London Mining Plc said BlackRock World Mining Trust would pay it $110 million for a 2 percent royalty on iron ore sales from its Marampa project in Sierra Leone.
“Although the company is already funded to achieve 5 million tons per annum (Mtpa) of capacity next year, the proceeds from this deal provide a further financial buffer and provide funds to advance the expansion at Marampa to 9 Mtpa at the appropriate time,” Chief Executive Graeme Hossie said.
The bankable feasibility study for the 9 Mtpa expansion is due to be completed in the third quarter, the miner said.
Shares of the company, which have halved since the beginning of this year, were up 16 percent at 172 pence at 0730 GMT on the London Stock Exchange.
“The $110 million cash injection removes any possible funding questions for Phase 1 delivery at Marampa and provides a substantial chunk of equity towards the expansion to 9 Mtpa,” Liberum Capital analyst Richard Knights said.
BlackRock is one of London Mining’s largest shareholders with a stake of about 7 percent.