Objectives and strategy of London Mining in CGMR

Objectives and strategy

London Mining’s objective is to identify, develop and operate scalable mines to become a mid-tier supplier to the global steel industry. The Group’s principal assets have actual or anticipated production and the ability for further expansion through either upgrading resources or acquisition.

The Company is currently undertaking resource definition programmes to ensure that all of these principal projects will have JORC standard resources in accordance with the time frames set out in this document in London Mining.

The Directors believe that the total iron ore concentrate production capacity of the Group’s four principal projects (on a 100% basis) has the potential to rise from 0.4Mtpa in 2009 to 14Mtpa in 2014 and to in excess of 20Mtpa in 2018:

• Sierra Leone – sinter feed : 1.5Mtpa in 2011 to in excess of 3Mtpa in 2013

• Saudi Arabia – DR pellets : 5Mtpa in 2013 to 10Mtpa in 2017

• Greenland – DR pellet feed : 5Mtpa in 2014 to 10Mtpa in 2018

• China – magnetite concentrate : 0.4Mtpa in 2009 to 1Mtpa in 2011

(Source: Company estimates)

The strategy of London Mining is to focus its activities on deliverable iron ore projects, where the key features are scalable production, financing opportunities and a clear route to market. The ability to accelerate projects through to efficient producing mines, utilizing its experienced technical and operating team, is an important part of the Company’s strategy.

The Group’s principal projects range from late stage exploration projects, through a brownfield  site to an under-optimized producing mine, all of which the Company intends to develop to be efficient   producing mines. All of the Group’s principal assets have an ore body and logistics solution which allow for production to be initiated and/or expanded in phases. The logistics solution primarily focuses on workable port locations with available land and with the ability to load, either directly or via transhipment, to ocean going vessels. The port locations are all within approximately 100km of the proposed mine site for all of the existing principal projects with the exception of China, where the product is largely sold at the mine gate, hence transportation costs are low. Currently, London Mining’s target markets are the MENA countries and China, and all of the principal assets are able to supply one or both of these markets at London Mining.

Flooding can come from various sources, from coastal waters, from rivers (also known as fluvial flooding) and surface water flooding. Of all these sources London is most vulnerable to surface water flooding. Heavy rainfall can swiftly overwhelm the drainage network, leading to flooding of low-lying areas.
During the 2007 floods, more than 1,000 homes, over 80 schools and parts of several hospitals were flooded in London despite London receiving only a third of the rainfall that affected other areas of the country. Climate change is projected to increase the frequency and intensity of heavy rainfall events, whilst London’s growth will mean that more people and assets will be at risk.

The Company has an experienced management and technical team. The iron ore assets are managed by in country project directors aided by a technical services team headed by the Company’s Chief Operating Officer, Luciano Ramos and comprising seven people with expertise in geology, metallurgy and mine engineering. The technical services team is focused on delivering low-cost, fast track solutions to production. The iron ore assets are overseen by the Company’s management team in London, which focuses on head office functions including funding, off-take agreements and corporate development opportunities.