(MENAFN- ProactiveInvestors - UK) The weak iron ore price and ebola outbreak have hit Sierra Leone operating London Mining (LON:LOND) where it hurts, as the debt-ridden firm revealed itself as on the brink of collapse, warning investors could be wiped out.
It said there could be little or no value left in the shares under the current proposals being discussed with potential strategic investors. Shares sank 90%.
Last week, the group admitted it didn't have the funds to carry on operating the Marampa iron mine without raising more money. That news also sent the shares spiralling south.
Today, it conceded that under current financing structures proposed, there would be little or no value remaining in its shares.
The firm is looking for a strategic investor to fund the life of mine expansion and a cash injection to allow the mine to continue operating.
"While the lenders of the company remain supportive of the process, they are not expected to provide any further short term funding which would be provided by a strategic investor if the discussions are successful," it said in brief update, adding the caveat there could be no certainty on the likelihood or timing of such an investment.
"With the iron ore price at its lowest level since 2009, the Marampa operations have been put under considerable financial strain.
"In addition, the outbreak of Ebola in Sierra Leone has introduced significant challenges both to the strategic investor process that the company began in May, and to the ongoing operational performance of the business, where our team in Sierra Leone continue to show exemplary commitment in such adverse circumstances."
London shares dropped almost 90% in early deals.
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