Annual report and accounts

27 July 2011

Anglesey Mining plc

A UK mining company listed on the London Stock Exchange

33% interest in Labrador Iron Mines Holdings Limited, a TSX quoted Canadian company with 39 million tonnes of compliant direct shipping hematite iron ore and 125 million tonnes of historical resources near Schefferville in Canada, where production and processing of iron ore is now underway.

The market value of the group’s investment in LIM at 31 March 2011 was £156 million compared with £75 million at the same date in 2010.  At 19 July 2011 this value was £129 million, equivalent to 81 pence per Anglesey share.

The first of LIM’s iron ore deposits has now been brought into production and LIM is moving towards becoming a significant producer.

100% of the Parys Mountain copper-lead-zinc project in North Wales with a total historical resource of 7.76 million tonnes at 9.3% combined copper, lead and zinc, held awaiting development.

Chairman’s Statement

This has been the most successful year that Anglesey Mining has ever experienced with the Schefferville iron ore mining operations of Labrador Iron Mines (“LIM”), in which the group holds 33% of the equity, moving into production. The first rail shipment of iron ore to the port of Sept-Iles was despatched in June 2011 and LIM is now on track to produce over one million tonnes of iron ore this year, with plans for expansion to enable production of 2.5 million tonnes in 2012.

The key developments and progress since the last Annual Report were:

  • LIM’s steady progress towards production saw the price of LIM shares continue to increase and at 19 July 2011 the market value of the group’s holding in LIM was C$199 million (£129 million) equivalent to 81 pence per Anglesey share.
  • LIM completed a share placement in April 2011 in which it raised C$121 million (£78.5 million). It is now well financed to carry through its expansion plans.
  • The price of iron ore has remained strong and currently stands at around US$175 per tonne (CFR China) and the consensus of forecasts by respected market analysts is for trading in the range of $150 – $200 per tonne for a number of years. This should be very positive for the future of LIM.
  • In January 2011 Anglesey raised £1.6 million through the exercise of share options with a concurrent private placing and now has a total of around £3.5 million in cash.

Parys Mountain

At Parys Mountain, the group holds 100% of the largest known base metal deposit in the United Kingdom. Resources of zinc, copper and lead with small but significant amounts of silver and gold total 7.76 million tonnes, most of which are historic resources, but which include 1.75 million tonnes of JORC compliant resource in the indicated category.

The prices for copper, zinc, lead, gold and silver, which are the major metals to be mined at Parys Mountain have remained strong. We believe that the Parys project has the potential to become a very significant base metal producer with by-products of gold and silver which would generate a substantial value for shareholders.

It is intended to undertake a detailed review of the resources and the development options for Parys Mountain during the remainder of 2011. This review will include the reappraisal of the previously proposed White Rock mine which would target near surface resources as a first stage development option, which would lead to the subsequent development of the deeper lying resources. The review will also include the identification of drilling targets close to the White Rock with the objective of increasing the near surface resources.

Financial

The results of Anglesey are dominated by those of its associate LIM, which during the financial year was a development company with no revenues and significant expenses in respect of its administrative costs. Primarily as a result of the losses reported by LIM, Anglesey recorded an overall loss of £1.44 million for the year ended 31 March 2011.

With a total of around £3.5 million in cash and administrative cash costs of less than £0.4 million per year the group is well placed to finance the review and the first stages of any subsequent development of Parys Mountain.

I look forward to the on-going success of Anglesey in what are truly exciting times.

John F. Kearney

Chairman

27 July 2011

Directors’ Report

The directors have pleasure in submitting their report and the audited accounts for the year ended 1H31 March 2011.

Principal activities and business review

The group’s principal activities are the development and operation of the Labrador iron project in eastern Canada in which the group now has a 33% interest, and the Parys Mountain project in North Wales which is wholly owned.

Development of the Labrador properties is proceeding rapidly and the James deposit, the first to go into production, dispatched the first train carrying iron ore on 29 June 2011. Output is expected to build up during the remainder of the operating season.

The group continues its search for other mineral exploration and development opportunities.

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

Labrador Iron

Anglesey Mining now holds a 33% interest in Toronto-listed LIM which is developing and operating direct shipping iron ore deposits in western Labrador and north-eastern Quebec near Schefferville in Canada. At 31 March 2011 the group’s interest was 40% (2010 – 41%); this was diluted after the year end following a major fund raising by LIM in April 2011.

The Schefferville Projects are located in the west-central part of the Labrador Trough iron range, one of the major iron ore producing regions in the world, and are divided into two separate portions, one within the Province of Newfoundland and Labrador, and the other within the Province of Quebec, both located near the town of Schefferville, Quebec.

The iron ore deposits forming the Schefferville Projects are predominantly hematite ore and were part of the original Iron Ore Company of Canada direct-shipping Schefferville operations conducted from 1954 to 1982.

A total of 39.6 million tonnes of measured and indicated resources have now been estimated in the James, Redmond, Houston and Denault deposits (NI43-101 compliant). The remaining deposits have a historical resource estimated at approximately 125 million tons of direct shipping iron ore, based on work carried out by IOC prior to the closure of its Schefferville operations in 1984. The historical estimate was prepared according to the standards used by IOC and, while still considered relevant, is not compliant with NI 43-101.

The plans for the Schefferville Projects envision the mining of the deposits in stages. Stage 1 comprises the James deposit which is closest to existing infrastructure.

Development progress during the year has been rapid and substantial, such that the project is now, post year end, operational and is mining, processing and shipping iron ore. C$13/£8 million was capitalised in respect of mineral property development and exploration costs (2010 – C$7/£4 million) and C$29/£18 million (2010 – C$7/£4 million) was capitalised in respect of property, plant and equipment.

Mining

Ore mining at the James deposit commenced in April 2011 and is planned to be carried out for seven to eight months per year from April to November (depending on weather conditions) at a mining rate of approximately 15,000 tonnes of ore per day, using conventional open-pit mining methods and where necessary employing standard drilling and blasting practices. Overburden and waste mining, and some ore mining, will continue through the winter period. Ore mined will be classed into three products for direct shipping, plant feed, and stockpiling for later treatment.

Silver Yards processing plant

The beneficiation plant, where Stage 1 ore will be crushed, washed and screened, is situated within an area called the Silver Yards approximately 1 km northeast of the James mine. The first phase of the Silver Yards plant has been constructed and commissioned including the primary and secondary crushers, screens, scrubbers, stackers and conveyers. Residual material from the plant is being pumped to the old Ruth Pit.

The Silver Yards plant has a planned initial processing rate of 6,000 tonnes per day, increasing to 10,000 tonnes per day. It is expected that the plant will continue to operate through to November. In future years the planned annual seasonal processing schedule will cover a period of seven to eight months, or approximately 210 to 240 days per year, from April to November or December, depending on weather conditions.

The ore which contains higher levels of silica will not be processed in the first year of operations but will be stockpiled for treatment later when the plant is expanded with the addition of a third processing line together a number of refinements to the plant.

Rail transportation

The 560 km main rail line between Schefferville and Sept-Iles was originally constructed for the shipment of iron ore from the Schefferville area and has been in continuous operation for over fifty years. LIM has constructed a five mile spur line which connects Silver Yards to the main rail line.

LIM has agreements covering access to all of the track required for iron ore transportation and for the rental of five locomotives to haul its trains. In addition LIM has purchased a fleet of 400 previously used rail cars of which the first consignment of rail cars has been delivered to Sept-Iles where modifications are being carried out.

LIM’s first ore train, loaded with direct shipping ore, departed Silver Yards for Sept-Iles on 29 June 2011. This train represents the first commercial iron ore train movement from the Schefferville area in almost 30 years.

Port

LIM has an arrangement with the Sept-Iles Port Authority for the use of the Pointe aux Basques terminal for handling and ship loading of LIM’s iron ore for the 2011 season and potentially beyond. Use of the Pointe aux Basques facilities requires train shunting and unloading in the adjacent rail yard and loading the iron ore onto barges or lakers and transhipping to larger vessels within the deeper waters of the bay or at another port. The port handling arrangements are currently being finalised. It is expected that the first shipment of iron ore will be loaded at the Port of Sept Iles in August 2011.

Exploration program

LIM has commenced a large exploration program on its Schefferville Area projects. A total of 17,500 metres of drilling is planned for the 2011 season, using four drill rigs, and a further 4,000 metres of exploration trenching will be carried out.

First Nations

The Schefferville Projects are located in an area over which claims for traditional aboriginal rights are asserted by four First Nations groups. LIM has signed impact benefits agreements (“IBAs”) with three of these groups and an Agreement in Principle with the fourth group.

Marketing

It is expected that iron ore products produced in 2011 will be sold into the spot market on a “FOB Sept- Iles” basis. LIM has had detailed discussions with a number of internationally recognised companies with specialist knowledge of the iron and steel industry and expects to finalise marketing arrangements with one of these companies for the sale of its initial 2011 ore production.

Iron Ore Price

The viability and profitability of LIM’s Schefferville Projects is dependent on the sale price of iron ore.

The world-wide iron-ore market remains positive though spot prices for 62% Fe sinter fines have fallen from highs of around US$190 per tonne (CFR China) during the first quarter of calendar 2011 to around US$170 per tonne in recent weeks. High demand for iron ore in recent years has been driven primarily by China. Current efforts by the Chinese government to slow down some aspects of growth of the Chinese economy, including restricting credit and raising base interest rates, has likely been the reason for some slowing in Chinese purchases and hence the recent reduction in spot prices. These reduced purchases have reportedly resulted in some levels of destocking. There are signs that this destocking is now being reversed which should lead to stronger prices in months to come.

The recent medium term increases in iron ore costs will inevitably lead to continuing increases in steel prices, which under normal circumstances would lead to reduced levels in steel demand in subsequent periods. Demand for steel and therefore for iron ore appears likely to remain strong, and is likely to continue to grow in the coming years. In the short to medium term, with demand remaining strong, prices are forecast to only retract marginally. In the longer term as major new production capacity comes on line in Brazil and Australia, the balance between supply and the continuing increasing demand is likely to remain close. The extent to which demand continues to exceed supply will be influenced by new and increased growth from other markets, including south-east Asia, and renewed growth in Europe led by Germany, and particularly by the level at which new iron ore supply from West Africa may emerge. There are now signs that some of this new African production will take longer to come on stream than previously forecast thereby extending the period during which demand is expected to equal or exceed supply. The latest consensus of current forecasts indicate that iron ore supply and demand will remain generally in balance until around 2015 to 2016, with prices only dropping 10-15% in that period, possibly followed by a supply surplus, with prices declining somewhat thereafter.

Full details of LIM’s operations and financial position are available in LIM’s financial statements, management’s discussion and analysis and annual information form, all of which cover the period to 31 March 2011 and are published on LIM’s website at http://www.labradorironmines.ca/invest_financials.php.

Parys Mountain

The Parys Mountain property is the largest known base metal deposit in the United Kingdom. A feasibility study carried out in 1991 identified a resource of 6.5 million tonnes containing zinc, copper and lead with small amounts of silver and gold. The 1991 feasibility study demonstrated the technical and economic viability of bringing the property into production at a rate of 350,000 tonnes per annum, producing zinc, copper and lead concentrates. However there was limited development over the period from 1991 to 2003 chiefly due to poor metal prices. This historic resource together with the White Rock JORC compliant resource identified more recently amounts in aggregate to 7.8 million tonnes at 9.3% combined metals.

The prices for copper, zinc, lead, gold and silver, which are the major metals to be mined at Parys Mountain have remained strong. It is intended to undertake a detailed review of the resources and the development options for Parys Mountain during the remainder of 2011. This review will include the reappraisal of the previously proposed White Rock mine which would target near surface resources as a first stage development option, which would lead to the subsequent development of the deeper lying resources. The review will also include the identification of drilling targets close to the White Rock with the objective of increasing the near surface resources.

The directors considered the carrying value of the Parys Mountain property and carried out an impairment review the detail of which is set out in note 10. The review indicated that no impairment provision was required or justified. Operation of the mine and the receipt of cashflows from it are dependent on finance being available to fund the development of the property.

Dolaucothi

In addition to its other mineral assets, the group holds the Dolaucothi gold property in South Wales. It is not the company’s current intention to incur significant expenditures on this property, however this situation will be kept under review.

Other activities

Management continues to search for new properties suitable for development within a relatively short time frame and within the financing capability likely to be available to the group.

Performance

So far as the directors are aware, there are no standardised indicators which can usefully be employed to gauge the performance of the group at this stage of its development other than the performance of the parent company’s listed shares. The directors expect to be judged by their success in creating value for shareholders.

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

Dividend

The group has no revenues and the directors are unable to recommend a dividend (2010 – nil).

Financial position

The group has no revenues from the operation of its properties. The loss for the year after tax was £1,445,657 compared to a profit of £8,204,337 in 2010. Of the 2010 profit, £8,788,063 was attributable to the effects of the LIM financing and to Anglesey’s sale of part of its LIM shareholding in March 2010; the only comparable transactions in 2011 resulted in a profit of £294,560. After excluding the effects of these transactions the comparable figures were losses of £1,740,217 in 2011 and £583,726 in 2010. The increased loss in the Labrador associate was due to higher administration and corporate expenses incurred there as activities increased during the project’s movement towards production. The company’s own expenses were increased by national insurance charges connected with the exercise of share options by directors and higher investor relations costs.

During the year there were no additions to fixed assets (2010 – nil) and £107,850 (2010 – £175,994) was capitalised in respect of the development of the Parys Mountain property. The Labrador properties are held in an associated company.

The group’s cash position at 31 March 2011 was £3,671,247 (2010 – £2,766,074), this increase from last year being due to the receipt of proceeds from the placing of shares in January 2011. The foreign exchange loss of £61,919 (2010 – nil) shown in the income statement arises for the first time this year on the cash balances held in Canadian dollars. There were no cash balances held in Canadian dollars until 31 March 2010.

At 31 March 2011 the company had 158,158,051 ordinary shares in issue, 5,000,000 more than in 2010 as a result of a cash placing of 2,500,000 shares and the exercise of share options over a further 2,500,000 shares. Following the year end a further 250,000 shares were issued in respect of the exercise of a director’s share options.

The directors believe that the group has adequate funding for its current and proposed operations.

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 matters, costs and changing foreign exchange rates and other matters.

The mining industry is competitive in all of its phases. There is aggressive competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential. The group faces strong 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

The company has adequate funds for its current and planned operations which do not at present include the development to production of the Parys Mountain property. Labrador Iron Mines Holdings Limited is believed to be fully funded for the foreseeable future.

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 looking into the unknown or little known 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 international currency fluctuations which affect the actual amount which might be received by the group in sterling.

Foreign exchange

The activities of LIM are carried out in Canada; the group’s interest in LIM is carried in the group accounts on an equity basis and is affected by an exchange rate risk. 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 Canadian dollars – see notes 17 and 24.

Permitting, environment and social

LIM has the governmental, operating, environmental and other permissions necessary for its current operations. Other permissions will be required as other deposits are brought into production.

LIM conducts its operations in Labrador and Quebec, in areas which are subject to conflicting First Nations land claims. There are a number of First Nations peoples living in the Quebec-Labrador peninsula with overlapping claims to asserted aboriginal land rights. Aboriginal claims to lands, and the conflicting claims to traditional rights between aboriginal groups, which also overlap the Quebec-Labrador provincial border, may have an impact on LIM’s ability to develop the Schefferville deposits.

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 permits 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 including 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 the operations of LIM or any other areas in which the group might engage may adversely affect its business or future operations.

Financial instruments

The group’s use of financial instruments is not significant and is described in note 24.

Directors

The names of the directors with biographical details are shown on the inside rear cover. In accordance with the company’s practice, Bill Hooley and Roger Turner retire by rotation and, being eligible, offer themselves for re-election. Since Danesh Varma, Howard Miller and David Lean have served for more than nine years as non-executive directors, the Corporate Governance Code requires that they be re-elected annually, and, being eligible, they are also proposed for re-election.

The company maintains a directors’ and officers’ liability policy on normal commercial terms which includes third party indemnity provisions. Unless otherwise determined by ordinary resolution, the number of directors, other than alternate directors, shall not be subject to any maximum, but shall not be less than two. The powers of the directors are described in the Corporate Governance Report.

With regard to the appointment and replacement of directors, the company is governed by its Articles, the Corporate Governance Code, the Companies Act and related legislation. The Articles themselves may be amended by special resolution of the shareholders and were in fact so amended at the AGM held in September 2010. Under the Articles, any director appointed by the board during the year must retire at the Annual General Meeting following his appointment. In addition, the Articles require that one-third of the remaining directors retire by rotation at each general meeting and seek re-appointment.

Directors’ interests in material contracts

Juno Limited (Juno), which is registered in Bermuda, holds 36.6% of the company’s ordinary share capital. The company has a controlling shareholder agreement and working capital agreement with Juno. Advances made under the working capital agreement are shown in note 19. Apart from interest charges there were no transactions between the group and Juno or its group during the year. An independent committee reviews and approves any transactions and potential transactions with Juno. Danesh Varma is a director and, through his family interests, a significant shareholder of Juno.

John Kearney is chairman and chief executive of Labrador Iron Mines Holdings Limited (LIM), Bill Hooley is a director and chief operations officer and Danesh Varma is chief financial officer. All three are shareholders of LIM, are entitled to remuneration from LIM and have been granted options over the shares of LIM. There are no transactions between LIM, the group and the company which are required to be disclosed.

There are no other contracts of significance in which any director has or had during the year a material interest.

Directors’ shareholdings

The interests of the directors in the share capital of the company, all of which are beneficial, are set out below:

19 July 2011 31 March 2011 31 March 2010
Director Number of options Number of ordinary shares Number of options Number of ordinary shares Number of options Number of ordinary shares
John Kearney 5,000,000 5,000,000 5,400,000
Bill Hooley 2,500,000 100,000 2,500,000 100,000 2,900,000 100,000
Ian Cuthbertson 1,700,000 1,027,300 1,700,000 1,027,300 2,100,000 1,027,300
David Lean 450,000 700,000 700,000
Howard Miller 600,000 600,000 900,000
Roger Turner 500,000 500,000 1,100,000
Danesh Varma 1,000,000 1,000,000 1,400,000

Further details of directors’ options are provided in the Directors’ Remuneration Report.

Substantial shareholders

At 19 July 2011 the following shareholders had advised the company of interests in the issued ordinary share capital of the company:

Name Number of shares Percentage of share capital
Juno Limited 57,924,248 36.6%
Passport Special Opportunities Master Fund 26,525,000 16.7%

Shares

Authority to allot shares

The directors would usually wish to allot any new share capital on a pre-emptive basis, however in the light of the group’s potential requirement to raise further funds for the acquisition of new mineral ventures, other activities and working capital, they believe that it is appropriate to have a larger amount available for issue at their discretion without pre-emption than is normal for larger listed companies. In the case of allotments other than for rights or other pre-emptive issues, it is proposed that such authority will be for up to £390,000 of share capital being 39,000,000 ordinary shares, which is equivalent to 25% of the issued ordinary share capital at 5H19 July 2011. Whilst such authority is in excess of the 5% of existing issued ordinary share capital which is commonly accepted for larger listed companies, it will provide additional flexibility which the directors believe is in the best interests of the group in its present circumstances. It is the directors’ present intention to renew this power each year.

Rights and obligations attaching to shares

The rights and obligations attaching to the ordinary and deferred shares are set out in the Articles of Association. Details of the issued share capital are shown in note 21. Details of employee share schemes are set out in the Directors Remuneration Report and in note 22.

Each ordinary share carries the right to one vote at general meetings of the company. Holders of deferred shares, which are of negligible value, are not entitled to attend, speak or vote at any general meeting of the company, nor are they entitled to receive notice of general meetings.

Subject to the provisions of the Companies Act 2006, the rights attached to any class may be varied with the consent of the holders of three-quarters in nominal value of the issued shares of the class or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of the shares of the class.

There are no restrictions on the transfer of the company’s shares.

Voting rights

Votes may be exercised at general meetings in relation to the business being transacted either in person, by proxy or, in relation to corporate members, by corporate representative. The Articles provide that forms of proxy shall be submitted not less than 48 hours before the time appointed for holding the meeting or adjourned meeting.

No member shall be entitled to vote at a general meeting or at a separate meeting of the holders of any class of shares in the capital of the company, either in person or by proxy, in respect of any share held by him unless all monies presently payable by him in respect of that share have been paid. Furthermore, no shareholder shall be entitled to attend or vote either personally or by proxy at a general meeting or at a separate meeting of the holders of that class of shares or on a poll if he has been served with a notice after failing to provide the company with information concerning interests in his shares required to be provided under the Companies Act.

Significant agreements and change of control

There are no agreements between the company and its directors or employees that provide for compensation for loss of office or employment that may occur because of a takeover bid. The company’s share plans contain provisions relating to a change of control. Outstanding awards and options would normally vest and become exercisable on a change of control, subject to the satisfaction of any performance conditions.

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. It also aims to be a valued and responsible member of the communities which it affects or operates in. Since there are no revenues from operations, it is the group’s general policy not to make charitable or political donations and none were made during the year (2010 – nil).

The group, which for these purposes does not include LIM, has no operations; 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.

Creditor payment policy

The group conducts its business on the normal trade credit terms of each of its suppliers and tries to ensure that suppliers are paid in accordance with those terms. The group’s average creditor payment period at 31 March 2011 was 47 days (2010 – 59 days).

Going concern

The directors have considered the business activities of the group as well as its principal risks and uncertainties as set out in this report. When doing so they have carefully applied the guidance given in the Financial Reporting Council’s  document “Going concern and liquidity risk: Guidance for directors of UK companies 2009”. Based on the group’s cash flow forecasts and projections for a twelve month period from the date of this report, and after making due enquiry in the light of current and anticipated economic conditions, the directors consider that the group and company have adequate resources to continue in business for the foreseeable future. For this reason, the going concern basis continues to be adopted in the preparation of the financial statements.

Statement of directors’ responsibilities

The directors are responsible for preparing the annual report and the financial statements. The directors are required to prepare the financial statements for the group in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”) and have also elected to prepare financial statements for the company in accordance with IFRS. Company law requires the directors to prepare such financial statements in accordance with IFRS, the Companies Act 2006 and, in relation to the group financial statements, Article 4 of the IAS Regulation.

International Accounting Standard 1 requires that financial statements present fairly for each financial year the group’s financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s ‘Framework for the Preparation and Presentation of Financial Statements’. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable International Financial Reporting Standards.

Directors are also required to:

  • properly select and apply accounting policies;
  • present information, including accounting policies, in a manner that provides relevant, reliable comparable and understandable information; and
  • provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the group, for safeguarding the assets, for taking reasonable steps for the prevention and detection of fraud and other irregularities and for the preparation of a directors’ report and directors’ remuneration report which comply with the requirements of the Companies Act 2006.

The directors confirm that the financial statements have (a) been prepared in accordance with applicable accounting standards; (b) give a true and fair view of the results of the group and the assets, liabilities and financial position of the group and the parent company; and (c) that the directors’ report includes a fair review of the development and performance of the business and the position of the group and the parent company together with a description of the principal risks and uncertainties that they face.

The directors are responsible for the maintenance and integrity of the group website.

Auditor

Each of the directors in office at the date of approval of the annual report confirms that so far as they are aware there is no relevant audit information of which the company’s auditor is unaware and that each director has taken all of the steps which they ought to have taken as directors in order to make themselves aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

A resolution to reappoint Mazars LLP as auditors and to authorise the directors to fix their remuneration will be proposed at the annual general meeting.

By order of the board

Ian Cuthbertson

Company Secretary

27 July 2011

Independent auditor’s report to the members of Anglesey Mining plc

We have audited the financial statements of Anglesey Mining plc for the year ended 31 March 2011 which comprise the Group Income Statement, the Group Statement of Comprehensive Income, the Group and Company Statement of Financial Position, the Group and Company Statement of Changes in Equity, the Group and Company Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

Respective responsibilities of directors and auditor

As explained more fully in the Directors’ Responsibilities Statement set out in the Directors’ Report, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. This report is made solely to the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body for our audit work, for this report, or for the opinions we have formed.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the APB’s web-site at www.frc.org.uk/apb/scope/private.cfm.

Opinion on the financial statements

In our opinion:

  • the financial statements give a true and fair view of the state of the group’s and of the
  • parent company’s affairs as at 31 March 2011 and of the group’s loss for the year then ended;
  • the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
  • the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
  • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.

Emphasis of matter

In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures in the financial statements concerning the valuation of intangible assets (note 10) of £13,900,593 in the group financial statements and the valuation of investment in subsidiary undertakings (note 13) of £13,630,271 in the company financial statements.

The financial statements and related noted have been prepared on the validity of the following:

  • The successful development of Parys Mountain mineral property; and
  • The raising of new finance to exploit mineral reserves.

No adjustments have been made to the statement of financial position and related notes to reflect changes to these assets’ carrying value that might be necessary should the above conditions not be met.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

  • the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and
  • the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
  • the information given in the Corporate Governance Statement with respect to internal control and risk management systems in relation to financial reporting processes and about share capital is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

•           adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

•           the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or

•           certain disclosures of directors’ remuneration specified by law are not made;

•           we have not received all the information and explanations we require for our audit; or

•           a Corporate Governance Statement has not been prepared by the company.

Under the Listing Rules we are required to review:

•           the directors’ statement, set out in the Directors’ Report, in relation to going concern;

•           the part of the Corporate Governance Statement relating to the company’s compliance with the nine provisions of the June 2008 Combined Code specified for our review; and

•           certain elements of the report to the shareholders by the Board on directors’ remuneration.

Richard Metcalfe (Senior Statutory Auditor)

for and on behalf of Mazars LLP

Chartered Accountants and Statutory Auditor

Tower Bridge House, St. Katharine’s Way, London, E1W 1DD

27 July 2011

Group income statement

All attributable to equity holders of the company

Notes Year ended 31 March 2011 Year ended 31 March 2010
All operations are continuing £ £
Revenue
Expenses (476,139) (253,684)
Equity-settled employee benefits 22 (28,127)
Share of loss of associate 14 (1,104,453) (203,173)
Gains on deemed disposals in associate 14 294,560 7,054,967
Profit on sale of shares in associate 14 1,733,096
Investment income 6 19,308 1,076
Finance costs 7 (117,014) (99,818)
Foreign exchange loss (61,919)
(Loss)/profit before tax 4 (1,445,657) 8,204,337
Tax 8
(Loss)/profit for the year (1,445,657) 8,204,337
(Loss)/profit per share
Basic – pence per share 9 (0.9)p 5.4 p
Diluted – pence per share 9 (0.9)p 5.3 p
Consolidated statement of comprehensive income
(Loss)/profit for the year (1,445,657) 8,204,337
Other comprehensive income:
Exchange difference on
translation of foreign holding
14 (360,273) 2,148,426
Total comprehensive (loss)/income
for the year
(1,805,930) 10,352,763

Statement of financial position of the group

31 March 2011
31 March 2010
Notes £ £
Assets
Non-current assets
Mineral property development 10 13,900,593 13,792,743
Property, plant and equipment 11 204,687 204,687
Interest in associate 14 21,073,132 21,868,314
Deposit 15 121,146 120,574
35,299,558 35,986,318
Current assets
Other receivables 16 22,469 8,327
Cash and cash equivalents 17 3,671,247 2,766,074
3,693,716 2,774,401
Total assets 38,993,274 38,760,719
Liabilities
Current liabilities
Trade and other payables 18 (791,148) (817,869)
17
(791,148) (817,869)
Net current assets 2,902,568 1,956,532
Non-current liabilities
Loan 19 (2,077,361) (1,960,347)
Long term provision 20 (42,000) (42,000)
(2,119,361) (2,002,347)
Total liabilities (2,910,509) (2,820,216)
Net assets 36,082,765 35,940,503
Equity
Share capital 21 7,092,414 7,042,414
Share premium 9,621,181 8,097,973
Currency translation reserve 3,620,997 3,981,270
Retained earnings 15,748,173 16,818,846
Total shareholders’ equity 36,082,765 35,940,503

The financial statements of Anglesey Mining plc registered number 1849957 were approved by the board of directors, authorised for issue on 27 July 2011 and signed on its behalf by:

John F. Kearney,    Chairman

Ian Cuthbertson,     Finance Director

The complete financial report can be viewed or downloaded as a pdf from www.angleseymining.co.uk/accounts/assets/ANRP11web.pdf

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