Annual financial report for the year ended 31 March 18 and Notice of AGM

For a full text pdf version of the annual report, financial statements and notice of the AGM, please click here

Chairman’s statement

To Anglesey Shareholders

The improvement in base metal prices, which began in 2016, continued in 2017 and into 2018. The zinc price increased from US$1.00 per pound in January 2017 to a 10-year high of US$1.63 per pound in February 2018. From January 2016, the zinc price more than doubled making it one of the better performing metals over the two-year period. Expectations of an increase in the supply of zinc concentrates towards the end of 2018 have led to the recent decline in the zinc price to the $1.15 per pound range.

The price of copper increased substantially in the second half of 2017 and ended the year at US$3.25 per pound, a 30% increase from the end of 2016. Lead also performed well in 2017, rising from US$0.92 per pound in January 2017 to US$1.22 per pound in January 2018. Although all metal prices softened in mid -summer 2018 in response to global geopolitical uncertainty, there is a strong expectation of a continued positive outlook for base metals, particularly for zinc and copper.

Parys Mountain – 2017 Scoping Study

In July 2017 a new Scoping Study on the Parys Mountain copper-lead-zinc project in North Wales, was prepared by Micon International Limited (Micon) and Fairport Engineering Ltd. The Scoping Study envisages a mining rate of 1,000 tonnes per day, to produce an average annual output of 14,000 tonnes of zinc concentrate at 57% Zn, 7,200 tonnes of lead concentrate at 52% Pb and 4,000 tonnes of copper concentrate at 25% Cu, over an initial mine life of eight years.

The Scoping Study demonstrates a viable mine development and a healthy financial rate of return. For example, using assumptions of longer term metal price projections of $1.35 per pound for zinc and $3.00 per pound for copper, and using an 8% discount rate, to reflect the relatively low political risk in the UK, the indicated NPV would be $52 million or £42 million, with an IRR of 30%.

Path towards Production

Following completion of the positive 2017 Scoping Study, Anglesey has been working to progress the Parys Mountain project towards production. We have previously described four key steps in the development of the project which are: the conversion of the Scoping Study to a Definitive Feasibility Study, the commencement of an Environmental Impact Assessment, the recruitment of key corporate staff and securing project finance. Whilst a Definitive Feasibility Study to develop the project to a suitable status for bank debt financing might be the ideal course, the Parys Mountain project is not yet at the stage to undertake a Definitive Feasibility Study.

A Definitive Feasibility Study can be defined as a comprehensive technical and economic study to demonstrate that development of a mine is reasonably justified. The results of the study may serve as the basis for a decision by a financial institution to finance the development of the project. However, a Preliminary Feasibility Study is an intermediate step in the engineering process to evaluate the technical and economic viability of a mining project, occurring between a Scoping Study and a DFS.

The 2017 Scoping Study recommended further work as interim steps towards undertaking a PFS, including more detailed mine planning and design, more engineering studies, additional metallurgical test work and a review of tailings management and environmental and planning permissions, all of which will require new and further financing. During the year the Scoping Study has been subject to detailed examination and review with the aim of enhancing the economics of the project to attract the capital financing necessary to achieve our target of getting the Parys Mountain Mine into production at the earliest date possible.

Optimisation Studies

The 2017 Scoping Study was based on mining only the 2.1 million tonnes of indicated resources reported by Micon in 2012. Micon had reported a further 4.1 million tonnes of inferred resources which were not incorporated into the Scoping Study. Of the inferred resources currently estimated, the Engine Zone, which lies at depths up to 600m, is of higher grade in most areas.

Development of even half of these inferred resources, which were not included in the Scoping Study, would significantly increase the projected life of the Parys Mountain mine from the initial eight years to perhaps double the projected mine-life to 15 or 18 years with potential positive outcomes on the project economics.

Anglesey is working on a revised mine model with the objective of incorporating some of the inferred resources, including part of the higher-grade Engine Zone inferred resources, into the earlier years of the mine plan and thereby increasing the project life of the mine to at least 10 years. In parallel, the cut-off grade used to determine the resources included in the Scoping Study can be tested to determine if this cut-off grade can be lowered to increase the mineable tonnage and thereby further extend the projected mine life.

The Scoping Study also recommended further metallurgical investigation to improve recoveries and minimise metal losses from the DMS plant, particularly for gold and silver via the gravity concentration circuit. The proposed metallurgical work would help to confirm the design and selection of key process items such as the grinding circuit and the flotation cells and finalise the process flow sheet and mass balance before carrying out any detailed engineering works. A preliminary proposal for additional laboratory test work, with an estimated cost of £100,000, has been obtained which requires representative samples of the ore which currently may not be available. The recommended metallurgical review will be carried out to the extent possible using existing data and technical information.

Environmental Studies

Completion of a feasibility study requires an evaluation of the planning and environmental aspects of the proposed development. An external review of the planning permissions and associated licence requirements has confirmed that the planning permissions previously granted remain valid and in force and that development and operation of the Parys Mountain Mine will require various environmental assessments and permits granted by Natural Resources Wales. It is proposed that some further environmental baseline and investigative work be carried out to bring the database up to date and to comply with the current level of requirements.

Financing and Marketing

Based on the positive results of the Scoping Study, we have commenced discussions with potential financiers for the development of the Parys Mountain project. It is expected that this development will occur in stepped progressions, to be followed by sequential financings to move towards mine construction.

The Parys Mountain Mine will produce three separate marketable concentrates for each of the base metals to be mined: zinc, lead and copper. In addition, a small quantity of gravity concentrate containing silver and gold will be produced. The concentrates are likely be sold to one or more of the smelting and refining operations in Europe. Anglesey has also commenced preliminary discussions with potential end-purchasers of the concentrates with a view to entering long-term supply contracts  provided these can be linked to investment or other funding or commercial arrangements as part of the financing for the development of the project.

Iron Ore

The group’s investments in Grangesberg Iron and in Labrador Iron are heavily dependent on the future price of iron ore. In 2017 the price of 62% Fe iron ore ranged from US$55 to US$97, while averaging US$71 per tonne, and during the first six months of 2018 ranged from US$65 to US$80 per tonne. Over the past two years there has been a substantial shift in the iron ore market favouring higher grade quality (+65% Fe) product, with premiums paid for 65% Fe exceeding 30% of the 62% Fe spot price. As a result, high grade iron ore products are currently commanding high premiums to this spot price while sub-commodity grades (<60% Fe) with high impurities are suffering increasing penalties, resulting in a widening divergence in actual market sale prices. These market conditions and the resultant strong premium for ~65% Fe products are expected to continue in the medium term based on the current global project pipeline, to the potential benefit of our projects.

Grangesberg Iron

Anglesey continues to manage the Grangesberg iron ore project in Sweden. The high-quality product expected to be produced from Grangesberg, together with the potential for sales within Sweden’s domestic markets, make Grangesberg more attractive than many other undeveloped iron ore projects. Although Grangesberg will benefit from extensive existing infrastructure the project will still require high levels of capital expenditure. Together with the other shareholders and stakeholders in Grangesberg we continue to evaluate all options to develop a viable way forward for the project.

Labrador Iron

The group holds a 12% interest in Labrador Iron Mines Holdings Limited (LIM) which owns extensive iron ore resources and facilities in its Schefferville Projects in Labrador and Quebec, Canada. LIM has not undertaken mining operations since 2013, primarily due to the low iron ore price environment, but maintains its iron ore assets on a stand-by care and maintenance basis and, subject to securing financing, is positioned to resume mining operations as soon as economic conditions warrant.

Outlook

The 2017 Scoping Study demonstrated a viable mine development at Parys Mountain with a healthy financial rate of return. The outlook for metal prices, particularly zinc, copper and lead, which form the basis of the Parys Mountain revenue, remains very positive.

Our objective is to phase the development and financing of Parys Mountain in logical, sequential and parallel steps by undertaking the various optimisations studies and programmes, completing a prefeasibility or feasibility study and progressing Parys Mountain towards production as quickly as the necessary financing and technical timelines allow.

As well as maintaining a watching brief on the iron ore projects in Canada and Sweden, Anglesey also plans to pursue new opportunities for mineral exploration and development projects, in the context of the current resource cycle, with a focus on advanced copper exploration or development projects. We plan to enhance our board and small management team by recruiting experienced executives to help execute our plans and deliver our objectives.

We believe that given the world’s continuing demand for metals and the shortage of attractive advanced projects, the strong technical base and political stability associated with all of Anglesey’s projects, particularly Parys Mountain, finance for project development will become available.

Once again, I would like to thank all our shareholders for their patience and continuing support.

John F. Kearney

Chairman

31 July 2018

Strategic report – Operations

Principal activities and business review

Anglesey Mining is engaged primarily in the evaluating and developing its wholly owned Parys Mountain zinc, lead, copper project in North Wales. In 2017 a new Scoping Study demonstrated a viable mine development and a healthy financial rate of return. Site activities during the year have continued to be limited to care and maintenance, though the Scoping Study has been subject to detailed examination and review with the aim of further optimising the development of the Parys Mountain project.

In addition, under various agreements the group participates in the management of the Grangesberg iron ore property in Sweden in which it has a 6% holding and a right of first refusal to acquire a further 51% ownership interest. The group also has a 12% holding in the Labrador Iron Mines in eastern Canada, currently in care and maintenance.

The group’s objective is to phase the development and financing of the Parys Mountain project by undertaking various optimisation programmes, completing a prefeasibility or feasibility study and progressing the Parys Mountain Mine towards production.

Parys Mountain

The Parys Mountain property hosts a significant polymetallic zinc, copper, lead, silver and gold deposit. The site has a head frame, a 300m deep production shaft and planning permission for operations. The group has freehold ownership of the minerals and surface land. Infrastructure is good, political risk is low and the project enjoys the support of local people and government.

An independent JORC resource estimate completed in 2012 by Micon International Limited reported a resource of 2.1 million tonnes at 6.9% combined base metals in the indicated category and 4.1 million tonnes at 5.0% combined base metals in the inferred category, with substantial exploration potential.

In July 2017 a new Scoping Study using the 2012 resource estimate was prepared by Micon and Fairport Engineering Ltd. The Scoping Study demonstrates a viable development mining 1,000 tpd to produce lead, zinc and copper concentrates and yielding a healthy financial rate of return.

Development Plan

During the period 2006-2010 Anglesey Mining carried out a detailed drilling programme on the White Rock Zone which lies adjacent to the existing 300m deep Morris Shaft and largely overlies the deeper Engine Zone deposits, but which extends to surface. As a result of this drilling the 2012 resource estimate by Micon included both the White Rock Zone and the Engine Zone.

A new mining plan based on a surface decline to access the White Rock zone was prepared. It proposed that a decline would be developed by mining contractors and would be used as the initial means of access to the resource for development and mining. During the initial production phase from the White Rock zone the decline would continue to be driven to reach the current bottom of the Morris Shaft and beyond. The shaft would then be dewatered and deepened by approximately 150 metres and recommissioned as a hoisting shaft for the remnant White Rock ore and for the deeper and more valuable Engine Zone ore. Mining would be carried out initially from the main decline using rubber-tyred equipment including drill jumbos, load-haul-dump machines and trucks to remove development waste to surface and production ore to the planned adjacent processing plant. The existing hoist and headframe would be refurbished and used to bring ore to the surface for delivery to the processing plant through the deepened shaft.

The 2017 Scoping Study concluded that the preferred development option for Parys Mountain is a 1,000 tpd mine and plant with a Dense Media Separation (DMS) section and that after an initial ramp-up period, the higher production level can be maintained. This would result in a mine life of approximately eight years based only on the indicated resources.

Metal Production

The proposed processing plant will consist of crushing and grinding followed by conventional three stage flotation to produce copper, zinc and lead concentrates to be shipped to smelters in Europe. Metallurgical performance and recovery is based on the large volume of information available from test work on Parys Mountain ores over the years. Total base metal recovery to each of the three copper, zinc and lead concentrates is forecast to be 89.8% and taking into account the DMS losses overall recovery will be approximately 85.7%. Significant amounts of silver and gold will report to each of the concentrates. Some free gold will be recovered by gravity methods and will be sold as Welsh gold.

Smelter payment terms and penalties have been based on indicative treatment charges currently prevailing from European smelters.

On average 14,000 tonnes of zinc concentrate at 57% Zn, 7,200 tonnes of lead concentrate at 52% Pb and 4,000 tonnes of copper concentrate at 25% Cu, will be produced annually. These figures will vary somewhat during the life of the mine as mine feed varies depending upon the particular ore bodies being mined at any time. Life of mine average annual metal production into concentrates is forecast at 17.6 million pounds of zinc, 8.3 million pounds of lead and 2.2 million pounds of copper.

Using estimated shipping costs, smelter terms and penalties, the overall NSR for the three concentrates, including the precious metals, is expected to total in excess of $270 million at the metal prices used for the base case. This would represent net smelter revenue of approximately 72% of the metal value in concentrates delivered to the smelters.

Project Financial Results

The pre-production capital cost of the base case including mining, DMS, concentrator and infrastructure is estimated at $56 million, including a $4 million contingency. The initial capital cost for mine development is estimated to be $16 million, the concentrator $29.5 million including $3 million for the DMS plant, and infrastructure $10 million. Operating costs were developed by Micon and Fairport based on current knowledge and experience which at the higher levels of production are forecast at around $47 per tonne of ore treated.

The base case yields a pre-tax net present value of $33 million, or £26 million, at a conservative 10 per cent discount rate, using metal prices of $1.25 per pound for zinc, $1.00 per pound for lead, $2.50 per pound for copper, $17.50 per ounce for silver and $1,275 per ounce for gold and at an exchange rate of £1.00 = $US1.25. With an estimated pre-production capital cost of $56 million, or £45 million, this results in an indicated internal rate of return (IRR) of 26%.

At an 8% discount rate, used to reflect the relatively low risks of the project given its advanced level of development and low political risk in the UK, the NPV8 would be enhanced to $40 million, or £32 million, for the base case metal price scenario. The project is sensitive to metal prices and exchange rates. Using metal price projections of $1.35 per pound for zinc and $3.00 per pound for copper the NPV10 would be $43 million, or £35 million and the NPV8 $52 million, or £42 million, with an IRR of 30%.

The pre-tax net present values, at 10% and 8% discount rates, and internal rates of return, are illustrated in the table below, all at a sterling:US dollar exchange rate of £1.00 = $US1.25.

Metal Prices Pre-Tax Cash Flows
Zinc

US$/lb

Lead US$/lb Copper

US$/lb

Silver

US$/oz

Gold

US$/oz

Undiscounted

$M

NPV10%

$M

NPV8%

$M

IRR

%

1.25 1.00 2.50 17.50 1,275 91.2 33.2 40.2 26
1.35 1.00 3.00 17.50 1,275 110.8 43.5 52.3 30

Mineral Resources and Exploration Potential

The 2017 Scoping Study utilises the Micon 2012 JORC Code compliant resource estimate of 2.1 million tonnes at 6.9% combined base metals in the indicated category. Micon had also reported a further 4.1 million tonnes at 5.0% combined base metals in the inferred category. These inferred mineral resources are not included in the Scoping Study but if utilised would significantly extend the projected operating life of the mine with a consequential increase in the resultant estimated valuation.

While the inclusion of inferred resources does not meet the strict criteria for feasibility studies used by banks for loan evaluation, given the detailed geological knowledge of Parys Mountain now available it would be acceptable to utilise some of this inferred resource for comparative financial modelling. To evaluate potential optimisation of the project some additional mine planning and scheduling will be carried out on the inferred resource and the results input to the financial model.

As reported in 2012, the resource estimate was made using a gross metal product value cut-off of $80 per tonne. The 2017 Scoping Study estimated the cash operating cost, prior to royalties and taxes, at $47 per tonne. Use of a lower cut-off grade would increase the tonnes in the indicated category, but with some reduction in grade, and increase the projected mine life. Further optimisation studies are required to determine the optimum cut-off grade that would provide the maximum increased return. These studies are being carried out initially on the base financial model, i.e. using the indicated resources only, and this will be followed by the extended resources using some of the inferred resources as detailed previously. These optimisation studies are of necessity an on-going process. As more detailed mine costings are developed, and as the increased tonnage potentially changes not just mine life but also the grade of ore processed, a series of iterations will be required to reach that optimum forecast result.

In addition to the indicated and inferred resources reported by Micon, the Parys Mountain area, over which the group holds the mineral rights, contains numerous indications of mineralisation across several kilometres many of which have been disclosed in earlier releases and reports. As most of these indications have been encountered in drilling at some depth, further exploration would be more effective from underground locations once mining operations commence.

Further work on Parys Mountain

The Scoping Study recommended further work to optimise and enhance the project as the next step ahead of mine development, including more detailed mine and stope design, underground geotechnical studies, additional infill drilling, more detailed engineering studies, additional metallurgical test work including work to improve recovery of specific metals to their own concentrate, and review of tailings management and paste fill processes. Several opportunities for cost reduction or productivity improvement have been identified.

Metallurgical Studies

Fairport has recommended that additional metallurgical testwork be carried out to increase confidence in a number of key areas including the performance of the DMS plant, regrind work in the lead circuit to improve concentrate quality, in the paste backfill section to confirm geotechnical characteristics, and in improving the overall water balance to reduce operating costs and discharge requirements. There is insufficient ore of a representative nature currently available to carry out all of this programme.

Environmental Studies

A conditional planning permission was issued by Gwynedd County Council in 1988 for ‘the development of a mining and milling complex for the extraction and processing of metalliferous ores and disposal of waste rock and slurry at Parys Mountain, Amlwch, Gwynedd. In 1991 a second planning permission was granted to develop a ‘Mine portal and spiral decline to access upper levels of the ore body to provide a second means of egress’. Both these planning permissions remain in force.

In the United Kingdom, industrial and other development proposals, including mineral development projects, are subject to two different processes: a) a planning process through which a planning authority grants permission for a specific development and, b) the environmental permitting process through which permission is granted (in this case by Natural Resources Wales) for the operation of an installation or activity that could have an environmental impact.

For planning purposes Parys Mountain is currently considered a dormant site which cannot commence permitted activity until the mineral planning authority has agreed conditions. An application may need to be accompanied by an environmental statement under the Environmental Impact Assessment (EIA) Regulations. The regulations specify what type of developments should be subject to EIA. Underground mineral workings require an EIA only if the development is likely to have significant effects on the environment. The planning authority may require an EIA as part of the review process and has the responsibility for deciding if an EIA is required.

Several environmental studies have been undertaken within the Parys Mountain area, dating back prior to 1988, when the first planning permission for a new mine was obtained by Anglesey. Baseline monitoring of environmental conditions was carried out at various times in the 1980s and 1990s. There has also been an extensive monitoring programme for water quality carried out by the Environment Agency to assess the impacts of historic mining activities in the area.

It is now proposed that some further environmental baseline and investigative work be carried out to bring the database up to date and to comply with the now current level of regulations. During the year a report was prepared on the details of the work that will be needed to meet these requirements and planning for commencement of this work is advanced. It is stressed that the original planning permissions that have been in place for a number of years remain intact.

Grangesberg Iron AB

The Grangesberg iron ore mine is situated in the mineral-rich Bergslagen district of central Sweden about 200 kilometres north-west of Stockholm. Until its closure in 1989 due to prevailing market conditions, Grangesberg had mined in excess of 150 million tonnes of iron ore.

The group holds a direct 6% interest in Grangesberg Iron AB (GIAB) and, until June 2021, a right of first refusal over 51% of the share capital of GIAB. This right has been granted in exchange for the group continuing to co-manage GIAB on a cost recovery basis. The group also has shareholder and cooperation agreements such that it holds operatorship of GIAB subject to certain conditions and appoints three out of five directors to the board of GIAB.

GIAB is a private Swedish company founded in 2007 which in 2014 completed (with assistance from the group) a financial and capital restructuring of the mine. GIAB holds a 25-year exploitation permit covering the previously mined Grangesberg underground mining operations granted by the Swedish Mining Inspectorate in May 2013.

In September 2014 an NI 43-101 Technical Report was prepared by Roscoe Postle Associates Inc showing a compliant resource estimate for the Grangesberg Mine of 115.2 million tonnes at 40.2% Fe in the indicated category and 33.1 million tonnes at 45.2% Fe in the inferred category. RPA concluded that the Grängesberg iron ore deposit hosts a significant iron resource that has excellent potential for expansion at depth.

Over the past two years there has been a substantial shift in the iron ore market favouring higher grade quality (+65% Fe) product, with premiums paid for 65% Fe exceeding 30% of the reported 62% reported spot price. The high-quality product expected to be produced from Grangesberg would attract such premium pricing and, together with the potential for sales within Sweden’s domestic markets, make Grangesberg more attractive than many other undeveloped iron ore projects. Although Grangesberg benefits from extensive existing infrastructure, development of the project will still require high levels of capital expenditure.

Labrador Iron

The group has an investment holding of 12% (2017 – 12%) in Labrador Iron Mines Holdings Limited. LIM owns extensive iron ore resources and facilities in its exploration properties in Labrador and in Quebec, Canada, one of the major iron ore producing regions in the world.

In the three-year period of 2011 to 2013 LIM produced a total of 3.6 million dry metric tonnes of iron ore, all of which was sold in 23 cape-size shipments into the China spot market. LIM has not undertaken mining operations since 2013, primarily due to the low iron ore price environment, but maintains its properties on a stand-by care and maintenance basis and, subject to securing financing, is positioned to resume mining operations as soon as economic conditions warrant.

Other activities

The directors continue to seek out new properties suitable for development within a relatively short time frame and within the financing capability likely to be available to the group. The directors have identified copper projects as the most potentially attractive and the group is currently evaluating a number of early stage opportunities.

Performance

The directors expect to be judged by results of project development and/or exploration and by their success in creating long term value for shareholders. The group holds shares in mineral companies and has interests in exploration and evaluation properties and, until economically recoverable reserves can be identified, there are no standardised performance indicators which can usefully be employed to gauge the performance of the group, other than the market price of the company’s shares.

The chief external factors affecting the ability of the group to move forward are primarily the demand for metals and minerals, levels of metal prices and exchange rates; these and other factors are dealt with in the risks and uncertainties section below.

Financial results and position

The group has no revenues from the operation of its properties. The loss for the year ended 31 March 2018 after tax was £278,189 compared to a loss of £307,968 in the 2017 fiscal year. The administrative and other costs excluding investment income and finance charges were £109,677 compared to £141,022 in the previous year.

During the year there were no additions to fixed assets (2017 – nil) and £100,319 (2017 – £84,196) was capitalised in respect of the Parys Mountain property as mineral property exploration and evaluation.

At 31 March 2018 the group held mineral property exploration and evaluation assets with a carrying value of £15.0 million. These carrying values are supported by the results of the 2017 Scoping Study may not reflect the realizable value of the properties if they were offered for sale at this time.

The group’s cash balance at 31 March 2018 was £137,113 (2017 – £392,293) the reduction being due to ongoing operating and capital expenses. The foreign exchange loss of £42 (2017 – gain £178) shown in the income statement arises on cash balances held in Swedish Krona (in 2017 there was also a Canadian dollar balance).

At 31 March 2018 the company had 177,608,051 ordinary shares in issue, unchanged from the previous year.

Financial instruments

The group’s use of financial instruments is described in note 24.

Employment, community and donations

The group is an equal opportunity employer in all respects and aims for high standards from and for its employees. At 31 March 2018 the company had five male directors; there were no female directors or employees. It also aims to be a valued and responsible member of the communities which it operates in or affects. There are no social, community or human rights issues which require the provision of further information in this report.

Environment

The group currently has no operations and consequently its effect on the environment is very slight, being limited to the operation of two small offices, where recycling and energy usage minimisation are encouraged. It is not practical or useful to quantify the effects of these measures.

Risks and uncertainties

The directors have carried out a robust assessment of the principal risks facing the group, including those that would threaten its business model, future performance, solvency or liquidity. In conducting its business the group faces a number of risks and uncertainties some of which have been described above in regard to particular projects. The board believes the principal risks facing the group are adequately disclosed in these financial statements and that there are no other risks of comparable magnitude which need to be disclosed. In reviewing the risks facing the group, the board considers it is sufficiently close to the group’s operations and aware of its activities to be able to adequately monitor risk without the establishment of any formal process. The group may become subject to risks against which it cannot insure or against which it may elect not to insure because of high premium costs or other reasons. However, there are also risks and uncertainties of a nature common to all mineral projects and these are summarised below.

General mining risks

Actual results relating to, amongst other things, mineral reserves, mineral resources, results of exploration, capital costs, mining production costs and reclamation and post closure costs, could differ materially from those currently anticipated by reason of factors such as changes in general economic conditions and conditions in the financial markets, changes in demand and prices for minerals that the group expects to produce, legislative, environmental and other judicial, regulatory, political and competitive developments in areas in which the group operates, technological and operational difficulties encountered in connection with the group’s activities, labour relations, costs and changing foreign exchange rates and other matters.

The mining industry is competitive in all of its phases. There is competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential. The group faces competition from other mining companies in connection with the acquisition and retention of properties, mineral claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees and other personnel.

Development and liquidity risk

At March 31, 2018, the group had limited working capital and had not achieved profitable operations and will need to generate additional financial resources to fund its planned optimization and development programmes at Parys Mountain. The group has relied primarily on equity financings to fund its working capital requirements and on previous occasions has also relied on its largest shareholder, Juno Limited, for financial support and may be required to do so in the future to ensure the group will have adequate funds for its current activities. There is a risk that additional funding may not be available on a timely basis or on acceptable terms. Development of the Parys Mountain project will be dependent on raising further funds from various sources.

Exploration and development risk

Exploration for minerals and development of mining operations involve risks, many of which are outside the group’s control. Current operations are in politically stable environments and hence unlikely to be subject to expropriation but exploration by its nature is subject to uncertainties and unforeseen or unwanted results are always possible.

Metal price risks

The prices of metals fluctuate widely and are affected by many factors outside the group’s control. The relative prices of metals and future expectations for such prices have a significant impact on the market sentiment for investment in mining and mineral exploration companies. Metal price fluctuations may be either exacerbated or mitigated by currency fluctuations which affect the amount which might be received in sterling.

Foreign exchange risk

LIM is a Canadian company; Angmag AB and GIAB are Swedish companies. Accordingly, the value of the holdings in these companies is affected by exchange rate risks. Operations at Parys Mountain are in the UK and exchange rate risks are minor. Most of the cash balance at the year end was held in sterling – see notes 17 and 24.

Permitting, environment and social risk

The group holds planning permissions for the development of the Parys Mountain property but further consents will be required to carry out proposed activities and these may be subject to various operational conditions and reclamation requirements.

Employee and personnel risk

The group is dependent on the services of a small number of key executives specifically the chairman, chief executive and finance director. The loss of these persons or the group’s inability to attract and retain additional highly skilled and experienced employees for any areas in which the group might engage may adversely affect its business or future operations.

This report was approved by the board of directors on 31 July 2018 and signed on its behalf by:

Bill Hooley

Chief executive officer

For a full text pdf version of the annual report, financial statements and notice of the AGM, please click here

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Posted in Corporate, Financial | Comments Off on Annual financial report for the year ended 31 March 18 and Notice of AGM

Half yearly report for the six months to 30 September 2017

Chairman’s Statement and Management Report

We are pleased to report that the broad trend of improving base metal prices is prevailing during 2017. The current price of zinc is strong and the long-term price outlook remains very positive.

The rally in base metals, which began in 2016 is continuing with the London Metal Exchange zinc price hitting a new 10-year high of US$1.52 per pound in late September. Since the beginning of 2017, the zinc price is up almost 30% and the year-over-year increase is approximately 40%.

We therefore believe that it is now opportune to move forward with the development of the Parys Mountain base metal project in North Wales and we are putting in place a number of key elements to facilitate this.

Parys Mountain

During the half year the updated Scoping Study on Parys Mountain, prepared by Micon International Limited and Fairport Engineering Limited, was received. The positive results from that Study, which were described in some detail in the annual report issued in July, indicate a processing rate for the planned Parys Mountain Mine of 1,000 tonnes per day, generating average copper, lead and zinc concentrate production of approximately 22,000 tonnes per annum in total.

The Scoping Study was based on copper prices of $US2.50 per pound, zinc of $US1.25 per pound and lead of $US1.00 per pound, generating an overall net smelter return of $US270 million with an IRR of 28% and an NPV10 of $US43 million.

Subsequent to preparation of the Study, metal prices have continued to improve significantly with copper now selling at around $US3.10 per pound, zinc at $US1.45 per pound and lead at $US1.10 per pound. If these current market prices were used in the Study, the financial results indicated would increase substantially.

We have previously described four key steps in the development of the project. These are: the commencement of an Environmental Impact Assessment; the conversion of the Scoping Study to a Definitive Feasibility Study; the recruitment of key corporate staff; and pursuing discussions with potential providers of project finance.

Progress has been made on each of these areas and discussions have been held with potential new executives with the expectation that they will be recruited in time to have inputs into the other key activities.

Of particular importance has been an external review of the projects current Planning Permissions and associated ongoing requirements for licences and permits. This external review has confirmed that the Planning Permissions remain in good standing but as expected will be reviewed during the feasibility study. The external review also examined the particular requirements for environmental compliance and how these will tie in with the planning review. We now have determined the route forward to progress each of these matters to achieve our target of initial production during 2020.

Grangesberg Iron

Activities at Grangesberg have been kept at a low level whilst the prospects for the price for iron ore remains somewhat subdued. However, Grangesberg would be a producer of high quality saleable product likely in the form of iron ore pellets. Demand for iron ore worldwide driven particularly by China continues to increase, albeit not at the same pace as that achieved several years ago and there is a growing requirement for high grade product and in particular for pellets.

The premium price for pellets is now forecast to range between $US35 and $US50 per tonne in the China market, primarily as a result of demand for higher quality iron ore as China plans to shut down up to 1,000 low grade domestic iron ore mines due to pollution concerns. Such a pellet premium, if sustained, would indicate the potential for a viable operation on the Grangesberg project, under the evaluation studies carried out within the last five years. Nevertheless, the capital cost to develop such an operation will be significant and it will be necessary to be confident that the current pellet premiums will be sustainable in the longer term. Anglesey continues to support Grangesberg and recognises that it is likely that further external partners will be required to raise the capital required for full development.

Labrador

Labrador Iron Mines operations at Schefferville are being maintained in stand-by care and maintenance following the completion of LIM’s financial restructuring in late 2016.  Notwithstanding the challenging financial environment during the past several years, LIM continued to conduct a variety of operational activities with the objective of preserving its assets, maintaining its mineral properties on a standby basis, fulfilling environmental and regulatory obligations and controlling costs.

Anglesey, with a holding of 12% in LIM, maintains a watching but passive interest.

Operations

As previously, we have continued to keep corporate and operating cost at the lowest possible level, although these were a little higher than the previous year because of increased activity. In accordance with the company’s accounting policies and past practice, the expenditures on the Parys Project related to the Scoping Study have in general been capitalised in the accounts rather than expensed.

Financial results

The group had no revenue for the period. The loss for the six months to 30 September 2017 was £167,186 compared to £135,949 for the comparative period ended 30 September 2016. The net current assets reduced from £301,339 to £157,560 over the six months due to property expenditures capitalised of £65,943 together with the current operating expenses. Additional financing will be required for working capital to maintain the group and carry out planned progress at Parys Mountain.

Outlook

After a number of years when the outlook seemed hopeful but still uncertain, we can now look forward to a more positive future. The outlook for the key commodities upon which we rely – copper, zinc and lead, remains positive. The positive outlook is based largely on straightforward supply/demand criteria with considerably less influence from inventory adjustments and hedge trading that appeared to unduly influence prices previously.

This coming year will be critical for the development of Parys Mountain. We need to manage the transition to an expanded management team which will be instrumental in raising funds in what remains a demanding market, particularly for equity capital in the smaller resource company sector.

We look forward to being able to further update shareholders on these developments at appropriate times in the near future.

I would like to thank our limited management and our very supportive board of directors for their continued valuable input and advice and we again thank shareholders for their continued patience and support.

John F Kearney

Chairman

29 November 2017

 

Unaudited condensed consolidated income statement

 Notes Unaudited six months ended 30 September 2017 Unaudited six months ended 30 September 2016
All operations are continuing                            £                            £
 Revenue  –  –
 Expenses  (78,100)  (42,418)
 Equity-settled employee benefits  (9,324)  –
 Investment income 56 103
 Finance costs  (79,954)  (82,392)
 Foreign exchange gain 136 131
 Loss before tax  (167,186)  (124,576)
 Taxation 8  –  –
 Loss for the period 7  (167,186)  (124,576)
 Loss per share 
 Basic – pence per share  (0.1)p  (0.1)p
 Diluted – pence per share  (0.1)p  (0.1)p

Unaudited condensed consolidated statement of comprehensive income

 Loss for the period  (167,186)  (124,576)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
 Exchange difference on
translation of foreign holding
21,155  (18,135)
 Total comprehensive loss for the period  (146,031)  (142,711)

All attributable to equity holders of the company

 

Unaudited condensed consolidated statement of financial position

 Notes Unaudited 30 September 2017 Audited 31 March 2017
               £                £
Assets
 Non-current assets
 Mineral property exploration and evaluation 9 15,076,765 15,010,822
 Property, plant and equipment 204,687 204,687
 Investments 10 86,660 86,660
 Deposit 123,168 123,118
15,491,280 15,425,287
 Current assets
 Other receivables 34,239 23,603
 Cash and cash equivalents 226,088 392,293
260,327 415,896
 Total assets 15,751,607 15,841,183
Liabilities
 Current liabilities
 Trade and other payables  (102,767)  (114,557)
 (102,767)  (114,557)
 Net current assets 157,560 301,339
 Non-current liabilities
 Loans  (3,474,659)  (3,415,738)
 Long term provision  (50,000)  (50,000)
 (3,524,659)  (3,465,738)
 Total liabilities  (3,627,426)  (3,580,295)
 Net assets 12,124,181 12,260,888
Equity
 Share capital 11 7,286,914 7,286,914
 Share premium 10,171,986 10,171,986
 Currency translation reserve  (52,355)  (73,510)
 Retained losses  (5,282,364)  (5,124,502)
Total shareholders’ equity 12,124,181 12,260,888

All attributable to equity holders of the company

Unaudited condensed consolidated statement of cash flows

 Notes Unaudited six months ended 30 September 2017 Unaudited six months ended 30 September 2016
                           £                            £
Operating activities  
 Loss for the period  (167,186)  (124,576)
 Adjustments for:
 Investment income  (56)  (103)
 Finance costs 79,954 82,392
 Equity-settled employee benefits 6 9,324  –
 Foreign exchange movement  (136)  (131)
 (78,100)  (42,418)
Movements in working capital
 (Increase)/decrease in receivables  (10,636) 2,348
 Decrease in payables  (25,693)  (25,672)
Net cash used in operating activities  (114,429)  (65,742)
Investing activities
 Investment income 6 103
 Mineral property exploration and evaluation  (51,918)  (30,388)
Net cash used in investing activities  (51,912)  (30,285)
Financing activities
 Loans  – 125,000
Net cash generated from financing activities  – 125,000
Net (decrease)/increase in cash and cash equivalents  (166,341) 28,973
 Cash and cash equivalents at start of period 392,293 11,504
 Foreign exchange movement 136 131
 Cash and cash equivalents at end of period 226,088 40,608

 

 

All attributable to equity holders of the company

Unaudited condensed consolidated statement of changes in group equity

 Share
capital
£
 Share
premium
£
 Currency translation reserve
£
 Retained losses
£
 Total
£
Equity at 1 April 2017 – audited 7,286,914 10,171,986  (73,510)  (5,124,502) 12,260,888
Total comprehensive
income for the period:
Exchange difference on
translation of foreign holding
 –  – 21,155  – 21,155
Loss for the period  –  –  –  (167,186)  (167,186)
Total comprehensive
income for the period
 –  – 21,155  (167,186)  (146,031)
Equity-settled employee benefits  –  –  – 9,324 9,324
Equity at
30 September 2017 – unaudited
7,286,914 10,171,986  (52,355)  (5,282,364) 12,124,181
Comparative period
Equity at 1 April 2016 – audited 7,116,914 9,848,949  (38,457)  (4,826,013) 12,101,393
Total comprehensive
income for the period:
Exchange difference on
translation of foreign holding
 –  –  (18,135)  –  (18,135)
Loss for the period  –  –  –  (124,576)  (124,576)
Total comprehensive
income for the period
 –  –  (18,135)  (124,576)  (142,711)
Equity at
30 September 2016 – unaudited
7,116,914 9,848,949  (56,592)  (4,950,589) 11,958,682

All attributable to equity holders of the company


Notes to the accounts

  1. Basis of preparation

This half-yearly financial report comprises the unaudited condensed consolidated financial statements of the group for the six months ended 30 September 2017. It has been prepared in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority, the requirements of IAS 34 – Interim financial reporting (as adopted by the European Union) and using the going concern basis and the directors are not aware of any events or circumstances which would make this inappropriate. It was approved by the board of directors on 29 November 2017. It does not constitute financial statements within the meaning of section 434 of the Companies Act 2006 and does not include all of the information and disclosures required for annual financial statements. It should be read in conjunction with the annual report and financial statements for the year ended 31 March 2017 which is available on request from the company or may be viewed at www.angleseymining.co.uk.

The financial information contained in this report in respect of the year ended 31 March 2017 has been extracted from the report and financial statements for that year which have been filed with the Registrar of Companies. The report of the auditors on those accounts did not contain a statement under section 498(2) or (3) of the Companies Act 2006 and was not qualified. The half-yearly results for the current and comparative periods have not been audited or reviewed.

  1. Significant accounting policies

The accounting policies applied in these unaudited condensed consolidated financial statements are consistent with those set out in the annual report and financial statements for the year ended 31 March 2017.

Early Annual Improvements to IFRSs (2014 – 2016).

Effective 1 January 2017 and expected to be endorsed by the EU in Q3 2017.

  • IFRS 9 Financial Instruments. Effective 1 January 2018. Early application is permitted.
  • IFRS 15 Revenue from Contracts with Customers. Effective 1 January 2018. Early application is permitted
  • Clarifications to IFRS 15 Revenue from Contracts with Customers. Effective 1 January 2018 and expected to be endorsed by the EU in Q2 2017. Early application is permitted.

Annual Improvements to IFRSs (2014 – 2016).

Effective 1 January 2018 and expected to be endorsed by the EU in Q3 2017.

  • IFRS 16 Leases. Effective 1 January 2019 and expected to be endorsed by the EU in Q4 2017. Early application is permitted with application of IFRS 15 Revenue from Contracts with Customers.

The directors expect that the adoption of the above pronouncements (with the possible exceptions of IFRS9 and IFRS16) will have no material impact to the financial statements in the period of initial application other than disclosure. IFRS 9 is still ongoing and yet to be adopted by the EU. The group is not yet generating any revenue consequently the implementation of IFRS15 will have no impact at present. The directors have not yet assessed the full impact IFRS16 on these financial statements.

There have been no other new or revised International Financial Reporting Standards, International Accounting Standards or Interpretations that are in effect since that last annual report that have a material impact on the financial statements.

  1. Risks and uncertainties

The principal risks and uncertainties set out in the group’s annual report and financial statements for the year ended 31 March 2017 remain the same for this half-yearly financial report and can be summarised as: development risks in respect of mineral properties, especially in respect of permitting and metal prices; liquidity risks during development; and foreign exchange risks. More information is to be found in the 2017 annual report – see note 1 above.

  1. Statement of directors’ responsibilities

The directors confirm to the best of their knowledge that: (a) the unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of IAS 34 Interim financial reporting (as adopted by the European Union); and (b) the interim management report includes a fair review of the information required by the FSA’s Disclosure and Transparency Rules (4.2.7 R and 4.2.8 R). This report and financial statements were approved by the board on 29 November 2017 and authorised for issue on behalf of the board by Bill Hooley, chief executive officer and Danesh Varma, finance director.

  1. Activities

The group is engaged in mineral property development and currently has no turnover. There are no minority interests or exceptional items.

  1. Earnings per share

The loss per share is computed by dividing the loss attributable to ordinary shareholders of £0.167 million (loss to 30 September 2016 £0.125m), by 177,608,051 (2016 – 160,608,051) – the weighted average number of ordinary shares in issue during the period. Where there are losses the effect of outstanding share options is not dilutive.


  1. Business and geographical segments

There are no revenues. The cost of all activities charged in the income statement relates to exploration and development of mining properties. The group’s income statement and assets and liabilities are analysed as follows by geographical segments, which is the basis on which information is reported to the board.

Income statement analysis

Unaudited six months ended 30 September 2017
       UK Sweden – investment Canada – investment        Total
          £           £           £           £
Expenses  (78,100)  –  –  (78,100)
Equity settled employee benefits  (9,324)  –  –  (9,324)
Investment income 56  –  – 56
Finance costs  (72,116)  (7,838)  –  (79,954)
Exchange rate movements 136  –  – 136
Loss for the period  (159,348)  (7,838)  –  (167,186)

 

Unaudited six months ended 30 September 2016
       UK Sweden – investment Canada – investment        Total
          £           £           £           £
Expenses  (42,409)  (9)  –  (42,418)
Investment income 103  –  – 103
Finance costs  (82,392)  –  –  (82,392)
Exchange rate movements 105 26  – 131
Loss for the period  (124,593) 17  –  (124,576)

 

 Assets and liabilities

` Unaudited 30 September 2017
       UK Sweden investment Canada investment        Total
          £              £           £           £
Non current assets 15,404,620 86,659 1 15,491,280
Current assets 259,059 1,268  – 260,327
Liabilities  (3,343,051)  (284,375)  –  (3,627,426)
Net assets/(liabilities) 12,320,628  (196,448) 1 12,124,181
 Audited 31 March 2017
       UK Sweden investment Canada investment Total
          £              £           £           £
Non current assets 15,338,627 86,659 1 15,425,287
Current assets 414,655 1,241  – 415,896
Liabilities  (3,282,725)  (297,570)  –  (3,580,295)
Net assets/(liabilities) 12,470,557  (209,670) 1 12,260,888

 

  1. Deferred tax

There is an unrecognised deferred tax asset of £1.3 million (31 March 2017 – £1.3m) which, in view of the group’s results, is not considered to be recoverable in the short term. There are also capital allowances, including mineral extraction allowances, exceeding £12.5 million (unchanged from 31 March 2017) unclaimed and available. No deferred tax asset is recognised in the condensed financial statements.

  1. Mineral property exploration and evaluation costs

Mineral property exploration and evaluation costs incurred by the group are carried in the unaudited condensed consolidated financial statements at cost, less an impairment provision if appropriate. The recovery of these costs is dependent upon the successful development and operation of the Parys Mountain project which is itself conditional on finance being available to fund such development. During the period expenditure of £65,943 was incurred (six months to 30 September 2016 – £18,549). There have been no indicators of impairment during the period.

 

  1. Investments
 Labrador  Grangesberg  Total
         £            £            £     
At 1 April 2016 1 86,659 86,660
Addition during period
At 31 March 2017 1 86,659 86,660
Addition during period  –
At 30 September 2017 1 86,659 86,660

Labrador:  The group’s investment is classified as ‘unquoted’ and is held at a nominal value of £1.

Grangesberg:  The group has a 6% holding in Grangesberg Iron AB (an unquoted Swedish company) and a right of first refusal over shares amounting to a further 51% of that company. This investment has been initially recognised and subsequently measured at cost, on the basis that the shares are not quoted and a reliable fair value is not able to be estimated.

 

  1. Share capital
     Ordinary shares of 1p        Deferred shares of 4p  Total
Issued and
fully paid
 Nominal
value £
 Number      Nominal
value £
 Number  Nominal
value £
At 31 March 2016 1,606,081 160,608,051 5,510,833 137,770,835 7,116,914
Shares issued for cash 170,000 17,000,000  –  – 170,000
At 31 March 2017 and
30 September 2017
1,776,081 177,608,051 5,510,833 137,770,835 7,286,914

 

  1. Financial instruments
 Group  Available for sale assets  Loans & receivables
 Unaudited 30 September 2017  31 March 2017  Unaudited 30 September 2017  31 March 2017
£       £       £       £      
Financial assets
 Investments 1 1  –  –
 Deposit  –  – 123,168 123,118
 Other receivables  –  – 34,239 23,603
 Cash and cash equivalents  –  – 226,088 392,293
 –  –
1 1 383,495 539,014

 

  1. Events after the reporting period

None.

  1. Related party transactions

None.

 

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Parys Mountain Project Update

Anglesey Mining plc

8th September 2017 LSE:AYM

Parys Mountain Project Update
Planning for production in 2020

Anglesey Mining plc (“Anglesey” or the “Company”) is pleased to provide the following update on the Parys Mountain project in North Wales.

On 24th July 2017, Anglesey reported on the Scoping Study completed by Micon International Limited and Fairport Engineering Limited. The financial figures used in the Scoping Study were based on metal prices prevailing at that time. Since July all the metals to be produced at Parys Mountain have increased in price with copper at $3.10/lb compared to $2.50/lb in the Scoping Study, zinc has increased to $1.40/lb compared to $1.25/lb in the Study and lead has moved to $1.09/lb compared to $1.00. There has also been upward movement in both gold and silver. In contrast, the pound has strengthened somewhat against the US dollar and is now trading around $US1.30 to £1.00 compared to $US1.25 in the Study.

The overall impact of these changes would be very positive on the pre-tax NPV and IRR.

The fundamentals underlying the recent increases in these metal prices are well founded and are likely to continue to support upward growth through the next several years.

Anglesey believes that it is now opportune to progress a number of steps to move the Parys Mountain project forward with the expectation that financing can be obtained and the project developed to production as soon as practicable. The major steps to be taken in the short term will include:

• Commencement of an Environmental Impact Assessment
• Conversion of the Scoping Study to a Definitive Feasibility Study
• Recruitment of key corporate staff
• Discussions with potential providers of project finance, including investment funds, metal traders, smelters and banks

It is planned to immediately commence all of these steps with the hope that a Definitive Feasibility Study, including an Environmental Impact Assessment, can be completed in the first half of 2018 so that meaningful project financing discussions can take place immediately thereafter. It is the intention of the Company to bring in new personnel into key positions to drive these matters forward and move the project and the Company to a successful long-term future.

The Company has adequate funds to initiate these steps and continue its normal corporate and limited site operations but will need to raise some additional funding to complete these development targets. This will not likely involve significant dilution for current shareholders.

Providing this timetable can be met and discussions on project financing are well advanced by the middle of next year, it would be possible for project construction to commence before the end of 2018 with initial production targeted for the first half of 2020.

Parys Mountain Project

The Parys Mountain Scoping Study base case envisages a mining rate of 1,000 tonnes per day, to produce an average annual output of 12,500 tonnes of zinc concentrate at 57% Zn, 6,400 tonnes of lead concentrate at 52% Pb and 3,500 tonnes of copper concentrate at 25% Cu, annually, over an initial mine life of eight years.

The overall net smelter return (NSR) for the three concentrates, including the silver and gold precious metals contributions, is expected to total more than $270 million at the forecast metal prices used for the base case.

The base case yields a pre-tax net present value of $33.2 million, or £26.6 million, at a conservative 10 per cent discount rate, using metal prices of $1.25 per pound for zinc, $1.00 per pound for lead, $2.50 per pound for copper, $17.50 per ounce for silver and $1,275 per ounce for gold and at an exchange rate of £1.00 = $US1.25. With an estimated pre-production capital cost of $53 million, or £42 million, this results in an indicated internal rate of return (IRR) of 28.3%.

Using longer term metal price projections of $1.35 per pound for zinc and $3.00 per pound for copper the NPV10 would be $43.2 million, or £34.6 million. At an 8% discount rate, used to reflect the relatively low risks of the project given its advanced level of development and low political risk in the UK, the NPV8 would be enhanced to $41 million, or £32.8 million, for the base case metal price scenario and to $53 million, or £42 million, for the higher longer-term metal prices, with an IRR of 33%.

Importantly, the Scoping Study was based on only the 2.1 million tonnes of indicated resources reported by Micon in 2012. Micon had also reported a further 4.1 million tonnes of inferred resources which were not incorporated into the Scoping Study. It is expected that a high proportion of these inferred resources will be converted to indicated probable reserves once exploration drilling from underground takes place. These additional resources would be processed through the same concentrator plant and would significantly increase the projected life of the mine, to perhaps double the projected mine-life to 15 or 18 years, and enhance the NPV.

About Anglesey Mining plc

Anglesey is carrying out development and exploration work at its 100% owned Parys Mountain zinc-copper-lead deposit in North Wales, UK with a reported resource of 2.1 million tonnes at 6.9% combined base metals in the indicated category and 4.1 million tonnes at 5.0% combined base metals in the inferred category.
Anglesey also holds a 6% interest and management rights to the Grangesberg Iron project in Sweden, together with a right of first refusal to increase its interest by a further 51%. Anglesey also holds 11.8% of Labrador Iron Mines Holdings Limited which has direct shipping iron ore deposits in Labrador and Quebec.

For further information, please contact:

Bill Hooley, Chief Executive +44 (0)7785 572517
Danesh Varma, Finance Director +44 (0)207 653 9881
Elliot Hance, Beaufort Securities +44 (0)207 382 8300

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Voting at the AGM / Total voting rights

In respect of the voting at the company’s AGM held on 1 September 2017 the directors are pleased to report that all resolutions were passed unanimously on a show of hands.

The valid proxies recorded in respect of voting at the meeting were as follows:

Resolution In Favour Against Withheld
1 To receive the report and accounts 58,760,483 750 0
2 To approve the directors’ remuneration policy report 58,741,583 19,250 400
3 To approve the directors’ remuneration report 58,755,340 4,250 1,643
4 To reappoint John F. Kearney as a director 58,609,240 750 151,243
5 To reappoint Bill Hooley as a director 58,744,240 15,750 1,243
6 To reappoint David Lean as a director 58,609,240 150,750 1,243
7 To reappoint Howard Miller as a director 58,594,240 165,750 1,243
8 To reappoint Danesh Varma as a director 58,759,240 750 1,243
9 To reappoint Mazars LLP as auditors 58,760,483 750 0
10 To authorise the directors to determine the remuneration of the auditor 58,760,483 750 0
11 To authorise the directors to issue new share capital 58,760,483 750 0
12 To dis-apply pre-emption rights in respect of certain issues of shares 58,737,727 15,750 7,756

Notes

  1. Votes were received in respect of 58,761,233 shares representing 33.1% of the issued share capital.
  2. Any proxy appointments which gave discretion to the chairman have been included in the “For” total.
  3. The full text of the resolutions is shown in the notice of the AGM which is available in the annual report and on the website.

Total voting rights

The issued ordinary share capital of the company is 177,608,051 shares with voting rights; there are no shares in treasury.

The above figure may be used by shareholders as the denominator for the calculations which will determine whether they are required to notify their interest in the company, or any change to that interest, under the FSA’s Disclosure and Transparency Rules.

 

 

Name of contact:  Danesh Varma

Telephone number of contact:  +44 (0)207 6539881

For further information, please contact:

Danesh Varma, Finance Director +44 (0)207 653 9881.

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Annual financial report and Notice of AGM

Strategic report – Chairman’s statement

It is pleasing to report, after several years of depressed market conditions, that in several areas of significance to Anglesey Mining there are now real signs of resurgence. I believe we have passed the bottom of the mining cycle and there is a strong expectation of upward movement in metal prices, particularly for zinc and to some extent for copper, in the near future.  This positive outlook is now being reflected in the capital markets where after several years of depressed market conditions there is renewed investor interest in the mining sector and the opportunity to raise new capital is being demonstrated.

Parys Mountain –  2017 Scoping Study

Against this background of improving metal prices and increased investor interest it would seem opportune that we have recently undertaken a new Scoping Study on the Parys Mountain copper-lead-zinc project in North Wales which demonstrates a viable mine development and a healthy financial rate of return.

The Scoping Study was prepared by Micon International Limited (Micon) and Fairport Engineering Ltd (Fairport).  The selected base case envisages a mining rate of 1,000 tonnes per day, to produce an average annual output of 14,000 tonnes of zinc concentrate at 57% Zn, 7,200 tonnes of lead concentrate at 52% Pb and 4,000 tonnes of copper concentrate at 25% Cu annually over an initial mine life of eight years.

The overall net smelter return (NSR) for the three concentrates, including the silver and gold precious metals contributions, is expected to total more than $270 million at the forecast metal prices used for the base case calculations.

The base case yields a pre-tax net present value of $33.2 million, or £26.6 million, at a conservative 10 per cent discount rate, using present day metal prices of $1.25 per pound for zinc, $1.00 per pound for lead, $2.50/pound for copper, $17.50 per ounce for silver and $1,275 per ounce for gold and at an exchange rate of £1.00 = $US1.25. With an estimated pre-production capital cost of $53 million, or £42 million, this results in an indicated internal rate of return (IRR) of 28.3%.

Using longer term metal price projections of $1.35 per pound for zinc and $3.00 per pound for copper the NPV10 would be $43.2 million, or £34.6 million.  At an 8% discount rate, used to reflect the relatively low risks of the project given its advanced level of development and low political risk in the UK, the NPV8 would be enhanced to $41 million, or £32.8 million, for the base case metal price scenario and to $53 million, or £421.9 million for the higher longer-term metal prices, with an IRR of 33%.

Importantly, the study was based on only the 2.1 million tonnes of indicated resources reported by Micon in 2012. Micon had also reported a further 4.1 million tonnes of inferred resources which were not incorporated into the Scoping Study.  It is expected that a high proportion of these inferred resources will be converted to indicated probable reserves once exploration drilling from underground takes place. These additional resources would be processed through the same concentrator plant and would significantly increase the projected life of the mine, to perhaps double the projected mine-life to 15 or 18 years, and enhance the NPV.

I have been involved with the Parys Mountain project for many years, and I am encouraged that many of the variables and moving parts, including metal prices, treatment charges and used plant availability, have now moved in our favour and present a real and realisable opportunity for the Parys Mountain project.  There is of course still much to be do but we now have a clear path forward.

Iron Ore

The price of iron ore doubled during calendar 2016, driven by increased Chinese demand, reaching a two-year high of US$80 per tonne in December 2016 and moved even higher in early 2017, hitting a high of US$97 per tonne in February 2017, its highest level since mid-2014, before retreating somewhat to approximately US$70 per tonne in July 2017.   Our investments in Grangesberg Iron and in Labrador Iron rely heavily for their future success on this commodity.

Grangesberg Iron

Our operations at Grangesberg have been restricted during the past year while we continue to manage the project on behalf of both the company and Grangesberg’s other shareholders.  The economics of Grangesberg are more positive than many other iron ore projects but will still require both higher long-term iron ore prices as well as major levels of capital expenditure. The high-quality product from Grangesberg, together with the extensive existing infrastructure and the potential for sales within Sweden’s domestic markets, will be key to making the project viable when iron prices do move. Together with the other shareholders and stakeholders in Grangesberg we will continue to investigate all options to develop a viable business plan for the project.

Labrador Iron

During the year Labrador Iron Mines Holdings Limited (“LIM”) completed a financial restructuring as part which creditors were issued with shares in LIM and its subsidiary and as a result the group’s holding in LIM was diluted from 15% to just under 12%.  LIM is now debt free and continues to hold its iron ore assets in Labrador and Quebec.  Nevertheless, it will require a significant and sustained increase in the price of iron ore for the Labrador operations to be restarted.

Outlook

The outlook for Anglesey Mining is now brighter than at any time during the last few years.  Metal prices particularly zinc, copper and lead, which form the basis of Parys Mountain revenue, seem set for their long-awaited upward movement.

Based on the positive results of the Scoping Study we now plan to engage in discussions with potential financiers or partners for the development of the Parys Mountain project.   Recommendations have been made by Micon and Fairport regarding further work to optimise and enhance the project as the next step ahead of mine development.  It is hoped that financing for this work can be arranged as speedily as possible and will be followed by subsequent financings to move towards mine construction.

We expect that sterling will continue to be traded at relatively low levels against the United States dollar for the foreseeable future whilst negotiations over the Brexit withdrawal and the ensuing uncertainty around the actual exit take effect.  It may be that sterling will experience even further weakness in the longer term, which would benefit the Parys Mountain project.  Apart from these matters we do not expect Brexit issues to unduly influence the group.

It is likely that China will continue to experience economic growth and will make ever increasing demands for commodities that could be produced from your Anglesey’s projects.  Normal industrial demand in the United States and Europe, as well as larger developing countries, will also play an important part of the commodity markets.  China’s continuing growth coupled with a reluctance by major miners to embark on large new projects, generally in geographically and politically difficult environments, should see continuing demand for metals resulting in a long term and sustainable uplift in metal prices.

The strength in the markets and return of investor interest has been reflected in the price of the Company’s shares which has increased around fourfold from this time last year.  This has been coupled with strong trading volumes and gave us the opportunity to raise funds on two occasions during the year.

I would like to thank all our shareholders, whether at a major investment level or at smaller levels, for their continuing support during the difficult recent years that we have been through.

We trust that your patience and support will soon be recognised and rewarded.

John F. Kearney

Chairman

28 July 2017

 

Strategic report – Principal activities and business review

Anglesey Mining is engaged primarily in the business of exploring and evaluating its wholly owned Parys Mountain zinc, lead, copper project in North Wales. Although site activities there have been limited during the year to care and maintenance, a scoping and economic study bringing earlier reports up to date has been prepared during the year.

Under various agreements the group participates in the management of the Grangesberg iron ore property in Sweden in which it has a 6% holding and a right of first refusal to acquire a further 51% ownership interest. The group also has a 12% holding (2016 – 15%) in the Labrador iron project in eastern Canada, currently in care and maintenance.

The aim of the group is to create value in the Parys Mountain property, including by co-operative arrangements where appropriate, and to actively engage in other mineral ventures using the group’s own resources together with such external investment and finance as may be available where appropriate

Parys Mountain

The Parys Mountain property hosts a significant polymetallic zinc, copper, lead, silver and gold deposit. The site has a head frame, a 300m deep production shaft and planning permission for operations. The group has freehold ownership of the minerals and surface land. Infrastructure is good, political risk is low and the project enjoys the support of local people and government.

An independent JORC resource estimate completed in 2012 by Micon International Limited reported a resource of 2.1 million tonnes at 6.9% combined base metals in the indicated category and 4.1 million tonnes at 5.0% combined base metals in the inferred category with substantial exploration potential.

Physical operations at Parys Mountain were again kept at a low level during the past year, with only essential maintenance work carried out, while the main focus of activity was undertaking a new scoping study.

Scoping Study 2017

The Scoping Study was prepared by Micon International Limited (Micon) and Fairport Engineering Ltd (Fairport) and was completed in July 2017.

Development Plan

The original feasibility studies conducted on the Parys Mountain project in the 1990s envisaged production at a rate of 1,000 tpd being mined at depth through the 300-metre-deep Morris Shaft.  During the period 2006-2010 Anglesey Mining carried out a detailed drilling programme on the White Rock Zone which lies adjacent to the Morris Shaft and largely overlies the deeper Engine Zone deposits, but which extends to surface.  As a result of this drilling the 2012 resource estimate carried out by Micon included both the White Rock Zone and the Engine Zone.

A new mining plan based on a surface decline to access the White Rock zone was prepared.  The proposed decline would be developed by mining contractors and would be used as the initial means of access to the resource for development and mining. Mined ore would be trucked up the decline to the proposed surface processing plant. During the initial production phase from White Rock the decline would continue to be driven to reach the current bottom of the Morris Shaft and beyond.  The shaft would then be dewatered and deepened by approximately 150 metres and would be recommissioned as a hoisting shaft for the remnant White Rock ore and for the deeper and more valuable Engine Zone ore.

Production Alternatives

The initial work on the Scoping Study was designed on a throughput of 500 tonnes per day using conventional processing.  As the first results became available it became apparent that a higher daily production throughput would be financially more attractive.  Accordingly, assessment of increased throughput alternatives of 700 tpd and 1,000 tpd were added to the initial scope of the study.

In addition, the concept of adding a dense media separation plant ahead of the main concentrator was reviewed.  Dense media separation (DMS) is a process to remove largely non-metal bearing material from the mine feed ahead of the concentrator.  This results in a substantial reduction in the tonnage of ore to be treated by the concentrator.  Obviously there are additional costs associated with building and operating a DMS plant, and there is some loss of metal associated with the DMS tailings, but overall inclusion of a DMS plant improves the financial performance.

Concurrent with evaluation of these processing options, mine planning at 700 tpd and 1,000 tpd was also studied.  Mining would be carried out initially from the main decline using rubber-tyred equipment including drill jumbos, load-haul-dump machines and trucks to remove development waste to surface and production ore to the processing plant.  It was concluded that after an initial ramp-up period, the higher production level can be maintained.  In due course, the lower level of the shaft will be accessed from the decline and deepened as originally planned. The existing hoist and headframe will be refurbished and used to bring ore to the surface for delivery to the adjacent processing plant.

The processing plant was initially designed in a modular form with a capacity of 500 tpd throughput expandable to 1,000 tpd to minimise up-front capital costs.  The plant will consist of crushing and grinding followed by conventional three stage flotation to produce copper, zinc and lead concentrates to be shipped to smelters in Europe.  The study showed that the best results can be obtained with higher throughputs.  There is little additional capital cost required for the higher throughput and this increase is offset by lower operating costs and increased revenue.

Based on these outcomes it was concluded that the preferred development option for the Parys Mountain is a 1,000 tpd mine and plant with a DMS section and a mine life of approximately eight years.

Mineral Resources and Exploration Potential

The 2017 Scoping Study utilises the Micon 2012 JORC Code compliant resource estimate of 2.1 million tonnes at 6.9% combined base metals in the indicated category.  Micon had also reported a further 4.1 million tonnes at 5.0% combined base metals in the inferred category. These inferred mineral resources are not included in the current study but would significantly extend the projected operating life of the mine with a consequential increase in the resultant estimated valuation.

As reported in 2012, the resource estimate was made using a gross metal product value cut-off of $80 per tonne.  It is noted that the cash operating cost of the project, prior to royalties and taxes, is forecast at $47 per tonne.  This will enable some further review of the resource to be undertaken.  A lower cut-off grade would increase the tonnes in the indicated category at the same time as reducing the grade.  The larger tonnage would increase the mine life but would reduce the annual revenue due to the lower feed grade to the plant.  An optimisation study will be required to determine the optimum cut-off grade that would provide the maximum increased return over that currently reported.

In addition to the indicated and inferred resources reported by Micon, the Parys Mountain area, over which the group holds the mineral rights, contains numerous indications of mineralisation across several kilometres many of which have been disclosed in earlier releases and reports.  As most of these indications have been encountered in drilling at some depth, further exploration would be more effective from underground locations once mining operations commence.  Should any of these exploration efforts prove successful an increased throughput and a further extended mine life would be the likely outcome.

Capital and Operating Costs

The pre-production capital cost of the preferred option base case including mining, DMS, concentrator and infrastructure is estimated at $53 million.  The initial capital cost for mine development is estimated to be $13 million, the concentrator $29.5 million including $3 million for the DMS plant and infrastructure $10 million, for a total of $53 million.  Included within these figures is a $4 million contingency provision.

The major component of capital costs is initially associated with the processing plant and surface infrastructure.    Capital costs have been estimated based on quotes provided by equipment suppliers together with construction costs forecast by Fairport. Capital costs for the processing plant and infrastructure includes, when suitable, some used and reconditioned plant which has been identified as readily available.  The remainder would be new equipment.

Despite the quite wide spread in throughputs studied it became apparent that the lower throughput options did not present significant savings in capital cost.  This is largely due to minimum equipment sizes required for several units that could also accomplish the duty for the higher throughputs and with the fixed items of work required for buildings, construction and infrastructure that do not change materially across the throughput range. Mine development capital costs are based on all new equipment and on mine contractor development costs.

Operating costs have been developed by Micon and Fairport based on current knowledge and experience. Cash operating costs at the higher levels of production are forecast at around $47 per tonne of ore treated. Whilst capital costs were fairly constant across the throughput spectrum, operating cash costs per tonne of ore mined and milled varied significantly with the higher throughputs benefitting from much lower costs.  This lead to the clear conclusion that the higher the throughput the better the financial result.

The following table shows the key financial outcomes derived for each of the alternatives.

500tpd no DMS 700 tpd no DMS 700 tpd with DMS 1,000 tpd with DMS
Life of Mine (Years) 16 12 12 8
Initial Capital Cost $m 48 50 52 53
Operating cash cost $/t 63 55 53 47
NPV10 $m * 9.0 21.6 19.3 33.2
IRR % * 13.8 20.3 18.8 28.3
Payback (Years) * 7 5 5 4
  • Pre-Tax Based on Cu $2.50/lb, Zn $1.25/lb, Pb $1.00/lb, Ag $17.50/oz, Au $1,275/oz

Selected Base Case Option – 1,000 tpd

The 1,000 tpd option is clearly the most favourable financial outcome.  The additional capital cost required is only $5 million higher than the lowest cost option and at these levels that is not considered critical.  The inclusion of the DMS plant results in the rejection of approximately 37% of mined material ahead of the concentrator.  Included within this is approximately 4.5% of the metal in feed that will be permanently lost to tailings.  As a result of the application of the DMS the net concentrator feed to the floatation circuits will be approximately 700 tpd.

The NPV and IRR generated are significantly better at 1,000 tpd than the lower throughput options.  Therefore the 1,000 tpd option has been chosen as the base case for further consideration. No detailed study was carried out on a 1,000 tpd throughput without the DMS.  However, a short study indicated that it is likely that DMS will be far more favourable when the plant capacity is expanded to around 1,500 tpd which should occur when the inferred resources are upgraded to the indicated category.  The incorporation of DMS is therefore considered advisable and prudent.

Metal Production

Metallurgical performance and recovery is based on the large volume of information available from test work on Parys Mountain ores over the years.  Total base metal recovery in the concentrator to each of the three copper, zinc and lead concentrates is forecast to be 89.8% and taking into account the DMS losses overall recovery will be approximately 85.7%.  Significant amounts of silver and gold will report to each of the concentrates.  Some free gold will be recovered by gravity methods ahead of the concentrates and will be sold as Welsh gold.

It is expected that each of the three base metal concentrates will be sold to smelters in Europe.  Smelter payment terms and penalties have been based on treatment charges currently prevailing from these smelters.  It is possible that better terms could be obtained from Chinese smelters from time to time but the cost of shipping to the Far East compared to the proximity of shipping to continental Europe is likely to make such options less viable.

On average 14,000 tonnes of zinc concentrate at 57% Zn, 7,200 tonnes of lead concentrate at 52% Pb and 4,000 tonnes of copper concentrate at 25% Cu, will be produced annually.  These figures will vary somewhat during the life of the mine as mine feed varies depending upon the particular ore bodies being mined at any time. This will result in average annual metal production into concentrates of 17.6 million pounds of zinc ,8.3 million pounds of lead and 2.2 million pounds of copper.

Using estimated shipping costs, smelter terms and penalties, the overall NSR for the three concentrates, including the precious metals, is expected to total in excess of $270 million at the metal prices used for the base case.  This would represent a NSR of approximately 72% of the metal value in concentrates delivered to the smelters.

Project Financial Results

The base case yields a pre-tax net present value of $33.2 million, or £26.6 million, at a conservative 10 per cent discount rate, using present day metal prices of $1.25 per pound for zinc, $1.00 per pound for lead, $2.50/pound for copper, $17.50 per ounce for silver and $1,275 per ounce for gold and at an exchange rate of £1.00 = $US1.25. With an estimated pre-production capital cost of $53 million, or £42 million, this results in an indicated internal rate of return (IRR) of 28.3%.

Using longer term metal price projections of $1.35 per pound for zinc and $3.00 per pound for copper the NPV10 would be $43.2 million, or £34.6 million.  At an 8% discount rate, used to reflect the relatively low risks of the project given its advanced level of development and low political risk in the UK, the NPV8 would be enhanced to $41 million, or £32.8 million, for the base case metal price scenario and to $53 million, or£421.9 million for the higher longer-term metal prices, with an IRR of 33%.

The pre-tax net present values, at 10% and 8% discount rates, and internal rates of return, are illustrated in the table below, all at a sterling:US dollar exchange rate of £1.00 = $US1.25.

 

Metal Prices

Pre-Tax Cash Flows
Zinc

US$/lb

 

Lead US$/lb

 

Copper

US$/lb

Silver

US$/oz

 

Gold

US$/oz

Undiscounted

$M

NPV 10%

$M

NPV 8%

$M

IRR

%

1.25  

1.00

 

2.50

17.50  

1,275

91.2 33.2 41.0 28.3
1.35  

1.00

 

3.00

17.5  

1,275

110.8 43.2 52.4 33.1
 Foreign Exchange assumed to be £1.00: $1.25US

Further work on Parys Mountain

Both Micon and Fairport have recommended that further work to optimise and enhance the project as the next step ahead of mine development, including more detailed mine and stope design, underground geotechnical studies, additional infill drilling in some locations, more detailed engineering studies, additional metallurgical test work including work to improve recovery of specific metals to their own concentrate, and review of tailings management and paste processes. Several opportunities for cost reduction or productivity improvement have been identified for further study. It is planned to carry out these and other activities as suitable funds are available.  This will then lead to the generation of more detailed production and costing feasibility reviews to support project financing to move towards mine construction.

The directors are of the opinion that the Parys Mountain project is at an advanced stage and the existence of the current JORC resource estimate, the new scoping study and the original feasibility study, together with the valid planning permissions, represent a solid base from which to move the project towards production. There is in addition substantial exploration potential on the property.

Grangesberg Iron AB

The Grangesberg iron ore mine is situated in the mineral-rich Bergslagen district of central Sweden about 200 kilometres north-west of Stockholm. Until its closure in 1989 due to prevailing market conditions, Grangesberg had mined in excess of 150 million tonnes of iron ore. GIAB is a private Swedish company founded in 2007 which in 2014 completed (with assistance from the group) a financial and capital restructuring of the mine. GIAB holds a 25 year exploitation permit covering the previously mined Grangesberg underground mining operations granted by the Swedish Mining Inspectorate in May 2013.

The group has a direct 6% interest in GIAB and, until June 2018, a right of first refusal over 51% of the enlarged share capital of GIAB. This right has been granted in exchange for the group continuing to co-manage GIAB on a cost recovery basis. The group also has shareholder and cooperation agreements such that it holds operatorship of GIAB subject to certain conditions and appoints two out of five directors to the board of GIAB.

In September 2014 an NI 43-101 Technical Report was prepared by Roscoe Postle Associates Inc (“RPA”) showing a compliant resource estimate for the Grangesberg Mine of 115.2 million tonnes at 40.2% Fe in the indicated category and 33.1 million tonnes at 45.2% Fe in the inferred category. RPA concluded that the Grängesberg iron ore deposit hosts a significant iron resource that has excellent potential for expansion at depth.

During the coming year, Grangesberg will continue to operate under the direction of the group. It is planned that subject to the availability of adequate funding, Grangesberg will advance a number of environmental studies and other activities as a pre-requisite to a definitive feasibility study.

Labrador Iron

The group has an investment holding of 12% (2016 -15%) in Labrador Iron Mines Holdings Limited which in the three years up to 2013 produced a total of 3.6 million dry metric tonnes of iron ore from its properties in Labrador, Canada. Since then mining operations have been suspended due to low iron ore prices. In December 2016 LIM completed a financial restructuring which resulted in the conversion of liabilities into equity of LIM and its subsidiaries. As a result, the group’s interest in LIM has been diluted from 15% to 12%.

LIM continues to own all of its direct shipping iron ore projects in the central part of the Labrador Trough region, one of the major iron ore producing regions in the world, containing extensive iron ore resources, and where LIM owns processing plants and equipment and rail infrastructure and facilities being held on care and maintenance.

Other activities

The directors continue to seek out new properties suitable for development within a relatively short time frame and within the financing capability likely to be available to the group.

Performance

The directors expect to be judged by results of project development and/or exploration and by their success in creating long term value for shareholders. The group holds shares in mineral companies and has interests in exploration and evaluation properties and, until economically recoverable reserves can be identified, there are no standardised performance indicators which can usefully be employed to gauge the performance of the group, other than the market price of the company’s shares.

The chief external factors affecting the ability of the group to move forward are primarily the demand for metals and minerals, levels of metal prices and exchange rates; these and other factors are dealt with in the risks and uncertainties section below.

Financial results and position

The group has no revenues from the operation of its properties. The loss for the year ended 31 March 2017 after tax was £307,968 compared to a loss of £256,450 in the 2016 fiscal year. The administrative and other costs excluding investment income and finance charges were £141,022 compared to £112,279 in the previous year.

During the year there were no additions to fixed assets (2016 – nil) and £84,196 (2016 – £49,433) was capitalised in respect of the Parys Mountain property as mineral property exploration and evaluation, the increase being largely due to the expenses of the scoping study.

At 31 March 2017 the group held mineral property exploration and evaluation assets with a carrying value of £15.0 million. These carrying values may not reflect the realizable value of the properties if they were offered for sale at this time.

The group’s cash balance at 31 March 2017 was £392,293 (2016 – £11,504) the increase being due to two placings of new shares for cash during the year which raised £493,037 net of share issue costs. The foreign exchange gain of £178 (2016 – loss £2,039) shown in the income statement arises on cash balances held in Canadian dollars and Swedish Krona.

At 31 March 2017 the company had 177,608,051 (2016 – 160,608,051) ordinary shares in issue following the two share placings referred to above.

Financial instruments

The group’s use of financial instruments is described in note 24.

Employment, community, donations and environment

The group is an equal opportunity employer in all respects and aims for high standards from and for its employees. At 31 March 2017 the company had five male directors; there were no female directors or employees. It also aims to be a valued and responsible member of the communities which it operates in or affects.

The group holds planning permission for the development of the Parys Mountain property but further consents will be required to carry out proposed activities and these may be subject to various reclamation and operational conditions. The group currently has no operations and consequently its effect on the environment is very slight, being limited to the operation of two small offices, where recycling and energy usage minimisation are taken seriously and encouraged. It is not practical or useful to quantify the effects of these measures. There are no social, community or human rights issues which require the provision of further information in this report.

Risks and uncertainties

In conducting its business the group faces a number of risks and uncertainties some of which have been described above in regard to particular projects. However, there are also risks and uncertainties of a nature common to all mineral projects and these are summarised below.

General mining risks

Actual results relating to, amongst other things, mineral reserves, mineral resources, results of exploration, capital costs, mining production costs and reclamation and post closure costs, could differ materially from those currently anticipated by reason of factors such as changes in general economic conditions and conditions in the financial markets, changes in demand and prices for minerals that the group expects to produce, legislative, environmental and other judicial, regulatory, political and competitive developments in areas in which the group operates, technological and operational difficulties encountered in connection with the group’s activities, labour relations, costs and changing foreign exchange rates and other matters.

The mining industry is competitive in all of its phases. There is competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential. The group faces competition from other mining companies in connection with the acquisition and retention of properties, mineral claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees and other personnel.

Development and liquidity risk

On previous occasions and during the year the group has relied upon its largest shareholder, Juno Limited, for financial support and may be required to do so in the future to ensure the group will have adequate funds for its current activities. In the absence of support from Juno Limited the group would be dependent on the proceeds of share issues or other sources of funding. Developing the Parys project will be dependent on raising further funds from various sources.

Exploration and development

Exploration for minerals and development of mining operations involve risks, many of which are outside the group’s control. The group currently operates in politically stable environments and hence is unlikely to be subject to expropriation of its properties but exploration by its nature is subject to uncertainties and unforeseen or unwanted results are always possible.

Metal prices

The prices of metals fluctuate widely and are affected by many factors outside the group’s control. The relative prices of metals and future expectations for such prices have a significant impact on the market sentiment for investment in mining and mineral exploration companies. Metal price fluctuations may be either exacerbated or mitigated by currency fluctuations which affect the amount which might be received by the group in sterling.

Foreign exchange

LIM is a Canadian company; Angmag AB and GIAB are Swedish companies. Accordingly the value of the group’s holdings in these companies is affected by exchange rate risks. Operations at Parys Mountain are in the UK and exchange rate risks are minor. The majority of the cash balance at the year end was held in sterling – see notes 17 and 24.

Permitting, environment and social

The group holds planning permission for the development of the Parys Mountain property but further consents will be required to carry out proposed activities and these may be subject to various reclamation and operational conditions.

Employees and personnel

The group is dependent on the services of a small number of key executives specifically the chairman, chief executive and finance director. The loss of these persons or the group’s inability to attract and retain additional highly skilled and experienced employees for any areas in which the group might engage may adversely affect its business or future operations.

This report was approved by the board of directors on 28 July 2017 and signed on its behalf by:

Bill Hooley

Chief executive officer       

For a full text pdf version of the annual report and notice of the AGM, please click here.

 

Notice of AGM

Notice is given that the 2017 annual general meeting of Anglesey Mining plc will be held at the offices of the company’s lawyers, DLA Piper UK LLP, 1 London Wall, London, EC2Y 5EZ on 1 September 2017 at 11.00 a.m. to consider and, if thought fit, to pass the following resolutions. Resolutions 1 to 11 will be proposed as ordinary resolutions and resolution 12 will be proposed as a special resolution:

As ordinary business

  1. To receive the annual accounts and directors’ and auditor’s reports for the year ended 31 March 2017.
  2. To approve the directors’ remuneration policy report for the year ended 31 March 2017.
  3. To approve the directors’ remuneration report for the year ended 31 March 2017.
  4. To reappoint John F. Kearney as a director.
  5. To reappoint Bill Hooley as a director.
  6. To reappoint David Lean as a director.
  7. To reappoint Howard Miller as a director.
  8. To reappoint Danesh Varma as a director.
  9. To reappoint Mazars LLP as auditor.
  10. To authorise the directors to determine the remuneration of the auditor.

As special business

  1. That, pursuant to section 551 of the Companies Act 2006 (“Act”), the directors be and are generally and unconditionally authorised to exercise all powers of the Company to allot shares in the Company or to grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of £590,000, provided that (unless previously revoked, varied or renewed) this authority shall expire on 31 December 2018, save that the Company may make an offer or agreement before this authority expires which would or might require shares to be allotted or rights to subscribe for or to convert any security into shares to be granted after this authority expires and the directors may allot shares or grant such rights pursuant to any such offer or agreement as if this authority had not expired.

This authority is in substitution for all existing authorities under section 551 of the Act (which, to the extent unused at the date of this resolution, are revoked with immediate effect).

  1. That pursuant to section 570 of the Act, the directors be and are generally empowered to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the authority granted under section 551 of the Act pursuant to resolution 12 above as if section 561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities:

(a) in connection with an offer of equity securities (whether by way of a rights issue, open offer or otherwise) (i) to holders of ordinary shares in the capital of the company in proportion (as nearly as practicable) to the respective numbers of ordinary shares held by them; and (ii) to holders of other equity securities in the capital of the company, as required by the rights of those securities or, subject to such rights, as the directors otherwise consider necessary but subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates or any legal or practical problems under the laws of any territory or the requirements of any regulatory body or stock exchange; and

(b) otherwise than pursuant to paragraph 14(a) above, up to an aggregate nominal amount of £440,000

and (unless previously revoked, varied or renewed) this power shall expire on 31 December 2018, save that the Company may make an offer or agreement before this power expires which would or might require equity securities to be allotted for cash after this power expires and the directors may allot equity securities for cash pursuant to any such offer or agreement as if this power had not expired. This power is in substitution for all existing powers under section 570 of the Act which, to the extent effective at the date of this resolution, are revoked with immediate effect.

By order of the board

Danesh Varma

Company secretary

28 July 2017

 Notes to the notice of AGM

Entitlement to attend and vote

  1. The right to vote at the meeting is determined by reference to the register of members. Only those shareholders registered in the register of members of the Company as at the close of business on 29 August 2017 (or, if the meeting is adjourned, 48 hours (excluding any part of a day that is not a working day) before the date and time of the adjourned meeting) shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries in the register of members after that time shall be disregarded in determining the rights of any person to attend or vote (and the number of votes they may cast) at the meeting.

Proxies

  1. A shareholder is entitled to appoint another person as his or her proxy to exercise all or any of his or her rights to attend and to speak and vote at the meeting. A proxy need not be a member of the Company. A shareholder may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. Failure to specify the number of shares each proxy appointment relates to or specifying a number which when taken together with the numbers of shares set out in the other proxy appointments is in excess of the number of shares held by the shareholder may result in the proxy appointment being invalid. A proxy may be appointed only in accordance with the procedures set out in note 3 and the notes to the proxy form. The appointment of a proxy will not preclude a shareholder from attending and voting in person at the meeting.
  2. A form of proxy is enclosed. When appointing more than one proxy, complete a separate proxy form in relation to each appointment. Additional proxy forms may be obtained by contacting the Company’s registrar Capita Asset Services, Proxies, The Registry, 34 Beckenham Road, Kent BR3 4TU or the proxy form may be photocopied. State clearly on each proxy form the number of shares in relation to which the proxy is appointed. To be valid, a proxy form must be received by post or (during normal business hours only) by hand at the offices of the Company’s registrar, Capita Asset Services, Proxies, The Registry, 34 Beckenham Road, Kent BR3 4TU, no later than 11.00 a.m. on 29 August 2017 (or, if the meeting is adjourned, no later than 48 hours (excluding any part of a day that is not a working day) before the time of any adjourned meeting).

Corporate representatives

  1. A shareholder which is a corporation may authorise one or more persons to act as its representative(s) at the meeting. Each such representative may exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual shareholder, provided that (where there is more than one representative and the vote is otherwise than on a show of hands) they do not do so in relation to the same shares.

Total voting rights

  1. As at 18 July 2017 (being the last practicable date before the publication of this notice), the issued share capital consists of 177,608,051 ordinary shares of £0.01 each, carrying one vote each and 21,529,451 Deferred A Shares and 116,241,384 Deferred B Shares which do not carry any rights to vote. Therefore, the total voting rights as at 18 July 2017 are 177,608,051.

Nominated Persons

  1. Where a copy of this notice is being received by a person who has been nominated to enjoy information rights under section 146 of the Companies Act 2006 (“Act”) (“Nominated Person”):

(a) the Nominated Person may have a right under an agreement between him/her and the shareholder by whom he/she was nominated, to be appointed, or to have someone else appointed, as a proxy for the meeting; or

(b) if the Nominated Person has no such right or does not wish to exercise such right, he/she may have a right under such an agreement to give instructions to the shareholder as to the exercise of voting rights. The statement of the rights of shareholders in relation to the appointment of proxies in note 2 does not apply to a Nominated Person. The rights described in such notes can only be exercised by shareholders of the Company.

Shareholders’ right to require circulation of resolutions to be proposed at the meeting

  1. A shareholder or shareholders meeting the qualification criteria set out in note 10 below may require the Company to give shareholders notice of a resolution which may properly be proposed and is intended to be proposed at the meeting in accordance with section 338 of the Act. A resolution may properly be proposed unless (i) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company’s constitution or otherwise), (ii) it is defamatory of any person, or (iii) it is frivolous or vexatious. The business which may be dealt with at the meeting includes a resolution circulated pursuant to this right. Any such request must (i) identify the resolution of which notice is to be given, by either setting out the resolution in full or, if supporting a resolution requested by another shareholder, clearly identifying the resolution which is being supported (ii) comply with the requirements set out in note 11 below, and (iii) be received by the Company no later than six weeks before the meeting.

Shareholders’ right to have a matter of business dealt with at the meeting

  1. A shareholder or shareholders meeting the qualification criteria set out in note 10 below may require the Company to include in the business to be dealt with at the meeting any matter (other than a proposed resolution) which may properly be included in the business in accordance with section 338A of the Act. A matter may properly be included unless (i) it is defamatory of any person, or (ii) it is frivolous or vexatious. Any such request must (i) identify the matter to be included in the business, by either setting out the matter in full or, if supporting a matter requested by another shareholder, clearly identifying the matter which is being supported (ii) set out the grounds for the request (iii) comply with the requirements set out in note 11 below and (iv) be received by the Company no later than six weeks before the meeting.

Website publication of audit concerns

  1. A shareholder or shareholders who meet the qualification criteria set out in note 10 below may require the Company to publish on its website a statement setting out any matter that such shareholders propose to raise at the meeting relating to either the audit of the Company’s accounts (including the auditors’ report and the conduct of the audit) that are to be laid before the meeting or any circumstances connected with an auditor of the Company ceasing to hold office since the last annual general meeting of the Company in accordance with section 527 of the Act. Any such request must (i) identify the statement to which it relates, by either setting out the statement in full or, if supporting a statement requested by another shareholder, clearly identify the statement which is being supported (ii) comply with the requirements set out in note 11 below and (iii) be received by the Company at least one week before the meeting. Where the Company is required to publish such a statement on its website (i) it may not require the shareholders making the request to pay any expenses incurred by the Company in complying with the request (ii) it must forward the statement to the Company’s auditors no later than the time when it makes the statement available on the website and (iii) the statement may be dealt with as part of the business of the meeting.

Notes 7, 8 and 9 above: qualification criteria and methods of making requests

  1. In order to require the Company (i) to circulate a resolution to be proposed at the meeting as set out in note 7, (ii) to include a matter in the business to be dealt with at the meeting as set out in note 8, or (iii) to publish audit concerns as set out in note 9, the relevant request must be made by (i) a shareholder or shareholders having a right to vote at the meeting and holding at least five per cent of the total voting rights of the Company or (ii) at least 100 shareholders having a right to vote at the meeting and holding, on average, at least £100 of paid up share capital. For information on voting rights, including the total voting rights of the Company, see note 5 above and the website referred to in note 15 below.
  2. Any request by a shareholder or shareholders to require the Company (i) to circulate a resolution to be proposed at the meeting as set out in note 7 (ii) to include a matter in the business to be dealt with at the meeting as set out in note 8 or (iii) to publish audit concerns as set out in note 9 may be made either (a) in hard copy, by sending it to Anglesey Mining plc, Tower Bridge, St Katharine’s Way, London E1W 1DD (marked for the attention of the Company Secretary); or (b) in electronic form, by sending an email to danesh@angleseymining.co.uk; and must state the full name(s) and address(es) of the shareholder(s) and (where the request is made in hard copy form) must be signed by the shareholder(s).

Questions at the meeting

  1. Shareholders have the right to ask questions at the meeting relating to the business being dealt with at the meeting in accordance with section 319A of the Act. The Company must answer any such question unless: (a) to do so would interfere unduly with the preparation for the meeting or would involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.

Documents available for inspection

  1. The following documents will be available for inspection during normal business hours at the registered office of the Company from the date of this notice until the time of the meeting. They will also be available for inspection at the place of the meeting from at least 15 minutes before the meeting until it ends: (a) copies of the service contracts of the executive directors, (b) copies of the letters of appointment of the non-executive directors and (c) the Articles of Association of the Company.

Biographical details of directors

  1. Biographical details of all those directors who are offering themselves for reappointment at the meeting are set out in the annual report and accounts.

Website providing information about the meeting

  1. The information required by section 311A of the Act to be published in advance of the meeting, which includes the matters set out in this notice and information relating to the voting rights of shareholders, is available at www.angleseymining.co.uk.

For a full text pdf version of the annual report and notice of the AGM, please click here

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Anglesey Mining Reports Positive Results of Scoping Study on Parys Mountain Mine

Anglesey Mining plc

 

24 July 2017        LSE:AYM

 

Anglesey Mining Reports Positive Results of

Scoping Study on Parys Mountain Mine

Viable mining project demonstrated with initial eight-year mine life

Anglesey Mining plc (“Anglesey” or the “Company”) is pleased to report, in summary, the results of its recently completed 2017 Scoping Study on its wholly owned Parys Mountain copper-lead-zinc project in North Wales.

The Scoping Study was prepared by Micon International Limited (Micon) and Fairport Engineering Ltd (Fairport).

The selected base case envisages a mining rate of 1,000 tonnes per day, to produce an average annual output of 14,000 tonnes of zinc concentrate at 57% Zn, 7,200 tonnes of lead concentrate at 52% Pb and 4,000 tonnes of copper concentrate at 25% Cu, annually, over an initial mine life of eight years.

The overall net smelter return (NSR) for the three concentrates, including the silver and gold precious metals contributions, is expected to total more than $270 million at the forecast metal prices used for the base case models.

The base case yields a pre-tax net present value of $33.2 million, or £26.6 million, at a conservative 10 per cent discount rate, using present day metal prices of $1.25 per pound for zinc, $1.00 per pound for lead, $2.50/pound for copper, $17.50 per ounce for silver and $1,275 per ounce for gold and at an exchange rate of £1.00 = $US1.25. With an estimated pre-production capital cost of $53 million, or £42 million, this results in an indicated internal rate of return (IRR) of 28.3%.

Using longer term metal price projections of $1.35 per pound for zinc and $3.00 per pound for copper the NPV10 would be $43.2 million, or £34.6 million. At an 8% discount rate, used to reflect the relatively low risks of the project given its advanced level of development and low political risk in the UK, the NPV8 would be enhanced to $41 million, or £32.8 million, for the base case metal price scenario and to $53 million, or £42 million for the higher long-term metal prices, with an IRR of 33%

To illustrate the comparison and put the results of the Scoping Study into context, the market capitalisation of the Company at the close of trading on 21st July was £8.9 million.

Importantly, the study was based on only the 2.1 million tonnes of indicated resources reported by Micon in 2012. Micon had also reported a further 4.1 million tonnes of inferred resources which were not incorporated into the Scoping Study.  It is expected that a high proportion of these inferred resources will be converted to indicated resources once exploration drilling from underground takes place.  These additional resources would be processed through the same concentrator plant and would significantly increase the projected life of the mine, to perhaps double the mine-life to 15 or 18 years, and enhance the NPV.

Bill Hooley, Chief Executive commented “We are very pleased with the results of the Scoping Study which demonstrate a viable mine development at Parys Mountain and a healthy financial internal rate of return. The base case economic model at 1,000 tonnes per day indicates a robust project at consensus forecasts for the long-term prices of zinc and copper. This is the first detailed economic study of the Parys Mountain project for a number of years and, based on the current availability of reconditioned process plant, the estimated pre-production capital cost for the project is at a level that could be financeable.”

The pre-tax net present values, at 10% and 8% discount rates, and internal rates of return, are illustrated in the table below, all at a Sterling:US dollar exchange rate of £1.00 = $US1.25. The table also demonstrates the sensitivities of the Parys Mountain Project to zinc and copper prices.

 

Metal Prices Pre-Tax
Zinc

$/lb

Lead

$/lb

 Copper

$/lb

Silver

$/oz

 Gold

$/0z

Undiscounted

$M

NPV (10%)

$M

NPV (8%)

$M

IRR

%

1.25 1.00 2.50 17.50 1,275 91.2 33.2 41.0 28.3
1.35 1.00 3.00 17.5 1,275 110.8 43.2 52.4 33.1
Foreign Exchange assumed to be £1.00: $US1.25

Summary of 2017 Scoping Study

Mine Development Plan

The original feasibility studies conducted on the Parys Mountain project in the 1990s envisaged production at a rate of 1,000 tpd being mined at depth through the 300-metre-deep Morris Shaft. During the period 2006-2010 Anglesey Mining carried out a detailed drilling programme on the White Rock Zone which lies adjacent to the Morris Shaft and largely overlies the deeper Engine Zone deposits, but which extends to surface.  As a result of this drilling the 2012 resource estimate carried out by Micon included both the White Rock Zone and the Engine Zone.

A new mining plan based on a surface decline to access the White Rock zone was prepared. The proposed decline would be developed by mining contractors and would be used as the initial means of access to the resource for development and mining. Mined ore would be trucked up the decline to the proposed surface processing plant. During the initial production phase from White Rock the decline would continue to be driven to reach the current bottom of the Morris Shaft and beyond.  The shaft would then be dewatered and deepened by approximately 150 metres and would be recommissioned as a hoisting shaft for the remnant White Rock ore and for the deeper Engine Zone ore.

Production Alternatives

The initial work on the Scoping Study was designed on a throughput of 500 tonnes per day using conventional processing. As the first results became available it became apparent that a higher daily production throughput would be financially more attractive to potential financiers.  Accordingly, assessment of increased throughput alternatives of 700 tpd and 1,000 tpd were added to the initial scope of the study.  This extra work necessitated additional time and resulted in finalisation of the study being delayed beyond its originally expected completion date.

In addition, the concept of adding a dense media separation plant ahead of the main concentrator was reviewed. Dense media separation (DMS) is a process technology to remove largely non-metal bearing material from the mine feed ahead of the concentrator.  This results in a substantial reduction in the tonnage of ore to be treated by the concentrator.  Obviously, there are additional costs associated with building and operating a DMS plant, and there is some loss of metal associated with the DMS tailings, but overall inclusion of a DMS plant improves the financial performance.

Concurrent with evaluation of these processing options, mine planning at 700 tpd and 1,000 tpd was also studied. Mining would be carried out initially from the main decline using rubber-tyred equipment including drill jumbos, load-haul-dump machines and trucks to remove development waste to surface and production ore to the processing plant.  It was concluded that after an initial ramp-up period, the higher production level can be maintained.  In due course, the lower level of the shaft will be accessed from the decline and deepened as originally planned. The existing hoist and headframe will be refurbished and used to bring ore to the surface for delivery to the adjacent processing plant.

The planned processing plant was initially designed in a modular form with an initial capacity of 500 tpd throughput expandable to 1,000 tpd to minimise up-front capital costs. The plant will consist of crushing and grinding followed by conventional three stage flotation to produce copper, zinc and lead concentrates to be shipped to smelters in Europe.

The study clearly showed that the best financial results can be obtained with the higher throughputs. There is relatively little additional capital cost required for the higher throughput options and this increase is rapidly offset by lower unit operating costs and increased revenue.

Based on these outcomes it was concluded that the preferred development option for the Parys Mountain Mine is a 1,000 tpd mine and plant with a DMS section ahead off the main concentrator. This will generate a mine life of approximately eight years.

Mineral Resources and Exploration Potential

The 2017 Scoping Study utilises the Micon 2012 JORC Code compliant resource estimate of 2.1 million tonnes at 6.9% combined base metals in the indicated category. Micon had also reported a further 4.1 million tonnes at 5.0% combined base metals in the inferred category. These inferred mineral resources were not included in the current study but would have significantly extended the projected operating life of the mine with a consequential increase in the resultant estimated valuation.

As reported in 2012, the resource estimate was made using a gross metal product value cut-off of $80 per tonne. It is noted that the cash operating cost of the project, prior to royalties and taxes, is forecast at $47 per tonne.  This will enable some further review of the resource to be undertaken.  A lower cut of-grade would increase the tonnes in the indicated category at the same time as reducing the grade.  The larger tonnage would increase the mine life but would reduce the annual revenue due to the lower feed grade to the plant.  An optimisation study will be required to determine the optimum cut-off grade that would provide the maximum increased return over that currently reported.

It is also noted that in addition to the indicated and inferred resources reported by Micon, the Parys Mountain area, over which the Company holds the mineral rights, contains numerous indications of mineralisation across several kilometres many of which have been disclosed in earlier releases and reports. The Company has recognised that as most of these indications have been encountered in drilling at some depth, further exploration would be more effective from underground locations once mining operations commence.  Should any of these exploration efforts prove successful an increased throughput and a further extended mine life would be the likely outcome.

Scoping Study Results

Capital Costs:

The pre-production capital cost of the preferred option base case including mining, DMS, concentrator and infrastructure is estimated at $53 million. The initial capital cost for mine development is estimated to be $13 million, the concentrator $29.5 million including $3 million for the DMS plant and infrastructure $10 million, for a total of $53 million.  Included within these figures is a $4 million contingency provision.

The major component of capital costs is initially associated with the processing plant and surface infrastructure.   Capital costs have been estimated based on quotes provided by equipment suppliers together with construction costs forecast by Fairport. Capital costs for the processing plant and infrastructure includes, when suitable, some used and reconditioned plant which has been identified as readily available.  The remainder would be new equipment.

Despite the quite wide spread in throughputs studied it became apparent that the lower throughput options did not present significant savings in capital cost. This is largely due to minimum equipment sizes required for several units that could also accomplish the duty for the higher throughputs and with the fixed items for work required for buildings, construction etc that do not change materially across the throughput range.

Mine development capital costs are based on all new equipment and on mine contractor development costs.

Operating Costs:

Operating costs have been developed by Micon and Fairport based on current knowledge and experience. Cash operating costs at the higher levels of production are forecast at around $47 per tonne of ore treated. Whilst capital costs were fairly constant across the throughput spectrum, operating cash costs per tonne of ore mined and milled varied significantly with the higher throughputs benefitting from much lower costs. This led to the clear conclusion that the higher the throughput the better the financial result.

The following table shows the key outcomes derived for each of the options studied.

 

  500tpd no DMS 700 tpd no DMS 700 tpd with DMS 1,000 tpd with DMS
Life of Mine (Years) 16 12 12 8
Initial Capital Cost $m 48 50 52 53
Operating cash cost $/t 63 55 53 47
NPV10 $m * 9.0 21.6 19.3 33.2
IRR % * 13.8 20.3 18.8 28.3
Payback (Years) * 7 5 5 4

Pre-Tax Based on Cu $2.50/lb, Zn $1.25/lb, Pb $1.00/lb, Ag $17.50/oz, Au $1,275/oz

 

Selected Base Case Option – 1,000 tpd

The 1,000 tpd option is clearly the most favourable financial outcome. The additional capital cost required is only $5 million higher than the lowest cost option and at these levels that is not considered critical.

The inclusion of the DMS plant results in the rejection of approximately 37% of mined material ahead of the concentrator. Included within this is approximately 4.5% of the metal in feed that will be permanently lost to tailings.  As a result of the application of the DMS the net concentrator feed to the floatation circuits will be approximately 700 tpd.

The NPV and IRR generated are significantly better at 1,000 tpd than the lower throughput options. Therefore the 1,000 tpd option has been chosen as the base case for further consideration.

No detailed study was carried out on a 1,000 tpd throughput without the DMS. However, a short study indicated that it is likely that DMS will be far more favourable when the plant capacity is expanded to around 1500 tpd, which should occur when the inferred resources are upgraded to the indicated category.  The incorporation of DMS is therefore considered advisable and prudent.

Metal Production

Metallurgical performance and recovery is based on the large volume of information available from test work on Parys Mountain ores over the years.

Total base metal recovery in the concentrator to each of the three copper, zinc and lead concentrates is forecast to be 89.8% and taking into account the DMS losses overall recovery will be approximately 85.7%. Significant amounts of silver and gold will report to each of the concentrates.  Some free gold will be recovered by gravity methods ahead of the concentrates and will be sold as Welsh gold.

It is expected that each of the three base metal concentrates will be sold to smelters in Europe. Smelter payment terms and penalties have been based on treatment charges currently prevailing from these smelters.  It is possible that better terms could be obtained from Chinese smelters from time to time but the cost of shipping to the Far East compared to the proximity of shipping to continental Europe is likely to make such options less viable.

On average 14,000 tonnes of zinc concentrate at 57% Zn, 7,200 tonnes of lead concentrate at 52% Pb and 4,000 tonnes of copper concentrate at 25% Cu, will be produced annually. These figures will vary somewhat during the life of the mine as mine feed varies depending upon the particular ore bodies being mined at any time. This will result in average annual metal production into concentrates of 17.6 million pounds of zinc, 8.3 million pounds of lead and 2.2 million pounds of copper.

Taking into account shipping costs, smelter terms and penalties, the overall net smelter return (NSR) for the three concentrates, including the precious metals contribution, is expected to total in excess of $270 million at the metal prices used for the base case calculations. This would represent a net smelter return of approximately 72% of the metal value in concentrates sold to the smelters.

Further work

Both Micon and Fairport have recommended that further work be carried out, including more detailed mine and stope design, underground geotechnical studies, additional infill drilling in some locations, more detailed engineering studies, additional metallurgical test work, including work to improve recovery of specific metals to their own concentrate, and review of tailings management and paste processes. Several opportunities for cost reduction or productivity improvement have been identified for further study.

It is planned to carry out these and other activities as suitable funds are available. This will then lead to the generation of more detailed production and costing feasibility reviews to support project financing.

John Kearney, Chairman stated, “I have been involved with this Company and the Parys Mountain project for many years, and I am encouraged that that many of the variables and moving parts, including metal prices, treatment charges and used plant availability, have now moved in our favour and present a real and realisable opportunity for Parys Mountain. There is of course still much to be do but we now have a clear path forward.  We will need to expand the management team to make this happen and I look forward to being involved with the future financings and the path to development, construction and eventual mine production.”

Based on the positive results of the Scoping Study, the company now plans to engage in discussions with potential financiers or partners for the development of the Parys Mountain project. It is expected that this financing will occur in a stepped progression.  A number of recommendations have been made by Micon and Fairport regarding further work to optimise and enhance the project as the next step ahead of mine development.  It is hoped that financing for this work can be arranged as speedily as possible and will be followed by subsequent financings to move towards mine construction.

About Anglesey Mining plc

Anglesey is carrying out feasibility and development work at its 100% owned Parys Mountain zinc-copper-lead deposit in North Wales, UK with a reported resource of 2.1 million tonnes at 6.9% combined base metals in the indicated category and 4.1 million tonnes at 5.0% combined base metals in the inferred category. Anglesey holds a 6% interest and management rights to the Grangesberg Iron project in Sweden, together with a right of first refusal to increase its interest by a further 51%. Anglesey also holds 11.8% of Labrador Iron Mines Holdings Limited which holds direct shipping iron ore deposits in Labrador and Quebec.

For further information, please contact:

Bill Hooley, Chief Executive +44 (0)7785 572517

Danesh Varma, Finance Director +44 (0)207 653 9881

Elliot Hance, Beaufort Securities +44 (0)207 382 8300

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Parys Mountain Scoping Study Progress Update

Anglesey Mining plc

3 July 2017        LSE:AYM

Parys Mountain Scoping Study Progress Update

Increase in annual production rate expected

 

In May Anglesey Mining plc (“Anglesey” or the “Company”) reported that work on the Scoping Study on the Parys Mountain copper-lead-zinc project in North Wales was being modified to examine increased throughput alternatives at 700 and 1,000 tonnes per day compared to the 500 tonnes per day used initially.  This stage of the study continues to be carried out by Micon International Limited and Fairport Engineering, in collaboration with company personnel and is based on the resource estimate made by Micon in 2012.       

The Micon 2012 JORC Code compliant resource estimate reported a resource of 2.1 million tonnes at 6.9% combined base metals in the indicated category and 4.1 million tonnes at 5.0% combined base metals in the inferred category.

The Company previously indicated that it expected that the inputs from the new phase would be incorporated into updated financial models, with a view to having optimized development scenarios available for consideration before the end of June 2017.  The Company is pleased to report that both consultants have made very significant progress and based on preliminary reviews improved inputs to the financial model, including reduced operating costs and increased annual production, are indicated. 

It was previously expected that an increased annual production rate would usually result in a significant increase in capital costs.  Whilst it is expected that there will be some increase in capital costs these are likely to be less than previously expected and together with the production and operating cost adjustments should justify the increased production approach.  

Both consultants are now working to complete their respective exercises imminently and the Company expects to review the results and issue a detailed summary as soon thereafter as is practicable.  The Company is firmly of the opinion that it is preferable to allow the consultants adequate time to properly complete their work to the highest standards than to insist on a hasty completion that may be subject to error.  The Company’s current plan is that the results of the Scoping Study will be announced ahead of the publication of the Annual Report and Accounts during this month of July.

The Company has noted that there has been some significant trading volume and volatility in the price of the Companies shares during the last few weeks.  The Company is unaware of any corporate related reason for these movements but notes the recent positive momentum in the prices of both zinc and copper, with zinc inventories on the LME declining to eight year lows and copper inventories also declining.

About Anglesey Mining plc

Anglesey is carrying out development and exploration work at its 100% owned Parys Mountain zinc-copper-lead deposit in North Wales, UK with a reported resource of 2.1 million tonnes at 6.9% combined base metals in the indicated category and 4.1 million tonnes at 5.0% combined base metals in the inferred category.

Anglesey holds a 6% interest and management rights to the Grangesberg Iron project in Sweden, together with a right of first refusal to increase its interest by a further 51%. Anglesey also holds 11.8% of Labrador Iron Mines Holdings Limited which has direct shipping iron ore deposits in Labrador and Quebec.
 
For further information, please contact:
 
Bill Hooley, Chief Executive +44 (0)7785 572517
Danesh Varma, Finance Director +44 (0)207 653 9881
Elliot Hance, Beaufort Securities +44 (0)207 382 8300

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Parys Mountain Scoping Study Update

Anglesey Mining plc

12 May 2017        LSE:AYM

 Parys Mountain Scoping Study Update

 Anglesey Mining plc (“Anglesey” or the “Company”) reports that work on Scoping Study on the Parys Mountain copper-lead-zinc project in North Wales is continuing.  The study is being undertaken by Micon International Limited and Fairport Engineering, in collaboration with company personnel, based on the resource estimate calculated by Micon in 2012.

 The 2012 JORC Code compliant resource estimate reported a resource of 2.1 million tonnes at 6.9% combined base metals in the indicated category and 4.1 million tonnes at 5.0% combined base metals in the inferred category.

 The initial approach adopted for the Scoping Study was a plan to mine these resources at 500 tonnes per day, or 165,000 tonnes per annum, commencing with development of the mineral deposits closest to surface.  The Company had chosen this throughput rate as it was believed that the low capital cost associated with this approach would provide the most beneficial outcome.  Given the level of indicated resources defined by Micon in 2012, this would result in a mine life of around 16 years, with mining of the indicated resources only and none of the inferred resources.

 The Company has reviewed the initial outcome of the study, based on a daily processing plant input of 500 tonnes per day of ore, and concluded that an accelerated development of the indicated resources over a shorter initial mine life should be economically more attractive.

 Fairport has considered some processing alternatives, specifically the introduction of dense media separation, that would increase the effective daily production rate by about 40% with only a limited increase in capital.  This would result in a shortened mine life based on the existing indicated resources and should generate an enhanced financial outcome.

 In addition, on reviewing the current indicative levels of the capital cost of mill equipment, including readily available used processing plant, it was felt that construction of a larger processing plant with a higher throughput rate could be justified. The feasibility study completed in 1991 was based on a throughput rate of 1,000 tonnes per day, or 350,000 tonnes per year.

 Obviously, a higher initial daily throughput rate would require additional mine development, a higher capital cost and result in a shortened mine life based only on the existing 2.1 million tonnes of indicated resources, but it should generate an enhanced financial outcome. 

 However, recognising the significant inferred resources of 4.1 million tonnes, being almost twice the current indicated resources, it would be expected that during the operation of the mine definition and exploration drilling would be carried out from underground locations that should be expected to bring much of the current inferred resources into the indicated category, and that would then extend the mine life significantly. 

 Based on an initial review of the preliminary results of the draft Scoping Study, Anglesey has asked both Micon and Fairport to consider alternative production and throughput scenarios, at various levels between 500 and 1,000 tonnes per day, and expects to receive modified mine production schedules and alternative capital cost estimates in the near future.  The inputs will then be incorporated into updated financial models, with a view to having optimized development scenarios available for consideration before the end of June 2017.

 About Anglesey Mining plc

Anglesey is carrying out development and exploration work at its 100% owned Parys Mountain zinc-copper-lead deposit in North Wales, UK with a reported resource of 2.1 million tonnes at 6.9% combined base metals in the indicated category and 4.1 million tonnes at 5.0% combined base metals in the inferred category.

Anglesey holds a 6% interest and management rights to the Grangesberg Iron project in Sweden, together with a right of first refusal to increase its interest by a further 51%. Anglesey also holds 11.2% of Labrador Iron Mines Holdings Limited which has direct shipping iron ore deposits in Labrador and Quebec

For further information, please contact:
 
Bill Hooley, Chief Executive +44 (0)7785 57251

Danesh Varma, Finance Director +44 (0)207 653 9881

Elliot Hance, Beaufort Securities +44 (0)207 382 8300

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Placing of New Shares for £0.225 million

20th March 2017                                                                    LSE: AYM

Placing of New Shares for £0.225 million

Anglesey Mining plc is pleased to announce that it has today agreed to issue 5,000,000 new ordinary shares, representing approximately 2.8% of the Company’s enlarged issued share capital, at 4.5 pence per share in a placement, to raise a total of £225,000 gross and £213,750 net.

The net proceeds of issue will be used for general working capital and for the continued development of the Parys Mountain poly-metallic project in North Wales on which an updated scoping study is being prepared by Micon International Limited and by Fairport Engineering Limited.  This study is reviewing capital and operating costs including the use of available second-hand plant to minimise capital expenditure wherever possible.  Recent increases in base metal prices over the last few months together with the lower level of sterling compared to the United States dollar are also expected to be positive for the project economics. The study is nearing completion and is expected that the report will be available shortly.  When the report is completed Anglesey will commence discussions with interested funding partners with a view to moving the project on to the next stage of development aimed at bringing the mine in to production. 

Bill Hooley, CEO, stated “We are very pleased to announce this financing which shows the continued support for Anglesey Mining and for its projects from sophisticated institutional investors in the resource industry.  We believe that such support is both positive for the development of the project and as an indicator that investor interest in the base metals sector has returned and that the outlook for the metals that will be produced from Parys Mountain is positive”.

The directors have authorised the issue of the new shares under the dispensation approved at the last AGM on 28th September 2016.  The new ordinary shares of 1 pence each to be issued in respect of this transaction will rank pari passu with the existing ordinary shares of the company. The transaction is conditional on the admission of the new ordinary shares to the Official List and to trading on the London Stock Exchange’s main market.

Application will be made for these shares to be admitted to both the Official List and to trading on the London Stock Exchange’s main market for listed securities and it is expected that such admission will become effective and dealings will commence on or 30 March 2017.

Following the allotment of these new ordinary shares becoming unconditional, the issued ordinary share capital of the company will be 177,608,051 ordinary shares of 1 pence each with voting rights; there are no shares held in treasury.  This figure may be used by shareholders as the denominator for the calculations which will determine whether they are required to notify their interest in the company, or any change to that interest, under the Financial Conduct Authority’s Disclosure and Transparency Rules.

About Anglesey Mining plc

Anglesey is carrying out development and exploration work at its 100% owned Parys Mountain zinc-copper-lead deposit in North Wales, UK with a reported resource of 2.1 million tonnes at 6.9% combined base metals in the indicated category and 4.1 million tonnes at 5.0% combined base metals in the inferred category

Anglesey holds a 6% interest and management rights to the Grangesberg Iron project in Sweden, together with a right of first refusal to increase its interest by a further 51%.

Anglesey also holds 11.2% of Labrador Iron Mines Holdings Limited which has direct shipping iron ore deposits in Labrador and Quebec and which has recently completed its Plan of Arrangement.  The Plan implements a restructuring of LIMH’s business to preserve its mining assets, continue its mine site activities in a care and maintenance standby mode and position it to refinance an orderly resumption of its iron ore mining activities when economic conditions warrant.

For further information, please contact:

Bill Hooley, Chief Executive +44 (0)1492 541 981

Danesh Varma, Finance Director +44 (0)207 653 9881

Eliliot Hance, Beaufort Securities +44 (0)207 382 8300

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LIMH completes Plan of Arrangement, Placing of New Anglesey Shares for £0.3 million completed

16th December 2016                                                                                          LSE: AYM

LIMH completes Plan of Arrangement

Placing of New Anglesey Shares for £0.3 million completed 

Anglesey Mining plc (“Anglesey” or the “Company”) is pleased to announce that Labrador Iron Mines Holdings Limited (“LIMH”) has reported that its Plan of Compromise and Arrangement (the “Plan”) under the Canadian Companies’ Creditors Arrangement Act has been approved by creditors and sanctioned by the Ontario Superior Court of Justice in Toronto.

The Sanction Order of the Court marks the final legal milestone in LIMH’s financial restructuring process, with implementation of the Plan scheduled for Monday, December 19th, 2016.

Upon implementation of the arrangement creditors of LIMH will be issued, as a group, approximately 22% of the shares of LIMH which means that Anglesey will then hold approximately 11.9% of LIMH and will be its second largest shareholder. Creditors will also be issued 49% of LIMH’s operating subsidiary Labrador Iron Mines Limited. 

The Plan implements a restructuring of LIMH’s business to preserve its mining assets, continue its mine site activities in a care and maintenance standby mode and position LIMH to refinance an orderly resumption of its iron ore mining activities when economic conditions warrant.

Bill Hooley, Chief Executive, stated “We are very pleased to see LIMH passing this major milestone which will leave it debt free and with all its major assets intact.  As a significant shareholder in LIMH we look forward to the future development of its iron ore assets in Labrador when the economic climate is right, and to other opportunities that LIMH is now in a position to pursue.”

Placing of New Anglesey Shares completed

 Anglesey also reports that the previously announced issue 12,000,000 new ordinary shares in the Company has been completed raising a total of £310,200.  The issued ordinary share capital of the company is now 172,608,051 ordinary shares of 1 pence each with voting rights; there are no shares held in treasury.  This figure may be used by shareholders as the denominator for the calculations which will determine whether they are required to notify their interest in the company, or any change to that interest, under the Financial Conduct Authority’s Disclosure and Transparency Rules.

The proceeds of the placement will be used for project development of Anglesey’s 100% owned Parys Mountain zinc-copper-lead deposit and for general working capital.  An updated scoping study is currently being prepared by Micon International Limited and Fairport Engineering Limited, both of which are acknowledged experts and leaders in the resources sector.

About Anglesey Mining plc

Anglesey is carrying out development and exploration work at its 100% owned Parys Mountain zinc-copper-lead deposit in North Wales, UK with a reported resource of 2.1 million tonnes at 6.9% combined base metals in the indicated category and 4.1 million tonnes at 5.0% combined base metals in the inferred category

Anglesey holds a 6% interest and management rights to the Grangesberg Iron project in Sweden, together with a right of first refusal to increase its interest by a further 51%.

Anglesey also holds 11.9% of Labrador Iron Mines Holdings Limited which has direct shipping iron ore deposits in Labrador and Quebec, currently held in stand-by care and maintenance pending an improvement in the iron ore price.

For further information, please contact:
Bill Hooley, Chief Executive +44 (0)1492 541981;
Danesh Varma, Finance Director +44 (0)207 653 9881;
Elliot Hance, Beaufort Securities+44 (0)207 382 8300

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