London Mining obtains 30 year license to build and operate Iron Ore mine in Greenland
London Mining today announced in a press release that it has been awarded an exclusive 30 year exploitation licence for its 100% owned Isua Project in Greenland (the “Exploitation Licence”). This licence is a significant step in the process of seeking partners for the development of Isua.
Based on a 2012 bankable feasibility study, the Isua Project is expected to produce 15Mdmt/a of premium quality iron pellet feed concentrate with low impurities and is based on a one billion tonne resource which could be shipped year round from a dedicated deep water port. Detailed Environmental and Social Impact Assessments to international standards have been completed and have been subject to public consultation as part of the permitting process.
Within the Exploitation Licence, London Mining has agreed to incorporate a royalty structure (“Royalty”) with the Government of Greenland. The Royalty, based on sales, is payable if combined withholding tax and corporation taxes are less than the calculated Royalty in a particular year, such that the Government receives a minimum amount. The royalty is structured with escalating rates: with the first five years at 1%, years 6-10: 3%; years 11-15: 4%, rising to 5% after year 16. The lower rate in the earlier years recognises the need to protect the payback period for initial development investment once the mine is brought into production.
The new fiscal agreement will have no material adverse impact on the net present value of the project.
Graeme Hossie, CEO, London Mining PLC
Graeme Hossie, Chief Executive Officer of London Mining said: “We are very pleased today to receive the exploitation licence for the Isua iron ore project after many years of exploration and development work. Isua is an important project for Greenland and its development will help deliver key objectives for Greenland of economic growth and diversification from sustainable mining activity. The Isua project represents the potential of a significant 15mtpa supply of very high quality iron ore concentrate to the global steel industry. 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. While London Mining’s operational and capital allocation focus remains firmly on the recently announced expansion and mine life extension at its operating mine in Sierra Leone, the granting of the 30 year exploitation licence for Isua is an important validation of the extensive work to date and provides a solid basis for discussions with potential funders and partners required to move the project forward.”
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