London Mining Financial Analysis - Research Paper Example

London Mining Plc is an intensifying iron ore producer of the sky-scraping specification that focuses on the global steel industry and is concentrate on identifying, developing, and operating sustainable mines. London Mining was founded in the year 2005 to acquire, finance, and develop mines for the global steel industry (Annual Report 2012). The company commence its operation with 100% owned Marampa Mine in Sierra Leone in the year 2012 sales from its and produced 3.4Mwmt of sinter concentrate in that led to a loss of $27.2m in the financial year ending December 2012. The company expanded its production capacity to 5.4Mwmt/a in 2013 resulting in higher profits in the half-year stage of $10.2m profit from operations. However, London Mining reveals further increasing production capacity to 6.5Mwmt/a in 2014. Marampa has sufficient resources in supporting the staged expansion of over 10.8Mwmt/a in the forthcoming years. London Mining has vested in a bankable feasibility study that delineates plans for a further producing 20Mwmt/a of iron ore by budding mines in Saudi Arabia and Greenland. London Mining moreover has a coking coal operation which is vested in Colombia which focuses on the feedstocks for steel production (Annual Report 2013). The pricing of iron ore is stabilized at $130 (£81) per tonne in the global commodities market but after three years, Iron ore prices have decreased to $93 per tonne during the third quarter. This has to lead to a fall in London Mining shares to 5pc thus representing a lofty-risk play on iron ore price.  Moreover, the company shares trade at a discount to the company’s net assets at 141p per share.