In March 2009, London Mining formed a 50/50 joint venture company, China Global Mining Resources (CGMR), with Wits Basin Precious Metals to acquire and operate the Xiaonanshan (XNS) mine and Sudan processing plant in the Anhui and Jiangsu Provinces of the People’s Republic of China.

A Chinese standard resource of 31.2 million tonnes of magnetite ore averaging 23.6% total Fe for a portion of the XNS licence area previously drilled was verified by SRK Consulting in July 2008 with the ore body remaining open laterally and at depth. This resource is not classified according to any internationally recognised standard.  The joint venture has been granted an extension to the previous licence area as part of government initiatives to rationalise small producers and increase domestic supply of iron ore. The extended licence area is situated in a region of high geological prospectivity, indicated by the prolonged life of similar mines nearby.  CGMR has also been granted the right to acquire a further iron ore development asset, Matang, which is owned by the sellers of XNS and Sudan.

The Sudan plant has an annual capacity of 0.4mtpa of magnetite concentrate grading 62 to 64% following an expansion in June 2008. Production in 2008 from the XNS/Sudan complex was estimated to have been over 0.3mtpa with sales revenues peaking at USD 130/t of concentrate. In early 2009, revenues averaged USD 85/t with operating costs averaging around USD 50 to USD 60/t. Initial productivity improvements are expected to lead to a 50% increase in capacity and a threefold increase in capacity to 1.2mtpa is planned by the end of 2011 funded entirely by incremental cash flow.

Operating margins are expected to remain robust as a result of the realisation of significant cost savings from the expansion of existing operations with the close proximity to local steel mills enabling the operations to capture a transport related pricing premium for its concentrate.  This premium is expected to be enhanced by the implementation of a more focused marketing strategy.