London Mining acquires coking coal business in Colombia

UK-based emerging international miner London Mining has announced that it is acquiring the remaining 80 percent of Columbia-based International Coal Company (ICC), where it is already a stakeholder, for an initial consideration of $5.5 million cash and 3.5 million newly issued London Mining shares, with a potential further consideration of up to $8.5 million and up to 6.3 million shares payable subject to the satisfaction of performance conditions.
 
The performance conditions are linked to EBITDA and capex targets for the coke ovens and to the delivery over time of attractive coking coal and port opportunities. The ICC consists of coking coal concessions, a low volatile coking coal mine development project (Invercoal) and a permitted coke oven project, all located in Columbia.
 
The acquisition is conditional on ICC becoming the registered owner of certain land rights. The sellers are Pacific Overseas Investments Ltd., SIHL Investments International Corporation, Talman Alliance and Executive Players Inc.
 
As ICC's assets are not yet operational, there were no profits attributable in 2009. London Mining expects to invest a total of about $40 million over the next 18 months in ICC. The strategy of ICC is to develop and consolidate its interests in the region with the aim of producing over 2 million mt of coking coal per year in the medium term.
 
Furthermore, ICC's joint venture with Invercoal, a Colombian company with existing mining operations and concessions, aims to develop another coking coal mining operation with an annual capacity of 250,000 mt, which is expected to produce low volatile coking coal. The proposed mine is within two km of ICC's coke oven project.
 
The acquisition of ICC further supports London Mining's strategy of becoming a mid-tier supplier to the steel industry, and will provide London Mining with the platform to develop a Colombian coking coal business.