Half yearly report for the six months to 30 September 2015

Chairman’s Statement and Management Report

As indicated in the Chairman’s Statement in the Annual Report published in July this year, the hoped for resurgence in the resources sector has not yet occurred and indeed since the date of that Report the investment climate has further deteriorated. Continuing economic difficulties in Europe and a deepening slow down in Chinese consumption, coupled with an apparent increasing involvement of hedge funds and sovereign investment funds in resource derivative markets, have resulted in further worsening of key commodity prices during the last three months. Prices for iron ore are now close to their lowest since an open market for iron ore first evolved in 2007; and prices for base metals such as copper, lead and zinc are now at multi-year lows.

It is unclear how matters will resolve themselves in both the next few months and in the next few years. However it is apparent that with continuing low commodity prices there will be shut downs of a number of producing mines and it is highly unlikely that there will be significant new investment to replace all of this lost production. Production on a global level must therefore fall. Despite the Chinese slowdown in rate of economic growth, consumption of major metals continues to increase. Initially this is likely to reduce the levels of stocks firstly of concentrates and eventually of finished products and metals. Inevitably and notwithstanding the activities of the hedge funds and sovereign investment funds this must lead to a net deficit of supply over demand. The problem will be further exacerbated by the near cessation of mineral exploration particularly at the grass roots level which must severely limit the flow of potential new projects to even maintain production levels as current mines reach the end of their natural life. This will then only add to the supply/demand shortfall.

The real question of course is over what time frame will these events unfold? The minerals sector has always operated in cycles but the current trough following the super-cycle of the early part of this century is deeper than experienced by any currently working in the sector and there is little in the way of guidance from the past to try to be certain of the way the cycle will move in the future. Past cycles have often had a sharp increase once the bottom was reached and hopefully that will again be the case this time round. But as a word of caution it is by no means certain that we have yet seen the bottom, nor is it clear how the new derivative players will affect the rate of recovery and it is far from certain that capital will return to the sector to fund a rapid regrowth after the pain that investors in the sector have suffered in the last two or three years.

Nevertheless we must remain optimistic and we must continue to place ourselves in the most favourable position to benefit from the upturn in whatever form and whenever it does return. To this end we have significantly reduced our operating costs particularly from a cash flow point of view at just £68,000 for the half year being well under 50% of that for the comparable period last year. Despite this we have managed to keep all of our major assets in good standing and ready for relatively speedy development at the appropriate time. In this regard I must thank all of our directors for their continuing support in waiving fees and salaries during this critical time.

As always we continue to look for new opportunities for your Company within the resources sector, particularly in commodities with which we are familiar and within political sectors in which we feel comfortable. Given the difficulties being felt by many others within the sector who do not benefit from our low operating cost scenario a number of such opportunities are beginning to present themselves and we will review each of these as they come to our attention.

Operations

The levels of operations and direct expenditure at all of our projects have remained very low throughout the period. No field work has been carried out at Parys Mountain but as shareholders will be aware we do own the freehold to the surface area covering virtually all our published resources and fortunately under UK law, with the exception of some minor commitments to prior land owner and to the Crown for precious metals licences, this gives us perpetual ongoing rights to these resources with no resultant demands from departments of mines or similar for minimum expenditures and lease relinquishments. We can therefore maintain our Parys Mountain assets for a very low holding cost.

The situation in Sweden, whilst governed by leases from the state, still allows us to keep these leases for a number of years without any immediate demand for minimum work levels. Again no field work has taken place but a number of off-site technical reviews have been conducted to best position Grangesberg for the possible upturn in what may well become a favourable market in the future, particularly for the type of iron ore product that the project is expected to produce in its geographical location.

In Canada, Labrador Iron Mines is now operating under the Canadian Companies Creditors Arrangement Act. LIM does have some ongoing expenditure but it has embarked on a process of non-essential asset sales to allow it sufficient time to seek suitable financial restructuring arrangements with the aim of maintaining its principal assets to permit a return to production when markets return to higher levels.

Results

Anglesey recorded a net loss for the period of £0.14 million (2014 loss £0.88 million. Administration costs at £0.07 million were further reduced from £0.15 million in the comparative period in 2014. The group had no revenue for the period. At the period end cash resources stood at £7,000 and there was a working capital deficiency of £88,000. This was reduced by a loan of £50,000 from Juno after the period end however additional working capital will need to be raised in the immediate future.

Outlook

The outlook in the short to medium term remains somewhat unclear. However it is certain at least in the longer term that the demand to supply balance will need to be restored and commodity prices will need to return to a level at which ongoing production at a reasonable profit is sustainable. It remains our view that zinc should be one of the earliest commodities to benefit from this movement. This is reinforced by the closure of both the Century Mine in Australia and the Lisheen Mine in Ireland in recent months both of which were major producers, and by the curtailment of production by a number of others including the substantial reduction recently announced by Glencore. All these production reductions should mean that the supply demand balance would already be in deficit and the small overhang of metal stocks should be eradicated within this calendar year. We do not see any major new mines coming on stream in the medium term, and with China continuing to grow, albeit at a slower rate than previously, demand should continue to increase. However the current lower levels of mine production of concentrates is likely to lead to the closure of at least one the major smelters somewhere in the world. The resultant shortfall in metal production should then lead to an early rise in the price of the metal. Given the short time to move Parys Mountain into production we would be in a strong position to benefit from this movement.

The situation of iron ore in the short term is less exciting. China continues to import record quantities of iron ore but the build-up in production levels particularly from Australia and Brazil over recent years following major capital project commencements in 2010 and 2011 that have recently come on stream, mean that a surplus of production capacity now exists that under normal circumstances would take a number of years to be eroded by natural growth in demand. Whilst China’s growth remains subdued there is always the possibility, maybe driven by internal political pressures, for that country to embark on a new stimulus plan and that would have an immediate beneficial effect firstly on iron ore pricing and later on base metals. Should such an upturn occur then LIM with all its physical and geological assets in place would be well positioned to benefit. Grangesberg too would also then be able to embark upon its rejuvenation programme to bring its mine back into production in something like a three year span from an investment decision.

In summary, while the current situation is dark and indeed the future is uncertain, Anglesey remains positive that a recovery will occur within a sensible time frame. We will maintain our assets in good standing to permit us take the fullest advantage of the inevitable and I thank all shareholders for their patience during these difficult times.

John F Kearney

Chairman

26 November 2015

Unaudited condensed consolidated income statement

Notes Unaudited six months ended 30 September 2015 Unaudited six months ended 30 September 2014
All operations are continuing £ £
Revenue - -
Expenses (68,337) (152,230)
Impairment of investment 10 - (692,702)
Exchange difference on
investment impairment
10 - 20,850
Investment income 160 1,044
Finance costs (66,959) (56,200)
Foreign exchange (loss)/gain (813) 330
Loss before tax (135,949) (878,908)
Tax 8 - -
Loss for the period (135,949) (878,908)
Loss per share
Basic – pence per share (0.1)p (0.5)p
Diluted – pence per share (0.1)p (0.5)p

Unaudited condensed consolidated statement of comprehensive income

Loss for the period (135,949) (878,908)
Other comprehensive income:
Exchange difference on
translation of foreign holding
33 -
Total comprehensive loss
for the year
(135,916) (878,908)

All attributable to equity holders of the company

Unaudited condensed consolidated statement of financial position

Notes 30 September 2015 31 March 2015
£ £
Assets
Non-current assets
Mineral property exploration and evaluation 9 14,901,320 14,877,193
Property, plant and equipment 204,687 204,687
Investments 10 86,660 86,660
Deposit 122,906 122,806
15,315,573 15,291,346
Current assets
Other receivables 29,990 30,977
Cash and cash equivalents 7,970 96,873
37,960 127,850
Total assets 15,353,533 15,419,196
Liabilities
Current liabilities
Trade and other payables (124,851) (121,557)
(124,851) (121,557)
Net current (liabilities)/assets (86,891) 6,293
Non-current liabilities
Loans (2,949,461) (2,882,502)
Long term provision (50,000) (50,000)
(2,999,461) (2,932,502)
Total liabilities (3,124,312) (3,054,059)
Net assets 12,229,221 12,365,137
Equity
Share capital 11 7,116,914 7,116,914
Share premium 9,848,949 9,848,949
Currency translation reserve (31,130) (31,163)
Retained losses (4,705,512) (4,569,563)
Total shareholders’ equity 12,229,221 12,365,137

All attributable to equity holders of the company

Unaudited condensed consolidated statement of cash flows

Notes Unaudited six months ended 30 September 2015 Unaudited six months ended 30 September 2014
£ £
Operating activities
Loss for the period (135,949) (878,908)
Adjustments for:
Investment income (160) (1,044)
Finance costs 66,959 56,200
Impairment of investment 10 - 692,702
Exchange difference on
investment impairment
10 - (20,850)
Foreign exchange movement 813 (330)
(68,337) (152,230)
Movements in working capital
Decrease/(increase) in receivables 1,002 (3,513)
Increase in payables 8,329 13,877
Net cash used in operating activities (59,006) (141,866)
Investing activities
Investment income 60 834
Mineral property exploration and evaluation (29,144) (41,899)
Investment - (74,940)
Net cash used in investing activities (29,084) (116,005)
Net decrease in cash
and cash equivalents
(88,090) (257,871)
Cash and cash equivalents at start of year 96,873 289,097
Foreign exchange movement (813) 330
Cash and cash equivalents at end of year 7,970 31,556

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 2015 – audited 7,116,914 9,848,949 (31,163) (4,569,563) 12,365,137
Total comprehensive
income for the period:
Exchange difference on
translation of foreign holding
- - 33 - 33
Loss for the period - - - (135,949) (135,949)
Total comprehensive
income for the period:
- - 33 (135,949) (135,916)
Equity at
30 September 2015 – unaudited
7,116,914 9,848,949 (31,130) (4,705,512) 12,229,221
Comparative period
Equity at 1 April 2014 – audited 7,116,914 9,848,949 - (2,832,953) 14,132,910
Total comprehensive
income for the period:
Loss for the period - - - (878,908) (878,908)
Total comprehensive
income for the period:
- - - (878,908) (878,908)
Equity at
30 September 2014 – unaudited
7,116,914 9,848,949 - (3,711,861) 13,254,002

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 2015. 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 26 November 2015. 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 2014 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 2015 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 are unaudited.

2.  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 2015. The following amendments to interpretations were effective in the current period and have been adopted.

IFRIC 21 Levies; Effective – Annual periods beginning on or after 17 June 2014

IAS 19 Employee Benefits: Amendment relating to the accounting for contributions from employees or third parties to defined benefit plans; Effective – Annual periods beginning on or after 1 February 2015

Annual Improvements 2010 – 2012 cycle: Amendments to IFRS2, IFRS3, IFRS8 IAS 16, IAS24 and IAS38; Effective for accounting periods beginning on or after 1 February 2015.

Annual Improvements 2011 – 2013 cycle: Amendments to IFRS3, IFRS13 and IAS40; Effective for accounting periods beginning on or after 1 January 2015

The adoption of the amendments and new interpretations has not resulted in a change to the accounting policies nor had a material effect on the financial performance and position of the group. In preparing these financial statements any accounting assumptions and estimates made by management were consistent with those applied to the aforesaid annual report and financial statements.

3.  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 2015 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 2015 annual report – see note 1 above.

4.  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 26 November 2015 and authorised for issue on behalf of the board by Bill Hooley, Chief Executive Officer and Danesh Varma, Finance Director.

5.  Activities

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

6.  Earnings per share

The loss per share is computed by dividing the loss attributable to ordinary shareholders of £0.1 million (loss to 30 September 2014 £0.9m), by 160,608,051 (2014 – unchanged) – 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.

7.  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 2015
UK Sweden – investment Canada – investment Total
£ £ £ £
Expenses (68,337) - - (68,337)
Investment income 160 - - 160
Finance costs (66,959) - - (66,959)
Exchange rate movements - (57) (756) (813)
Loss for the period (135,136) (57) (756) (135,949)
Unaudited six months ended 30 September 2014
UK Sweden – investment Canada – investment Total
£ £ £ £
Expenses (152,230) - - (152,230)
Loss on fair
value of investment
- - (692,702) (692,702)
Exchange
difference on loss above
- - 20,850 20,850
Investment income 1,044 - - 1,044
Finance costs (56,200) - - (56,200)
Exchange rate movements 330 - - 330
Loss for the period (207,056) - (671,852) (878,908)

Assets and liabilities

` Unaudited 30 September 2015
UK Sweden investment Canada investment Total
£ £ £ £
Non current assets 15,228,913 86,659 1 15,315,573
Current assets 33,513 4,447 - 37,960
Liabilities (2,894,766) (229,546) - (3,124,312)
Net assets/(liabilities) 12,367,660 (138,440) 1 12,229,221
Audited 31 March 2015
UK Sweden investment Canada investment Total
£ £ £ £
Non current assets 15,204,686 86,659 1 15,291,346
Current assets 123,364 4,486 - 127,850
Liabilities (2,831,473) (222,586) - (3,054,059)
Net assets/(liabilities) 12,496,577 (131,441) 1 12,365,137

8.  Deferred tax

There is an unrecognised deferred tax asset of £1.2 million (31 March 2015 – £1.2m) 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 £11 million (unchanged from 31 March 2015) unclaimed and available. No deferred tax asset is recognised in the condensed financial statements.

9.  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 £24,127 was incurred (six months to 30 September 2014 – £53,159). There have been no indicators of impairment during the period.

10.  Investments

Labrador Grangesberg Total
£ £ £
At 31 March 2014 1,257,985 - 1,257,985
Addition during period - 86,659 86,659
Impairment resulting
from adjustment to nominal value
(1,231,218) - (1,231,218)
Exchange difference arising on adjustment above (26,766) - (26,766)
At 31 March 2015 1 86,659 86,660
Addition during period - - -
At 30 September 2015 1 86,659 86,660

Labrador: At 31 March 2014 the group treated its 15% holding in LIM as an investment held at its published fair value. At 31 March 2015 the value of the LIM investment was deemed to be impaired given the decline in the share price and the loss its quotation on the Toronto Stock Exchange on 2 April 2015 and the directors decided to write down the value of the LIM shares to 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.

11.  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 2014,
2015 and 30 September 2015
1,606,081 160,608,051 5,510,833 137,770,835 7,116,914

12.  Financial instruments

Group Available for sale assets Loans & receivables
30 September 2015 31 March 2015 30 September 2015 31 March 2015
£ £ £ £
Financial assets
Investments 1 1 - -
Deposit - - 122,906 122,806
Other debtors - - 29,990 30,977
Cash and cash
equivalents
- - 7,970 96,876
- -
1 1 160,866 250,659
30 September 2015 31 March 2015
£ £
Financial liabilities
Trade creditors (69,832) (71,538)
Other creditors (105,019) (100,019)
Loans (2,949,461) (2,882,502)
(3,124,312) (3,054,059)

13.  Events after the reporting period

None.

14.  Related party transactions

None.

Anglesey Mining plc

Directors:

John Kearney                Chairman

Bill Hooley                      Chief executive

Danesh Varma               Finance director

David Lean                     Non executive

Howard Miller                Non executive

Roger Turner                 Non executive

Parys Mountain site: Parys Mountain, Amlwch, Anglesey, LL68 9RE

Phone 01407 831275

London office: Painter’s Hall, 9 Little Trinity Lane, London, EC4V 2AD

Phone 020 7653 9881

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

Share registrars: Capita Registrars  www.capitaregistrars.com

Phone:  0871 664 0300 – for all change of address and shareholder
administration matters (calls cost 10p per minute plus network extras,
lines open 0830 to 1730 Mon-Fri)

Web site: www.angleseymining.co.uk

E-mail: mail@angleseymining.co.uk

Shares listed on the London Stock Exchange – LSE:AYM

Company registration number 1849957

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