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Sierra Leone - London Mining, battered by a sharp drop in iron ore prices, warned on Wednesday that its shares now had "little or no value", sending its stock tumbling as it searches for a strategic investor.
Sierra Leone-focused London Mining, which owns the Marampa mine, is one of several small miners set up in West Africa during the commodities boom, on the back of rising demand for iron ore. They hoped to turn the region into a new producing frontier, to compete with Australia and Brazil.
But with larger, lower-cost producers like Rio Tinto and BHP Billiton pumping out cheaper ore - and prices languishing below $80 per tonne - they have struggled.
London Mining's larger peer African Minerals said last month it was open to selling a minority stake in its only mine as part of a financial rescue plan.
In Wednesday's statement, London Mining said its lenders remained supportive of the talks with potential investors, but were not expected to provide short-term funding. That cash injection would come from a new partner, if one can be found.
"Under the structures currently proposed, the board believes that there will be little or no value remaining in the equity of the company and the other listed securities of the group," the miner said.
London Mining's shares crashed 96% to lows of 0.12 pence after the statement, before recovering in morning trade to change hands at 0.7p, 77% down.
"This looks like the end of the road for London Mining unless a new investor charges to the rescue," analysts at Numis Securities said in a note.
Reuters reported earlier this week that potential investors include India's third-largest steelmaker JSW Steel, with whom the miner is holding talks.
London Mining has battled low-cost iron ore from mining giants Rio, BHP and Brazil's Vale, but also an Ebola epidemic that has so far killed over 3 000 people in the region.
The virus has made it difficult to move workers and goods and threatens to disrupt logistics. London Mining said the Ebola outbreak in Sierra Leone posed significant challenges to the search for an investor, which began in May, and its operations.
The company warned last week that it did not have enough cash to operate its only mine and was in talks to find a partner who could inject cash into the business.
The stock, which traded above 400p per share in 2011, at the peak of the boom, started spiralling last month. The miner is also embroiled in a pricing dispute with commodities trader Glencore.
London Mining listed at about 192p on the London Stock Exchange five years ago.
