UK-based London Mining has announced that it has signed a letter of intent with US-based mining company Wits Basin Precious Minerals, Inc. (Wits Basin) for a 50/50 joint venture partnership for Wits Basin's iron ore project located near Maanshan, Anhui Province in the People's Republic of China.
Under the preliminary terms of the agreement, London Mining is to acquire a 50 percent equity interest in the project for a total consideration of $45 million. The joint venture vehicle currently holds rights to acquire three Chinese mining companies, Nanjing Sudan Minerals, Maanshan Zhaoyuan Mining and Xiaonanshan Mining.
Following completion of acceptable due diligence and legal documents, the transaction could be closed within six weeks.
Moreover, London Mining has also agreed to provide up to $1 million, in the form of a convertible loan note to be issued by Wits Basin, to cover due diligence and other transaction costs associated with the potential acquisitions.
"Based on current iron ore spot pricing and the drill-indicated resources, we believe this project will be cash-flow positive in excess of $30 million in the first twelve months of operation," commented Wits Basin's CEO Mr. Stephen D. King.