London Mining received a 30 year exclusive exploitation license for its 100% owned Isua Project.

 

The operating mine, which would employ 450 people is expected to produce 15Mdmt/a of iron pellet feed concentrate. The iron ore will be shipped to a dedicated deep water port. Shipping will be year round.

A bankable feasibility project for Isua was completed in March 2012. A JORC was completed showing a 1.1 billion tonne resource.

 

The company will pay the government an escalating royalties with the first five years at 1%, years 6-10: 3%; years 11-15: 4%, rising to 5% after year 16. London Mining says the lower rate in the earlier years recognizes the need to protect the payback period for initial development investment once the mine is brought into production.

 

Based on a 15 year mine life, the company estimates that corporate and dividend tax could be CAD 5.51 billion and income tax of personnel could be CAD 740 million.

 

London Mining acquired the Isua licence in 2005 from Rio Tinto. The new fiscal agreement will have no material adverse impact on the net present value of the project.

 

Mr Graeme Hossie CEO of London Mining admits that financing could be challenging. Although new projects in iron ore currently do face funding challenges, we believe Isua's high quality product segment will become increasingly important to steelmakers to balance the growth in lower quality iron ore supply and the increasing importance of pellets in the evolving iron ore market."