SHARES in Aim-listed London Mining soared yesterday after the firms said BlackRock World Mining Trust would pay it $110m (£70m) for a two per cent royalty on iron ore sales from its Marampa project in Sierra Leone.
“Although the company is already funded to achieve 5m tons per annum (Mtpa) of capacity next year, the proceeds from this deal provide a further financial buffer and provide funds to advance the expansion at Marampa to nine Mtpa at the appropriate time,” chief executive Graeme Hossie said.
The bankable feasibility study for the nine Mtpa expansion is due to be completed in the third quarter, the miner said. Shares of the company, which have halved since the beginning of this year, rose 17 per cent yesterday.
BlackRock is one of London Mining’s largest shareholders with a stake of about seven per cent.
“For some time we have been reviewing a range of ways to invest in mining royalties,” said BlackRock chairman Anthony Lea. “This deal meets our investment objective of trying to raise income for the portfolio whilst at the same time also being exposed to growth in production and to changes in commodity prices.”