelorMittal. Having taken appropriate legal advice, the Group believes the likelihood of a material liability arising is remote. As part of the Mining Lease Agreement between London Mining and the Government of Sierra Leone London Mining has entered into a Performance Bond in the form of a letter of credit of USD 2.0 million which shall be drawn on if London Mining fails to make substantial progress towards the development and operation of plant capable of 8Mtpa at the Marampa iron ore mine. The Directors‟ current expectation is that the Performance Bond will not be called upon. As part of a port agreement between London Mining Colombia and MichellMar S.A., a letter of credit is in place for USD 1.7 million which shall be drawn on if London Mining Colombia fails to pay penalties due to non-delivery of pre-agreed tonnages into the port. This contingent liability is expected to be settled as part of the sale process of the operations.

19. Events after the balance sheet date (unaudited)

In July 2013 London Mining drew down on the new Prepayment Agreement with Vitol S.A.

As part of the ongoing hedging programme to secure cash flows and as a requirement of the financing facility,

London Mining has entered into further hedges for 495,539dmt of 2013 production at an average CFR of USD 121/t

and 589,254dmt of 2014 production at an average CFR of USD 120/t. Additional hedges will be entered into for Q2

2014.

London Mining Plc 22 August 2013 FINANCIAL RESULTS FOR … · 2013. 8. 21. · London Mining Plc...

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