LONDON--Sierra Leone iron ore producer London Mining PLC
(LOND.LN) said Monday it has entered into a dispute with Glencore
PLC (GLEN.LN) over a cash prepayment that the commodities trader
has refused to pay.
This has prompted the U.K.-listed miner to enter discussions
with its core lender to provide short-term liquidity in the event
the dispute can't be resolved.
At 0752 GMT, the company's shares were down 11% at 23 pence a
share. The company's shares have fallen nearly 80% since the
beginning of the year due to a slump in the iron ore price, which
has raised concerns about its ability to service its debt burden.
The company also said last month that the ebola outbreak in Sierra
Leone has affected its supply chain, prompting the company to guide
toward the lower end of its previous full-year output target
range.
The U.K.-listed miner said it is considering its options with
Glencore, including terminating the commercial off-take agreement.
The agreement envisaged selling 9.5 million wet metric tons of iron
ore over a five year period to Glencore at a pre-determined price
in exchange for a pre-payment facility of up to $27 million. The
agreement is due to expire in the first quarter of 2017.
London Mining said it has separately signed an agreement with
Afreximbank for a $30 million revolving two-year pre-export
financing facility on similar terms to those for London Mining's
original corporate facilities. The facility is subject to approval
from the company's other lenders and therefore may not be secured
in time to help with its refinancing needs.
The company said it continues to receive "strong interest" from
other companies willing to enter a pre-payment offtake agreement
should it be unable to resolve its dispute with Glencore.
London Mining also said it is accelerating discussions with
potential strategic partners as part of its effort to reduce debt
and fund its growth plans.
-Write to Alex MacDonald at alex.macdonald@wsj.com
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