UPDATE 2-Sierra Leone plans hike in London Mining tax -draft

Fri Dec 16, 2011 3:42pm GMT

* SL increases London Mining tax rate from 6 to 25 pct

* London Mining shares down 2 pct by 1430 GMT

By Simon Akam

FREETOWN, Dec 16 (Reuters) - Sierra Leone plans to increase iron ore miner London Mining's tax rate by 19 percentage points to 25 percent, according to a draft agreement between the miner and government seen by Reuters on Friday.

The changes to London Mining's lease agreement are outlined in a renegotiated agreement which is still to be signed by Sierra Leone's president and approved by parliament.

Sierra Leone's director of mines, asked to comment, said the terms of the new agreement are not expected to change from the current draft.

London Mining declined to comment.

Shares in the London AIM-listed company was down over 2 percent at 283.5 pence by 1430 GMT.

London Mining is one of two iron ore projects coming on line in Sierra Leone. British peer African Minerals, which has its own tax arrangements with the government, has started shipping ore from its Tonkolili mine.   Continued...

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