LIM March 2013 year-end results and operational update

Anglesey Mining’s 15% held associate Labrador Iron Mines Holdings Limited (TSX: LIM) today reports its operating and audited financial results for the fiscal year ended March 31, 2013. LIM is also pleased to provide an update on its 2013 operating season, as the second shipment of iron ore departed the Port of Sept-Îles on June 27, 2013.

Recent Operating Highlights

LIM commenced its third season of operations in April 2013 with the re-start of full-scale mining activities targeting 1.75 million to 2.0 million tonnes of saleable iron ore production in 2013. Recent operating highlights include:

  • The first shipment for 2013 sailed from the Port of Sept-Îles in early June carrying approximately 174,000 wet metric tonnes (“wmt”) of iron ore. This was followed by LIM’s second shipment carrying approximately 177,500 wmt on June 27, 2013.
  • The Silver Yards Phase 3 upgrade and expansion for the wet plant was commissioned in June and has been operating in conjunction with the dry plant, which has been processing ore since April.
  • Railway operations recommenced in early April. For the 2013 operating season, LIM is using newly-built, rotary dumper compatible iron ore gondolas, comprising longer, 164-car train sets, allowing for improved productivity and potential cost savings.
  • New, independent National Instrument 43-101 (“NI 43-101”) year-end resource estimates showed a 33% net increase in LIM’s year-end mineral resource to 59.5 million tonnes grading 56.7% Fe, including an increase in the combined Houston and Malcolm resource to 40.6 million tonnes grading 57.6% Fe. In addition, a new indicated and inferred resource was also estimated on historic stockpiles, providing supplementary plant feed for Silver Yards in future years.
  • LIM announced its first independent NI 43-101 inferred mineral resource estimate on the Elizabeth Taconite Project of 640 million tonnes grading 31.8% Fe.

“We are pleased with the solid start to our third operating season, highlighted by two shipments sold in June,” commented Rod Cooper, President and Chief Operating Officer. “Our operating crews have worked hard in addressing the challenging weather conditions experienced in April and May and activities at site have progressed well as we head into the important summer months. The ramp up of the Silver Yards processing facility and connection to the power grid are two positive accomplishments, and with a number of other enhancements made in the areas of the mine, process plants and rail, we look forward to meeting our production targets for the year.”

Addressing important requirements for the 2013 operating season

In preparation for the 2013 operating season, we have executed many important initiatives in securing our working capital requirements, increasing liquidity and addressing volatility in the iron ore markets.” commented John Kearney, Chairman and Chief Executive Officer. “We believe this has allowed us to mitigate some of the challenges we experienced in 2012, which overshadowed our operational achievements during the year.”

  • In May 2013, LIM signed a new, two-year iron ore sales agreement with the Iron Ore Company of Canada (“IOC”) for the sale of LIM’s iron ore production for calendar years 2013 and 2014, with the price calculation based on the monthly average of the market index.
  • At the same time in May 2013, LIM entered into an off-take financing arrangement with RB Metalloyd Limited (“RBM”), under which RBM advanced a pre-payment of US$35 million to LIM, to be credited against the proceeds of LIM’s committed sales of 3,500,000 tonnes of iron ore during 2013 and 2014.
  • LIM has put in place a limited price protection program to address potential iron ore market volatility, purchasing put options on 825,000 tonnes of iron ore over the period August to October 2013, exercisable at a CFR China price of US$105 per tonne.
  • In order to mitigate the risk of significant ocean freight cost escalation, LIM has agreed to fixed freight costs to northern China on seven vessels during 2013.
  • In March 2013, LIM established a strategic relationship with Tata Steel Minerals Canada (“TSMC”), a subsidiary of Tata Steel Limited, which includes multi-part cooperation agreements in various aspects of the companies’ respective iron ore operations in the Labrador Trough. Subject to completion of formal agreements, TSMC will pay $30.0 million to LIM for the sale of a 51% interest in LIM’s Howse deposit, which will be used to fund various expenditures for the 2013 operating season.

John Kearney added, “For 2013, our operational priorities are to minimize costs, maximize production and sales and to ensure that sales revenue is generated as early as possible. We have implemented cost reduction and cash conservation measures across all aspects of our operations.”

Financial Results

For the fiscal year ended March 31, 2013, LIM recognized revenue from mining operations of $95.7 million (FOB Port of Sept-Îles) on sales of 1.56 million dry tonnes of iron ore in ten shipments completed during the year. This revenue is recognized on an FOB Port of Sept-Îles basis and is net of deduction of ocean freight and IOC’s participation.

Revenue for the 2013 fiscal year was negatively impacted by low realized iron ore prices (CFR China spot price less value-in-use adjustments and before ocean freight and IOC participation), particularly in the period from August to October 2012, when the spot price of iron ore suffered a sharp decline of 33%.

For the fiscal year ended March 31, 2013, LIM reported a loss of $129.7 million or $1.56 per share, resulting primarily from an operating loss (before depletion and depreciation) of $28.9 million, a depletion and depreciation charge of $29.7 million and write-downs totalling $61.2 million comprising a write-down of mineral property interests of $58.1 million and a $3.1 million provision against certain doubtful receivables.

Notice: Conference Call and Webcast held today at 11:00 am Toronto time.
Dial-in: +1 (647) 427-7450

About Labrador Iron Mines Holdings Limited (LIM)

Labrador Iron Mines (LIM) is Canada’s newest iron ore producer with a portfolio of direct shipping (DSO) iron ore operations and projects located in the prolific Labrador Trough. LIM has commenced its third year of operations and is targeting 1.75 to 2.0 million tonnes of saleable iron ore production in 2013.

About Anglesey Mining plc

Anglesey holds 15.3% of Toronto-listed Labrador Iron Mines Holdings Limited which is producing high grade hematite from its James pit, one of LIM’s direct shipping iron ore deposits in western Labrador and north-eastern Quebec.

Anglesey is also carrying out exploration and development work at its 100% owned Parys Mountain zinc-copper-lead deposit in North Wales, UK where a JORC Code-compliant resource of 2.1mt at 6.9% combined base metals in the indicated category and 4.1mt at 5.0% combined in the inferred category was published in November 2012.

For further information, please contact:

Bill Hooley, Chief Executive +44 (0)1492 541981;

Ian Cuthbertson, Finance Director +44 (0)1248 361333;

Samantha Harrison:  RFC Ambrian +44 (0)20 3440 6800;

Emily Fenton/Jos Simson:  Tavistock Communications +44 (0)20 7920 3155.

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