London Mining (LSE:LOND) is turning a negative into a positive.
The London listed company, which is on the brink of collapse due to declining iron ore prices and the outbreak of the Ebola virus, is transitioning its struggling Marampa iron ore mine into a treatment center to fight the spread of the disease in Sierra Leone.
“We believe it is our duty to provide what help we can to stem the spread of this disease,” said Dan Desjardins, managing director for London Mining.
The heavily-indebted company is constructing a 130-bed center near its Marampa mine, which currently employs 1,400 people, and donating over $165,000 to fight Ebola.
“I salute all our employees for their dedication and contribution in creating what is now an important part of Sierra Leone’s economy and ongoing development,” said Graeme Hossie, London Mining’s chief executive
“I also applaud them for the ongoing leadership role our team has played within the private sector in Sierra Leone in helping address the challenges of the current Ebola crisis. The Marampa mine retains excellent fundamentals and it is our sincere wish for it to find the appropriate financial support to continue operating over the longer term.”
London Mining, whose only operating mine is in Sierra Leone, reported a first-half loss due to a drop in iron ore prices and said the outbreak of the virus across West Africa could hurt production in the second half.
The outbreak, which has been rampant in Sierra Leone, has the ability to cost companies an additional $1 per ton of iron ore produced in 2014 and force a reduction in drilling,” according to London Mining.
The disease, along with the continual decline in iron ore prices, has essentially put London Mining on life support.
The company’s financial woes have toppled over as administrators at Price Waterhouse Coopers (PwC) have taken over the company after failing to find a buyer to bridge the funding gap for its Marampa mine in Sierra Leone. The group has already held “advanced discussions” with several potential buyers, and hopes it will lead to a sale that can be concluded quickly.
“The collapse in iron ore prices and the resulting impacts on this business have been very dramatic. Our focus is to ensure that a buyer is found for the Marampa mine operations given it is such an important part of the Sierra Leone economy,” said Russell Downs, joint administrator and partner at PwC.
“We are liaising with key stakeholders and asking for a short window of forbearance as we look to conclude a transaction.”
The potential downfall of the London Mining has raised fears about international efforts to combat Ebola, which has already claimed 4,500 lives in Sierra Leone, Guinea and Liberia.