JOHANNESBURG (miningweekly.com) – Aim-listed London Mining on Thursday announced that it had been awarded an exclusive 30-year exploitation licence for its 100%-owned Isua project, in Greenland.
Based on a 2012 bankable feasibility study, the Isua project was expected to produce 15-million tonnes a year of premium quality iron pellet feed concentrate with low impurities, based on a one-billion-tonne resource, which could be shipped year-round from a dedicated deep-water port.
Detailed environmental- and social-impact assessments to international standards had also been completed and were subject to public consultation as part of the permitting process.
"We are very pleased today to receive the exploitation licence for the Isua iron-ore project after many years of exploration and development work. Isua is an important project for Greenland and its development will help deliver Greenland’s key objectives of economic growth and diversification from sustainable mining activity,” London Mining CEO Graeme Hossie said.
The iron-ore miner stated that the granting of the licence was a significant step in the process of seeking partners for the development of Isua.
“While London Mining's operational and capital allocation focus remains firmly on the recently announced expansion and mine life extension at its operating mine in Sierra Leone, the granting of the 30-year exploitation licence for Isua is an important validation of the extensive work to date and provides a solid basis for discussions with potential funders and partners required to move the project forward," he said.
He added that, while new iron-ore projects currently faced funding challenges, London Mining believed that Isua's high-quality product segment would become increasingly important to steelmakers to balance the growth in lower-quality iron-ore supply and the increasing importance of pellets in the evolving iron-ore market.
Meanwhile, within the exploitation licence, London Mining had also agreed to incorporate a royalty structure with the government of Greenland.
The royalty, based on sales, would be payable if withholding tax and corporate taxes were less than the calculated royalty in a particular year, such that the government received a minimum yearly amount from the project.
The royalty was structured with escalating rates: with the first five years at 1%, years 6 to 10 at 3%; years 11 to 15 at 4%; and 16 years and beyond 5%.
The lower rate in the earlier years recognised the need to protect the payback period for initial development investment once the mine is brought into production, London Mining explained, adding that this new fiscal agreement would not have a material adverse impact on the net present value of the project.