Ebola warning sparks collapse in London Mining shares

8th October 2014, Comments 0 comments

The Ebola virus outbreak, tumbling iron ore prices and large debts sparked a near-total collapse in the shares of the London Mining group on Wednesday.

The company, whose only mine is located in Ebola-hit Sierra Leone, saw its shares lose 95 percent of their value after it revealed restructuring talks with potential strategic investors and lenders.

"Under the structures currently proposed, the board believes that there will be little or no value remaining in the equity of the company and the other listed securities of the group," London Mining said in a gloomy statement.

The Ebola outbreak has hit activity at its Marampa mine in northern Sierra Leone, which was already reeling from collapsing iron ore prices.

"The outbreak of Ebola in Sierra Leone has introduced significant challenges both to the strategic investor process that the company began in May, and to the ongoing operational performance of the business," it said.

"Our team in Sierra Leone continue to show exemplary commitment in such adverse circumstances."

It added: "With the iron ore price at its lowest level since 2009, the Marampa operations have been put under considerable financial strain."

Iron ore prices have tumbled to five-year lows in the face of rebounding lower-cost production in Australia.

By late afternoon on the London stock market, the group's stock stood at just 75 pence, down a hefty 75.81 percent from Tuesday's closing level.

"Ebola has hampered both operations and the process to secure a strategic investor," said Cailey Barker, director of equity research at Numis Securities.

"The current funding proposal contemplates funding of the life of mine expansion and a cash injection into Marampa to allow the mine to continue operating.

"This looks like the end of the road for London Mining unless a new investor charges to the rescue."

Back in June, the company had evacuated all non-essential staff from Sierra Leone due to the highly contagious Ebola virus that is still gripping West Africa.

London Mining shares have now shed more then 99 percent since the start of the year. It has a current stock market capitalization of about £4.29 million.

Aside from Sierra Leone, the group has also completed feasability studies for the development of projects in Greenland and Saudi Arabia.


© 2014 AFP

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