Mining

Mining is the extraction of valuable minerals or other geological materials from the earth, from an orebody, lode, vein, (coal) seam or reef, which forms the mineralized horizon and package of economic interest to the miner.

To gain access to the mineralised package within the lease area (aka Mining Rights Lease) it is often necessary to mine through (to create access, shafts, addits, ramps) or remove to the side waste material which is not of immediate interest to the miner. The total movement of ore and waste, which also includes the removal of soil in some cases, is referred to as the mining process. Depending on the nature, attitude, and grade of the orebody, it is often the case that more waste than ore is mined during the course of the life of a mine. The waste removal and placement is a major cost to the mining operator and to facilitate detailed planning the detailed geological and mineralisation characterization of the waste material forms an essential part of the geological exploration programme.

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 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 two other mines in Greenland and Saudi Arabia. In addition London Mining is producing from a coke operation with coking coal resource potential in Colombia. The Company listed on London AIM on 6 November 2009.

Objectives and strategy of London Mining in CGMR

Objectives and strategy

London Mining’s objective is to identify, develop and operate scalable mines to become a mid-tier supplier to the global steel industry. The Group’s principal assets have actual or anticipated production and the ability for further expansion through either upgrading resources or acquisition.

The Company is currently undertaking resource definition programmes to ensure that all of these principal projects will have JORC standard resources in accordance with the time frames set out in this document.

The Directors believe that the total iron ore concentrate production capacity of the Group’s four principal projects (on a 100% basis) has the potential to rise from 0.4Mtpa in 2009 to 14Mtpa in 2014 and to in excess of 20Mtpa in 2018:

• Sierra Leone – sinter feed : 1.5Mtpa in 2011 to in excess of 3Mtpa in 2013

• Saudi Arabia – DR pellets : 5Mtpa in 2013 to 10Mtpa in 2017

• Greenland – DR pellet feed : 5Mtpa in 2014 to 10Mtpa in 2018

• China – magnetite concentrate : 0.4Mtpa in 2009 to 1Mtpa in 2011

(Source: Company estimates)

The strategy of London Mining is to focus its activities on deliverable iron ore projects, where the key features are scalable production, financing opportunities and a clear route to market. The ability to accelerate projects through to efficient producing mines, utilizing its experienced technical and operating team, is an important part of the Company’s strategy.

The Group’s principal projects range from late stage exploration projects, through a brownfield site to an under-optimized producing mine, all of which the Company intends to develop to be efficient producing mines. All of the Group’s principal assets have an ore body and logistics solution which allow for production to be initiated and/or expanded in phases. The logistics solution primarily focuses on workable port locations with available land and with the ability to load, either directly or via transhipment, to ocean going vessels. The port locations are all within approximately 100km of the proposed mine site for all of the existing principal projects with the exception of China, where the product is largely sold at the mine gate, hence transportation costs are low. Currently, London Mining’s target markets are the MENA countries and China, and all of the principal assets are able to supply one or both of these markets.

The Company has an experienced management and technical team. The iron ore assets are managed by in country project directors aided by a technical services team headed by the Company’s Chief Operating Officer, Luciano Ramos and comprising seven people with expertise in geology, metallurgy and mine engineering. The technical services team is focused on delivering low-cost, fast track solutions to production. The iron ore assets are overseen by the Company’s management team in London, which focuses on head office functions including funding, off-take agreements and corporate development opportunities.