Anglesey’s major activity is its 15% share of Toronto-listed Labrador Iron Mines Holdings Limited (TSX:LIM) which holds twenty direct shipping iron ore deposits in western Labrador and north-eastern Quebec and is currently mining the first of these to be developed at the James Mine.
Anglesey also holds 100% of the Parys Mountain zinc-copper-lead deposit in North Wales, UK with a total JORC compliant indicated resource of 2.1 million tonnes and an inferred resource of 4.1 million tonnes.
Labrador Iron Mines has published its Financial Statements and Management Discussion and Analysis report for the three months ending 30th June 2013 both of which can be found on SEDAR and on LIM’s website at www.labradorironmines.ca. Key points are:
During the quarter, LIM sold two shipments of iron ore totalling 328,000 dry tonnes and reported revenue of C$17.9 million (free on board Port of Sept-Îles).
LIM commenced its third operating season in early April 2013 at the James Mine, following a waste removal program in March. The Silver Yards Processing Facility resumed operations in April with initial ore processing activities commencing from the dry plant.
Mining, processing and railing operations during the quarter were hampered by a combination of slower than anticipated contractor mobilization in March and challenging weather conditions in March and April. Train loading, railing and shipping were limited to the availability of saleable product produced, resulting in higher operating costs and lower revenue during the quarter due to fewer ships sold than planned.
For the first quarter ended June 30, 2013, LIM reported a net loss of C$28.5 million.
At June 30, 2013 current assets were C$67.9 million, including inventories with a carrying value of C$11.0 million, accounts receivable and prepaid expenses of C$26.2 million, a total of C$27.3 million in unrestricted cash and cash equivalents and C$8.6 million in restricted cash. Current liabilities, consisting of accounts payable and accrued liabilities, the current portion of deferred revenue, finance lease obligations and rehabilitation provision, were in aggregate C$67.2 million.
The Phase 3 expansion of the wet plant was largely completed in June, with commissioning of the wet high intensity magnetic separator continuing through July.
Subsequent to the end of the quarter, LIM’s third and fourth shipments of 2013 departed from the Port of Sept-Îles, totalling approximately 361,500 wet metric tonnes of iron ore product at a grade of 62% iron (“Fe”).
With the completion of all construction and commissioning activities at Silver Yards and the addition of a fourth train set in July, mining and railing volumes are now achieving operating plan objectives, while product recoveries in the wet plant are improving.
LIM is currently targeting a total of approximately 1.7 million tonnes of iron ore products in 2013 consisting of ten shipments. Planned shipments for the balance of 2013 will be sinter fines and lump ore at a planned average grade of about 62% Fe.
LIM’s first quarter ended June 30, 2013 was characterized by a disproportionate amount of waste removal, and lower than planned volumes of mining, railing and sales, resulting from slower than anticipated contractor mobilization in March and challenging weather conditions in March and April. As a consequence, train loading, railing and shipping volumes were limited to the availability of saleable product produced. LIM incurred significant rail related volume commitment penalties during the quarter and achieved sales of only two shipments instead of three shipments as planned. The sale of the third shipment occurred shortly after the end of the quarter.
For the quarter ended June 30, 2013, LIM’s loss of C$28.5 million included a depletion and depreciation charge of C$5.6 million and rail take-or-pay transportation penalties of C$6.2 million.
“LIM recognizes its current cost structure is too high and has undertaken a number of immediate and decisive measures to reduce both capital and operating costs” commented John Kearney, LIM Chairman and Chief Executive Officer. “The key to reducing operating costs is to maintain and increase production volumes of iron ore. It is expected that as production volumes increase during the remaining months of the operating season, a significant reduction in operating unit costs will be achieved in the second and third quarters.”
With the increase in production and railing volumes, the minimization in take-or-pay transportation penalties and the implementation of cost savings initiatives, cash operating costs during the remaining three quarters of the fiscal year are expected to be substantially lower than in the first quarter.
“With more favourable spot iron ore prices seen in recent weeks, combined with the operational improvements and cost reductions, we expect to achieve stronger results for the balance of the 2013 season” added John Kearney.
Operations at Parys Mountain have been limited since the last report and largely confined to care and maintenance of the facilities. Nevertheless a geological review of the property based in a large part on the results from last year’s drilling programme has commenced and is expected to lead to a reappraisal of development targets which will be an input into revisions to the Scoping Study.
Meanwhile the company remains confident that the market for its key base metals, particularly zinc, will improve in the medium term as the world comes out of recession and as China continues to show strong growth despite earlier uncertainties.
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;
Danesh Varma, Finance director +44 (0) 20 7653 9881;
Samantha Harrison: RFC Ambrian +44 (0)20 3440 6800;
Emily Fenton/Jos Simson: Tavistock Communications +44 (0)20 7920 3155.