London Mining Plc : Q4 2012 PRODUCTION REPORT

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London Mining Plc

Quoted on London AIM (LOND LN)

("London Mining" or the "Company")

24 January 2013

Q4 2012 PRODUCTION REPORT

Marampa, Sierra Leone

Production

·      Full year production of 1.63Mwmt (1.52Mdmt) exceeding 2012 target of 1.5Mdmt 

·      Quarterly production of 546,000wmt (508,000dmt) iron ore concentrate, up 46% on the previous quarter

·      Quarterly sales of 387,000wmt, up 30% on the previous quarter

·      Upgraded transhipment capability following

-       commissioning of floating offshore transhipment platform

-       mobilisation of second transhipment vessel

·      Stockpile of 390,000wmt to be sold down to 100,000wmt over H1 2013 at higher margins

·      560,000dmt of H1 2013 production hedged at an average CFR price USD132/dmt to protect margins during growth programme

Expansion

·      Second plant in commissioning stage  increasing capacity to 3.6Mtpa

·      Expansion to 5Mtpa capacity on track to complete in Q3 2013

Other Projects

·      Colombia operations have been placed under care and maintenance

·      Permitting submissions and public hearings have been completed for the Isua Project and permit is expected in 2013. 

Graeme Hossie Chief Executive of London Mining said:

"London Mining has had an excellent finish to its first year of production at Marampa with a 46% increase in quarterly production allowing us to beat the full year production target we set in January 2012. We have also started commissioning of the second plant which positions us well to meet our target of increasing capacity to 5Mtpa at an operating cost of under USD50/t. We have put our Colombian assets on care and maintenance with a view to rationalise the assets over time. This will enable us to better focus resources on Marampa which we expect to produce the greatest return on capital for shareholders in the near term.

The excellent performance at the Marampa operation was overshadowed by an accident in December which led to the first fatality in over seven years of London Mining operations and development activities. We were deeply saddened by this news and extend our sincere condolences to the family and friends of the individual concerned. London Mining is committed to the safety of all its employees, contractors and host communities. This remains the Company's highest priority, as Marampa continues to ramp up production." 

Marampa, Sierra Leone (100% owned)

Q4 production

	Full year	Q4	Q3	Q2	Q1
Concentrate produced (wmt)	1,631,000	546,000	373,000	397,000	315,000
Average daily production rate (wmt/d)	4,530	5,939	4,051	4,358	3,467
Sales (wmt)	1,279,000	387,000	298,000	350,000	244,000
Average concentrate grade sold (Fe%)	64.9	64.3	64.1	65.3	65.9
Moisture content (%)	6.7	6.8	8.3	6.7	4.7
Average FOB price *  including hedges (USD/dmt)	104	104	97	105	108
Average freight (USD/wmt)	39	33	39	45	39

*Free on board ("FOB") prices are net of freight and grade premium but exclude marketing related fees

Operations at Marampa performed very well in the fourth quarter. This was due to increased mining productivity following the engagement of a new mining contractor, as well as an improvement in plant availability and metallurgical recoveries; this contributed to quarterly production of 546,000wmt, a 46% increase over the previous quarter. 24 ocean going vessels were loaded for export over 2012 with sales volumes increasing by almost 30% quarter on quarter in Q4 2012 to 387,000wmt.

Prices and hedging

Marampa iron ore continues to capture a grade related premium relative to the benchmark. The average unhedged received price after deduction of freight over Q4 2012 was USD93/dmt FOB up from USD77/dmt in Q3 2012. The realised Platts 62% Fe CFR price improved in Q4 to USD125/dmt  from an average of USD117/dmt in Q3 2012. After hedging, the realised FOB price for Q4 2012 was equivalent to USD104/dmt (USD97/dmt in Q3 2012). As a result of the recent improvement in spot iron ore pricing, 320,000dmt of Q1 production has been hedged at an average CFR price of USD130/dmt and 240,000dmt of Q2 2013 production has been hedged at an average CFR of USD134/dmt in order to secure margins in a key stage of production growth. 

Stockpile management and logistics upgrades

Following rectification works for the Pride of Marampa floating offshore transhipment platform ("FOTP") that were completed over the fourth quarter, operation of the Pride of Marampa has commenced with loading of a geared panamax vessel.  Loading of ungeared vessels is expected to begin later in Q1 2013. In addition London Mining has also mobilised a second transhipment vessel that until recently operated successfully in India with a proven loading rate of 15,000tpd.  This second vessel is expected to arrive in Sierra Leone for commissioning later in Q1 2013 resulting in total installed transhipment capacity of 35,000tpd. This significantly derisks the transhipment operations by providing back-up to the existing FOTP and provides accelerated and multiple vessel loading capability.   The new vessel is being leased over a three year period and will be funded  through the reinvestment of operating cost savings made from improved cycle times and a reduction in redundant barging capacity.

As a result of the excellent performance of the Marampa processing plant in Q4, a stockpile of around 390,000wmt is now in place with shipping now scheduled to allow realisation of a significantly higher FOB price than would have been achievable in Q4 2012. The logistics required to deplete the stockpile are already in place and the further upgrades to transhipment capacity are expected to reduce it to an operating level of less than 100,000wmt or one ship load during the first half of 2013.

Construction of second plant and gravity circuit

Mechanical completion of the second plant has been achieved and commissioning of the second 1.8Mtpa of capacity is underway. Plant capacity will be increased further to 5Mtpa following further equipment installations to beneficiation capacity in Q3 2013.

Health and safety

Although the Lost Time Injury Frequency Rate declined over the quarter, an incident in December led to the fatality of one of our contractors. A full investigation has been carried out and measures to improve the safety performance of our operations have been implemented.

	Q1	Q2	Q3	Q4
LTI	3	1	1	0
All Injuries incl.LTI	15	18	21	9
Fatalities	0	0	0	1
LTIFR	4.77	1.55	2.03	0.76

Isua, Greenland (100% owned)

The company has completed its permitting process requirements for the Isua Project in Greenland with the Department of Minerals and Petroleum (DMP) to enable construction to commence subject to the availability of funding from a strategic partner. The Bankable Feasibility Study for the project, as well as a Social Impact Assessment and an Environmental Impact Assessment, was completed in the first half of 2012. The public hearing process and related responses and submissions, were completed over Q4 2012 and London Mining has submitted all documents and the applications for construction of the project to the DMP in accordance with the Mineral Resources Act of Greenland. It is expected that all required approvals will be completed in 2013.  

In December, the Inatsisartut (the Parliament of Greenland) passed a bill on building and construction works related to large scale projects. The act is aimed at promoting foreign investment in Greenland and limiting possible negative consequences. London Mining is in full compliance with all aspects of the new legislation.

Colombia (100% owned)

Following a review of the business and the ongoing weakness of the market for coke, the Colombian operations have been placed into care and maintenance whilst London Mining looks to rationalise the asset over time, to focus on its core iron ore business. The coke ovens are located in an area of significant coking coal resource potential with opportunities to access the coke export market.

	Q4 2012	Q3 2012	Q2 2012	Q1 2012
Coke produced (t)	14,695	12,937	12,616	5,800

Wadi Sawawin, Saudi Arabia (25% owned)

Further progress at Wadi Sawawin has been limited and is dependent on a dispute being resolved between our Saudi partners National Mining Company and their proposed engineering firm STX Heavy Industries.  London Mining is not involved in the dispute but is working with both parties to resolve it constructively.

Graeme Hossie, Chief Executive Officer, and Jim North, Chief Operating Officer will be hosting a conference call for analysts and investors today at 8:30am GMT (UK). Details for the conference call are below:

International dial-in:	[phone]
UK Toll Free:	0800 279 4841
Confirmation code:	8498459

For more information please visitwww.londonmining.co.ukor contact:

London Mining Plc Graeme Hossie, Chief Executive Officer Rachel Rhodes, Chief Financial Officer Thomas Credland, Head of Investor Relations	[phone]
Liberum Capital(Nominated Advisor/Broker) Clayton Bush/Christopher Kololian	[phone]
J.P. Morgan Cazenove (Broker) Ignacio Borrell / Ben Davis	[phone]
Brunswick Group LLP Carole Cable / Rosheeka Field	[phone]

About London Mining

London Mining is an expanding producer of high specification iron ore for the global steel industry and is focused on identifying, developing and operating sustainable mines. London Mining commenced sales from the Marampa Mine in Sierra Leone in 2012 and expects to reach production capacity of 5Mtpa in 2013. A bankable feasibility study was completed in 2012 on an expansion plan to 9Mtpa and a prefeasibility study was completed in 2011 which shows that Marampa has resources to support a staged expansion to over 16Mtpa. London Mining has also completed bankable feasibility studies outlining plans for a further 20Mtpa of iron ore production by developing mines in Greenland and Saudi Arabia. The Company listed on AIM in London on 6 November 2009. It trades under the symbols LOND.L (Reuters) and LOND LN (Bloomberg). More information about London Mining can be found at www.londonmining.co.uk.

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