Shares in London Mining have collapsed following the company’s announcement that it will run out of cash if it does not raise new financing.
Shares in the company plummeted 43% to a record low of 9.51p on the London Stock Exchange after London Mining confessed that it did “not have sufficient liquidity to enable it to continue to trade through this period without raising further finance.”
London Mining said that it was “in detailed negotiations with a potential strategic investor to make an investment in the group with a deal structure under consideration. This currently contemplates funding of the life of mine expansion and a material cash injection into the company which will give rise to a significant dilution to the existing equity and a revised capital structure.”
The proposed investment as currently structured is expected to require a number of weeks to implement, “and there can be no certainty that such discussions will be successful,” London Mining said in a statement.
Funds from Afreximbank are not expected to be available in the required time period with discussions on structure ongoing.
“The company’s lenders are working constructively with us to enable investment into the Group and in addition are currently considering the provision of further finance. While the lenders remain supportive of the process there can be no certainty at this time that such arrangements can be put in place to facilitate such an investment,” London Mining added.
This comes a week after the announcement that London Mining is in dispute with Glencore regarding a cash prepayment amount which the company has requested and which Glencore has refused to pay, which may result in the termination of the offtake agreement between the two companies.
“London Mining continues to receive strong interest in its offtake including prepayment financing and has received expressions of interest from a number of parties to reallocate uncommitted offtake and provide further funding for the company in the event that the position with Glencore cannot be resolved. In the meantime discussions with potential strategic partners are continuing and are being accelerated,” London Mining said at the time.