Greenland iron ore mine gets green light
London Mining (LON:LOND) received a 30-year exclusive exploitation license for its 100%-owned Isua Project.
The operating mine, which would employ 450 people, is expected to produce 15Mdmt/a of iron pellet feed concentrate. The iron ore will be shipped to a dedicated deep water port. Shipping will be year round.
A bankable feasibility project for Isua was completed in March 2012. A JORC was completed showing a 1.1 billion tonne resource.
The company will pay the government an escalating royalties with the first five years at 1%, years 6-10: 3%; years 11-15: 4%, rising to 5% after year 16. London Mining says the lower rate in the earlier years recognises the need to protect the payback period for initial development investment once the mine is brought into production.
Based on a 15 year mine life, the company estimates that corporate and dividend tax could be Can$5.51 billion and income tax of personnel could be Can$740 million.
"The new fiscal agreement will have no material adverse impact on the net present value of the project," said the company in a statement.
CEO Graeme Hossie admits that financing could be challenging.
"Although new projects in iron ore currently do face funding challenges, we believe Isua's high quality product segment will 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," said Hossie in a statement.
London Mining's flagship operation is its Marampa Mine in Sierra Leone.
Image of Greenland ice by Christine Zenino