20 July 09

Final results 2009

 

A UK mining company listed on the London Stock Exchange with -

 

A 50% ownership in Labrador Iron Mines Holdings Limited, a TSX quoted Canadian company developing the Labrador Iron Ore properties which are scheduled for commercial production in 2010. A historic resource of 90 million tons of partially developed iron ore in Western Labrador. Development activities fully funded - £19.8 million cash equivalent available at 31 March 2009

 

Parys Mountain - An important copper-lead-zinc deposit in North Wales, UK with a total historical resource of 7.76 million tonnes at 9.3% combined copper, lead and zinc, currently held awaiting development  

Chairman’s Statement

 

Along with the majority of companies in the resources sector, indeed in almost all business sectors, Anglesey Mining has felt the effects of the global economic and financial crisis that struck the world in the second half of 2008. The low point occurred towards the end of 2008 with some improvement having been seen since.

With the global economic downturn, the price of Anglesey shares has fallen dramatically during the last year. This reflected a similar fall in the share price of our 50% owned Canadian associate Labrador Iron Mines Holdings Limited (LIM).

LIM ended its financial year at 31 March 2009 with cash and current assets of Canadian $35.7 million (£19.8 million) and is in a healthy financial and operational condition to carry out its planned programmes to move its direct shipping iron ore project in Western Labrador into production.

Anglesey shares are currently trading at less than half of the implied value of its shareholding in LIM. We believe that the commencement of iron ore shipments in 2010 will encourage the market to reflect the real value of this project in the share prices of both LIM and Anglesey Mining.

 

Labrador Iron Project

During 2008 major exploration drilling and bulk mining programmes were completed accompanied by a programme of detailed testwork. This work is continuing and will lead to the final design and ordering of the infrastructure, mining and beneficiation plant and contracts required for the planned commencement of commercial production during the second quarter of 2010.

The highlight of the metallurgical testwork was the demonstration that high grade products of both lump ore and sinter fines can be produced. In addition to the high grades the testwork demonstrated a low level of impurity in all the critical elements and compounds. Based on these results marketing discussions were initiated with European steel mills and, despite the generally negative sentiment prevailing as a result of significant downturns in orders for semi-finished steel products in Europe, the level of interest being shown for LIM’s expected product is very encouraging.

The negotiation of benchmark iron ore prices for 2009 between the major iron producers and the large steel mills is still ongoing though some settlements have occurred. These settlements whilst lower than the high levels achieved in 2008 are still the second highest level ever achieved.

We remain very pleased with the way that Labrador Iron Mines has progressed. Current activities are accelerating to prepare for commercial production in 2010 and we look forward to this investment in our associate company becoming an even more valuable asset for the group in the future.

 

Parys Mountain Mine

As we reported previously, negotiations with Western Metals Limited in Perth, Australia for the potential sale of the Parys Mountain mine were terminated in October 2008. The termination was a result of failure to agree terms and conditions during the rapidly declining financial and commodity price environment that was developing at that time. We have received a considerable quantity of data and analysis generated by Western Metals and its consultants during its due diligence process which is now being reviewed.

Following termination of these discussions, and with metal prices at low levels, the Parys Mountain surface facilities were put into care and maintenance with expenditures being kept to a minimum. A previously commissioned geological report was delivered in January 2009. This reviews much prior geological exploration and analysis and makes some recommendations for future exploration. These recommendations will be closely considered when the exploration programme recommences.

Since the end of the year base metal prices have seen some healthy recovery and copper in particular, which is the major source of revenue under the Parys financial model, now appears to be showing strength. The forecasts of that financial model are encouraging and we will continue to review the development options for Parys Mountain.

 

Financial Results

The result for the year was a loss of £129,014 compared to a profit last year of £10.2 million. The profit in 2008 resulted largely from the flotation of the Labrador Iron project in Canada.

At 31 March 2009 the group balance sheet showed total assets of £27.9 million, with total liabilities of only £2.4 million. With this strong balance sheet and the support of our major shareholder we believe we can handle our current working capital requirements without difficulty.

 

Outlook

We go forward as a group in the fortunate position of being well-funded and close to production. China remains the most important factor in the future outlook for all metal prices. There are encouraging signs of build up in the Chinese economy which seems to be partly driven by government internal stimulus packages that are now beginning to take effect. This build up will of course result in increased demand for metals and higher metal prices.

Despite the difficulties of this past year, Anglesey is well positioned with its 50% shareholding in Labrador Iron Mines and can look forward to recognition of that value as Labrador Iron moves into production in 2010. We believe Anglesey is well placed to weather the economic storms and to take advantage of the anticipated upturn.

 

John F. Kearney

 

Chairman

20 July 2009

 

Consolidated income statement

 

 

 Notes

Year ended 31 March 2009

Year ended 31 March 2008 represented

All operations are continuing

 

£

£

 

 Revenue

 

 - 

 - 

 

 Administration expenses

 

(224,737)

 (399,331)

 

 Equity-settled employee benefits

 

(271,112)

 (142,723)

 

 Share of (loss)/profit in associate

 

(254,069)

10,449

 

 Investment income

 

7,118

21,970

 

 Finance costs

 

 (84,535)

 (67,326)

 

 Profit on deemed disposal

 

 - 

11,427,730

 

 Parys properties fair value adjustments

 

698,321

 (698,321)

 

 

 

 

 

 (Loss)/profit before tax

3

 (129,014)

10,152,448

 

 

 

 

 

 

 Tax

 

 - 

 - 

 

 

 

 

 

 (Loss)/profit for the year

 

 (129,014)

10,152,448

 

 

 

 

 

 

 Earnings per share 

 

 

 

 

 Basic - pence per share

4

 (0.1)

6.8

 

 Diluted - pence per share

4

 (0.1)

6.7

 

 

 

 

 

 

Consolidated balance sheet

 

 

 

31 March 2009

31 March 2008

 

 

 

 Notes

£

£

 

Assets

 

 

 

 

 

 Non-current assets

 

 

 

 

 

 Mineral property development

5

13,616,749

 - 

 

 

 Property, plant and equipment

6

204,687

 - 

 

 

 Interest in associate

7

13,821,013

12,068,276

 

 

 Deposit

 

119,549

 - 

 

 

 

 

 

 

 

 

 

 

27,761,998

12,068,276

 

 

 Current assets

 

 

 

 

 

 Other receivables

 

2,915

4,519

 

 

 Cash and cash equivalents

 

150,431

217,968

 

 

 

 

 

 

 

 

 

 

153,346

222,487

 

 

 

 

 

 

 

 

 Assets classified as held for sale

 

 - 

13,069,019

 

 

 

 

 

 

 

 Total assets

 

27,915,344

25,359,782

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 Current liabilities

 

 

 

 

 

 Trade and other payables

 

 (608,682)

 (63,819)

 

 

 

 

 

 

 

 

 

 

 (608,682)

 (63,819)

 

 

 

 

 

 

 

 

 Net current (liabilities)/assets

 

 (455,336)

158,668

 

 

 

 

 

 

 

 

 Non-current liabilities

 

 

 

 

 

 Loan

 

 (1,760,529)

 (1,475,993)

 

 

 Long term provision

 

 (42,000)

 - 

 

 

 

 

 

 

 

 

 

 

 (1,802,529)

 (1,475,993)

 

 

 Liabilities directly associated with
       assets classified as held for sale

 

 - 

 (464,741)

 

 

 

 

 

 

 

 Total liabilities

 

 (2,411,211)

 (2,004,553)

 

 

 

 

 

 

 

 Net assets

 

25,504,133

23,355,229

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 Share capital 

8

7,036,414

7,036,414

 

 

 Share premium

 

8,092,423

8,092,423

 

 

 Currency translation reserve

 

1,832,844

 (2,718)

 

 

 Retained profits

 

8,542,452

8,229,110

 

 

 

 

 

 

 

Total shareholders' equity

 

25,504,133

23,355,229

 

The financial statements were approved by the board of directors and authorised for
issue on 20 July 2009 and were signed on its behalf by:

John F. Kearney,     Chairman                        

Ian Cuthbertson,     Finance Director

  

Statements of changes in equity

 

 

 

 

 

 

 Group

 Share
capital

 Share
premium

 Currency translation reserve

 Retained profits

 Total

 

 £    

 £    

 £    

 £    

 £    

 At 1 April 2007

6,898,914

7,189,359

 (48,179)

 (2,066,061)

11,974,033

 

 

 

 

 

 

 Equity-settled benefits

 - 

 - 

 - 

142,723

142,723

 Shares issued for cash

137,500

962,500

 - 

 - 

1,100,000

 Share issue expenses

 - 

 (59,436)

 - 

 - 

 (59,436)

 Exchange differences on
    translation of foreign
    operations

 - 

 - 

45,461

 - 

45,461

 Profit for the year

 - 

 - 

 - 

10,152,448

10,152,448

 

 

 

 

 

 

 At 31 March 2008

7,036,414

8,092,423

 (2,718)

8,229,110

23,355,229

 

 

 

 

 

 

 Equity-settled benefits:
     - associate

 - 

 - 

 - 

171,244

171,244

     - company

 - 

 - 

 - 

271,112

271,112

 Exchange differences on
    translation of foreign
    holdings

 - 

 - 

1,835,562

 - 

1,835,562

 Loss for the year

 - 

 - 

 - 

 (129,014)

 (129,014)

 

 

 

 

 

 

 At 31 March 2009

7,036,414

8,092,423

1,832,844

8,542,452

25,504,133

 

 

 

 

 

 

Consolidated cash flow statement

 

 

 

Year ended 31 March 2009

Year ended 31 March 2008

 

 

 

£

£

Operating activities

 

 

 

 

 (Loss)/profit for the year

 

 (129,014)

10,152,448

 

 Adjustments:

 

 

 

 

 Investment revenue recognised
               in profit or loss

 

 (7,118)

 (18,959)

 

 Investment revenue recognised
               in discontinued operations

 

 - 

 (3,011)

 

 Finance costs recognised in profit or loss

 

84,535

67,326

 

 Equity-settled benefits

 

271,112

142,723

 

 Share of (loss)/profit in associate

 

254,069

 (10,449)

 

 Profit on deemed disposal

 

 - 

 (11,427,730)

 

 Parys properties fair value adjustments

 

 (698,321)

698,321

 

 

 

 

 

 

 

 

 (224,737)

 (399,331)

 

Movements in working capital

 

 

 

 

 Decrease/(increase) in receivables

 

22,775

 (12,168)

 

 Increase/(decrease) in payables

 

122,122

 (203)

 

 

 

 

 

 

Cash utilised by operations

 

 (79,840)

 (411,702)

 

 

 

 

 

 

 Interest paid

 

 - 

 - 

 

 

 

 

 

Net cash used in operating activities

 

 (79,840)

 (411,702)

 

 

 

 

 

Investing activities

 

 

 

 

 Interest received

 

4,492

19,121

 

 Mineral property development

 

 (192,189)

 (445,763)

 

 Payments for land and buildings

 

 - 

 (19,585)

 

 

 

 

 

Net cash used in investing activities

 

 (187,697)

 (446,227)

 

 

 

 

 

Financing activities

 

 

 

 

 Proceeds from issue of shares

 

 - 

1,040,564

 

 Loans

 

200,000

 - 

 

 

 

 

 

Net cash generated from financing activities

 

200,000

1,040,564

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 (67,537)

182,635

 Cash and cash equivalents at start of year

 

217,968

34,003

 Exchange rate changes on foreign cash and cash equivalents                                     -

1,330

 

 

 

 

 

 Cash and cash equivalents at end of year

 

150,431

217,968

 

 

 

 

 

 

Notes to the accounts

 

1      General information

 

Anglesey Mining plc is incorporated in the United Kingdom under the Companies Act 1985. The nature of the group’s operations and its principal activities are set out in note 3 and in the business review section of the directors’ report.

 

These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the group has been operating. Foreign operations are included in accordance with the policies set out in note 2.

 

The financial information set out in the results announcement does not constitute the group’s financial statements for the year ended 31 March 2009, but is derived from those financial statements.

 

The auditors have reported on the financial statements for the year ended 31 March 2009, their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985 but included the following 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 basis of preparation, the valuation of intangible assets of £13,616,749 in the Group financial statements and the valuation of investment in subsidiary undertakings of £14,081,396 in the Company financial statements.  The financial statements and related notes have been prepared based on the validity of the following:

•      The successful development of Parys Mountain mineral property;

•      The raising of new finance to exploit mineral reserves; and

•      The ability of the company to trade profitably in the future.

 

No adjustments have been made to the balance sheet and related notes to reflect changes to these assets' carrying values that might be necessary should the above conditions not be met.”

 

The auditors have reported on the financial statements for the year ended 31 March 2008; their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The financial information for the year ended 31 March 2008 is derived from the financial statements for that year.

 

The directors do not propose a dividend in respect of the year ended 31 March 2009 (2008: £nil).

 

The directors approved the financial statements for the year ended 31 March 2009 on 20 July 2009.

 

 

2      Significant accounting policies

 

Basis of Accounting

 

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and therefore the group financial statements comply with Article 4 of the EU IAS Regulation.

 

The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are set out below.

 

Going concern

 

The financial statements are prepared on a going concern basis. The validity of the going concern concept is dependent on finance being available for the continuing working capital requirements of the group and finance for the development of the group’s projects becoming available. Based on the assumption that such finance will become available, the directors believe that the going concern basis is appropriate for these accounts. Should the going concern basis not be appropriate, adjustments would have to be made to reduce the value of the group's assets, in particular the intangible fixed assets - mineral property development, to their realisable values.

 

Basis of consolidation

 

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries) made up to 31 March each year. Control is achieved where the company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

 

On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to profit and loss in the period of acquisition. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

 

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group.

 

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

 

Segmental analysis

 

The group’s primary format for segmental reporting is geographical segments which also correspond with the nature of the different projects being undertaken. The group has two segments: (i) the United Kingdom, which comprises the Parys Mountain base metal project and the much smaller Dolaucothi gold project and (ii) the Labrador Iron project in Canada, which from 3 December 2007 ceased to be carried in a subsidiary of the company and is not included in the segmental analysis from that date.

 

Property, plant and equipment

 

The group’s freehold land is stated in the balance sheet at cost. The directors consider that the estimated residual value of buildings, based on prices prevailing at the date of acquisition, is such that any depreciation would not be material. The carrying value is reviewed annually and any impairment in value would be charged immediately to the income statement.

 

Plant, equipment, fixtures and motor vehicles are stated in the balance sheet at cost, less depreciation. Depreciation is charged on a straight line basis at the following annual rates: plant and equipment 25%, fixtures and fittings 20% and motor vehicles 25%.

 

Intangible assets - mineral property development costs

 

Intangible assets are stated in the balance sheet at cost, less amounts written off and provisions for impairment.

 

Costs incurred prior to obtaining the legal rights to explore a mineral property are expensed immediately to the income statement. Mineral property development costs are capitalised until the results of the projects, which are usually based on geographical areas, are known. Mineral property development costs include an allocation of administrative and management costs as determined appropriate to the project by management.

 

Where a project is successful, the related exploration costs are written off over the life of the estimated mineral reserve on a unit of production basis. Where a project is terminated, the related exploration costs are written off immediately. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

 

Impairment of tangible and intangible assets

 

Mineral properties are written down when any impairment in their value has occurred and are written off when abandoned. Where a provision is made or reversed it is dealt with in the income statement in the period in which it arises.

 

Investment in associates

 

An associate is an entity over which the group exercises, or is in a position to exercise, significant influence, but not control or joint control, through participation in the financial or operating policy of the investee. In considering the degree of control, any options or warrants over ordinary shares which are capable of being exercised at the period end are taken into consideration.

 

Where material, the results and assets and liabilities of associates are incorporated in the financial statements using the equity method of accounting, except when these associates are classified as held for sale. Investments in associates are carried in the balance sheet at cost adjusted by any material post-acquisition changes in the net assets of the associates, less any impairment of value in the individual investments.

 

New accounting standards

 

The group and company have not applied the following IFRSs and IFRICs that have been issued and are applicable but are not yet effective: IAS1 Presentation of Financial Statements - Revised (effective 1 January 2009); IAS 27, Consolidated and Separate Financial Statements, revised 2008 (effective 1 July 2009); IAS 32, Financial Instruments: Presentation, revised 2008 (effective 1 January 2009); IFRS2 Share-based Payments - Vesting Conditions and Cancellations (effective 1 January 2009) and IFRS 8, Operating Segments (effective 1 January 2009). The group is evaluating the impact that these standards will have on the group’s financial statements, if any.

 

Judgements made in applying accounting policies and key sources of estimation uncertainty

 

The following critical judgements have been made in the process of applying the group’s accounting policies:

 

(a) The directors’ believe, after careful consideration, that the group does not, as a matter of fact, control the activities and operations of Labrador Iron Mines Holdings Limited (LIM), and that the correct accounting treatment of this interest is to account for it on an equity basis as an associate company. In any event, although the group currently has a 50.1% ownership share in LIM, there are outstanding exercisable warrants and options which if exercised would reduce the group’s voting control to approximately 40% and under these circumstances the directors believe that the use of equity accounting is appropriate.

 

(b) In determining the treatment of exploration, evaluation and development expenditures the directors are required to make estimates and assumptions as to future events and circumstances. There are uncertainties inherent in making such assumptions, especially with regard to: ore resources and the life of a mine; recovery rates; production costs; commodity prices and exchange rates. Assumptions that are valid at the time of estimation may change significantly as new information becomes available and changes in these assumptions may alter the economic status of a mining unit and result in resources or reserves being restated. Operation of a mine and the receipt of cashflows from it are dependent on finance being available to fund the development of the property.

 

(c) In connection with possible impairment of assets the directors assesses each potentially cash generating unit annually to determine whether any indication of impairment exists. The judgements made when doing so are similar to those set out above and are subject to the same uncertainties.

 

(d) Significant assumptions are made in determining the amount of any restoration provision, including judgements concerning uncertainties such as changes to the legal and regulatory framework, magnitude of possible contamination and the timing, extent and costs of required restoration and rehabilitation activity.

 

 

3      Business and geographical segments

 

All activities relate to the group’s principal activity which is the exploration and development of mining properties. The geographical and operational segments in which these activities are carried out coincide and are shown below. The direct property expenses in the UK are in respect of the Parys Mountain base metal project and in Canada they are in respect of the Labrador Iron project prior to its flotation in Toronto on 3 December 2007, after which it became an associated company investment.   

Direct property expenses capitalised

 

 

 

 

 

 

 

Parys Mountain

Labrador Iron Mines

Total

Parys Mountain

Labrador Iron Mines

Total

 

 

2009

2009

2009

2008

2008

2008

 

 

          £   

          £

          £

          £   

          £

          £

 

Site labour and support

39,005

 - 

39,005

72,778

 - 

72,778

 

Geology & drilling

14,123

 - 

14,123

106,006

58,471

164,477

 

Feasibility reports

9,018

 - 

9,018

55,650

75,004

130,654

 

Property rentals and charges

130,043

 - 

130,043

78,183

 - 

78,183

 

Travel

 - 

 - 

 - 

 - 

24,366

24,366

 

Currency translation difference

 - 

 - 

 - 

 - 

59,054

59,054

 

 

 

 

 

 

 

 

 

Total capitalised

192,189

 - 

192,189

312,617

216,895

529,512

 

Income statement analysis

 

 

 

 

 

 

 

 

United Kingdom

Canada

Total

United Kingdom

Canada

Total

 

Investment income

 (2,718)

 - 

 (2,718)

 (3,011)

 - 

 (3,011)

 

Rentals

 (8,839)

 - 

 (8,839)

 (10,457)

 - 

 (10,457)

 

Corporate salaries

107,626

 - 

107,626

185,994

 - 

185,994

 

Audit fee

55,580

 

55,580

20,439

 - 

20,439

 

Other corporate costs

70,370

 - 

70,370

179,774

23,581

203,355

 

 

 

 

 

 

 

 

 

 

222,019

 - 

222,019

372,739

23,581

396,320

 

 

 

 

 

 

 

 

 

Unallocated items:

 

 

 

 

 

 

 

Equity-settled employee benefits

 

 

271,112

 

 

142,723

 

Share of loss/(profit) in associate

 

254,069

 

 

 (10,449)

 

Investment income

 

 

 (4,400)

 

 

 (18,959)

 

Finance costs

 

 

84,535

 

 

67,326

 

Profit on deemed disposal

 

 

 - 

 

 

 (11,427,730)

 

Parys properties fair value adjustments

 

 (698,321)

 

 

698,321

 

 

 

 

 

 

 

 

 

Loss/(profit) for the year

 

 

129,014

 

 

 (10,152,448)

 

 

 

 

 

 

 

 

 

Assets and liabilities

 

 

 

 

 

 

 

Assets

14,094,331

13,821,013

27,915,344

13,291,506

12,068,276

25,359,782

 

Liabilities

 (2,411,211)

 - 

 (2,411,211)

 (2,004,553)

 - 

 (2,004,553)

 

 

 

 

 

 

 

 

 

Net assets

11,683,120

13,821,013

25,504,133

11,286,953

12,068,276

23,355,229

 

 

 

 

 

 

 

 

 

The group does not have any revenues. A proportion of the salary and corporate costs in the UK are in respect of investigating other mineral development opportunities.

In accordance with the group’s accounting policy, mineral property development expenses are capitalised. All other expenses are expensed in the income statement.

  

4      Earnings per ordinary share

 

 

2009

 

2008

 

 

 £

 

 £

 

Earnings

 

 

 

 

(Loss)/profit for the year

 (129,014)

 

10,152,448

 

 

 

 

 

 

Number of shares

 

 

 

 

Weighted average number of ordinary shares for the purposes of basic earnings per share

152,558,051

 

148,387,969

 

Shares deemed to be issued for no consideration in respect of employee options

 - 

 

2,529,054

 

Weighted average number of ordinary shares for the purposes of diluted earnings per share

152,558,051

 

150,917,023

 

 

 

 

 

 

Basic earnings per share

(0.1)p

 

6.8p

 

 

 

 

 

 

Diluted earnings per share

(0.1)p

 

6.7p

 

 As the group has a loss for the year ended 31 March 2009 and the effect of the outstanding
options is anti-dilutive, diluted earnings per share are the same as basic earnings per share.

  

5      Intangible assets - group

Mineral property development costs

 

 

 

 

 

 Parys Mountain 

 Labrador

 Dolaucothi

 Total

Cost

 £    

 £    

 £    

 £    

At 1 April 2007

13,111,943

543,757

194,065

13,849,765

Additions - own expenditure

312,617

275,949

 - 

588,566

Transfer to associate company

 - 

 (760,652)

 - 

 (760,652)

Reclassification as assets held for sale

 (13,424,560)

 - 

 - 

 (13,424,560)

Currency translation difference

 - 

 (59,054)

 - 

 (59,054)

At 31 March 2008

 - 

 - 

194,065

194,065

Additions - own expenditure

192,189

 - 

 - 

192,189

Reverse reclassification as
           assets held for sale

13,424,560

 - 

 - 

13,424,560

 

 

 

 

 

At 31 March 2009

13,616,749

 - 

194,065

13,810,814

 

 

 

 

 

Impairment provision

 

 

 

 

At 1 April 2007

 - 

 - 

 (194,065)

 (194,065)

At 31 March 2008

 - 

 - 

 (194,065)

 (194,065)

At 31 March 2009

 - 

 - 

 (194,065)

 (194,065)

 

 

 

 

 

Carrying amount

 

 

 

 

Net book value 2009

13,616,749

 - 

 - 

13,616,749

Net book value 2008

 - 

 - 

 - 

 - 

The Labrador assets were reclassified to associate company status following the flotation of Labrador Iron Mines Holdings Limited on the Toronto stock exchange on 3 December 2007.

Potential impairment of mineral properties

Accumulated development expenditure in respect of each project is carried in the financial statements at cost, less an impairment provision where there are grounds to believe that the discounted present value of the future cash flows from the project is less than the carrying value or there are other reasons to indicate that the carrying value is unsuitable. Each project or cash generating unit is reviewed separately in order to make a determination of whether any impairment of its value has occurred.

Parys Mountain

 

At Parys Mountain, impairment provisions were made over the financial years 2001 to 2003 in recognition of the decline in prices of the metals to be produced from the mine. However in 2007 these provisions were reversed since the result of re-estimating the discounted cash flows of the Parys Mountain project was a value significantly higher than the carrying value. The basis for these calculations was the directors’ estimates of future metal prices (in practice current spot prices were used) and capital and operating costs, and a discount rate of 10% (which had also been used in the previous calculations which gave rise to the impairment).

This year the directors carried out an impairment review with an effective date of 13 March 2009. As in previous years, this review was based on an estimate of discounted future cash flows from the development and operation of the Parys Mountain project. The directors have used past experience and an assessment of future conditions, together with external sources of information, to determine the assumptions which were adopted in the preparation of a financial model used to estimate the cashflows.

The key assumptions utilised were:

The mine will be developed largely as envisaged in the Kilborn Feasibility Study prepared in 1991, except where management has determined otherwise.

All the resources, both historical (including inferred resources) and those more recently estimated under JORC codes, will be developed and produced except that the tonnage of those classified as inferred in the 1991 Feasibility Study will be reduced by 20%.

Capital costs will be estimated at current costs when the expenditure is planned to be incurred; neither revenues nor operating costs will take into account any inflation.

The net present value is at 31 March 2009 and based on the assumption that mine development commences three years after that date.

Base metal prices are based on the forward rates quoted on the London Metal Exchange at 13 March 2009; the exchange rates used are those of the same day; gold and silver prices are spot rates on 13 March 2009; these rates and prices are tabulated below.

The following principal smelter terms have been estimated by the directors: zinc $185 pt treatment with a basis price of $1190 pt and a +10% / -7% variance; copper $45 pt treatment, $0.45 pt produced refining charge, lead $120 pt.

The discount rate of 10% applied to future cashflows is one which reflects the directors’ current market assessment of the time value of money and any risk factors which have not been adjusted already in the preparation of the forecast.

Table of assumptions significantly affecting the discounted net present value of Parys cashflows

Parameter

Value

Unit

Sensitivity Factor*

Zinc price

$1353

$/tonne 27 months forward

-47%

Copper price

$3843

$/tonne 27 months forward

-37%

Lead price

$1320

$/tonne 27 months forward

-

Silver price

$13.11

Spot

-

Gold price

$928

Spot

-

Exchange rate £/$

1.3973

LME rate 13 Mar 09

+23%

Capital expenditure

 

 

+94%

Operating costs

 

 

+40%

Discount rate

10%

 

+58%

All $ figures are in US dollars.

* The sensitivity factor is the percentage change in each specific assumption which would, on its own, result in a net present value equal to the carrying value of the intangible asset in the accounts.

Parys summary

The estimated net present value of the Parys Mountain project calculated by the directors and based on their estimates of all the required parameters, the principal of which are set out above, is US$49 million, equivalent to £35 million. The carrying value of the Parys Mountain project is £13.5 million.

Estimates of the net present value of any project, and particularly one like Parys Mountain, are always subject to many factors and wide margins of error. The directors believe that the estimates and calculations supporting their conclusions have been carefully considered and are a fair representation of the projected financial performance of the project.

The calculations above have been repeated using the spot metal prices and exchange rates of 5 June 2009 (major factors: exchange rate 1.60, zinc price $1555 and copper price $5555) and the net present value at 10% on this basis was $76 million, equivalent to £48 million.

Based on the review set out above the directors have determined that no impairment provision is required in the financial statements at 31 March 2009 in respect of the carrying value of the Parys property. Operation of the mine and the receipt of cashflows from it are dependent on finance being available to fund the development of the property.

A Parys properties fair value adjustment of £698,321 made in relation to the potential sale, which did not proceed, of the Parys Mountain project in the balance sheet and income statement for the year ended 31 March 2008 is no longer required or appropriate and has been reversed in the year to 31 March 2009.

Dolaucothi impairment

The group has no active plans to develop the Dolaucothi project in the near future and made a full impairment provision against the carrying value of the Dolaucothi expenditure in 2006.

 

6      Property, plant and equipment

Group

Freehold land and property

Plant & equipment

Office equipment

Total

Cost

£   

£   

£   

£   

At 1 April 2007

185,102

17,434

5,487

208,023

Additions

19,585

 - 

 - 

19,585

Reclassified as held for sale

 (204,687)

 (17,434)

 (5,487)

 (227,608)

At 31 March 2008

 - 

 - 

 - 

 - 

Reverse reclassification as held for sale

204,687

17,434

5,487

227,608

At 31 March 2009

204,687

17,434

5,487

227,608

Depreciation

 

 

 

 

At 1 April 2007

 - 

17,434

5,487

22,921

Reclassified as held for sale

 - 

 (17,434)

 (5,487)

 (22,921)

At 31 March 2008

 - 

 - 

 - 

 - 

Reverse reclassification as held for sale

 - 

17,434

5,487

22,921

At 31 March 2009

 - 

17,434

5,487

22,921

Carrying amount

 

 

 

 

At 31 March 2009

204,687

 - 

 - 

204,687

At 31 March 2008

 - 

 - 

 - 

 - 

 

7      Investment in associate

 

Labrador Iron Mines Holdings Limited (LIM), a company registered in Ontario, Canada, is the holder of the group’s interests in the Labrador properties, formerly held by the 100% owned subsidiary Labrador Iron Mines Limited.

At 31 March 2009 the group had a 50.1% ownership interest in LIM, however since there are warrants and options outstanding and exercisable at that date, the group’s diluted interest is less than 50% and consequently LIM is treated as an associate for the purposes of these group financial statements.

 

 

 

31 March 2009

 

31 March 2008

 

 

 

 £  

 

 £  

Values in group financial statements:

 

 

 

 

 

Value brought forward from previous year

 

12,068,276

 

 - 

 

Historic cost of interest at disposal date

 

-

 

630,097

 

Profit on deemed disposal

 

-

 

11,427,730

 

Group's share of (losses)/profits, adjusted to eliminate any fair value uplift and related taxation in associate's accounts

 (254,069)

 

10,449

 

Group's share of equity-settled benefits transferred to reserve

171,244

 

 - 

 

Exchange rate adjustments

1,835,562

 

 - 

 

Amount carried in the group accounts - being the value of group's share of net assets of the associate without any fair value adjustment in respect of mineral properties

13,821,013

 

12,068,276

 

 

 

 

 

 

Fair value of group's interest based on market price of associate's quoted shares at the year end

10,996,622

 

43,344,944

 

 

 

 

 

 

Fair value of group's interest based on market price of associate's quoted shares at 20 June 2009

12,861,702

 

 

 

 

 

 

 

 

The group’s interest in LIM is held in these financial statements at original cost to the group, adjusted by any material post-acquisition changes in the net assets of the associate, less any impairment of value in the individual investments. It is adjusted to reflect the exchange rate current at the balance sheet date.

The published fair value of the group’s investment in LIM of £11.0 million (2008 - £43.3 million) is derived by valuing the group’s shareholding in LIM at the LIM share price quoted in Toronto on 31 March 2009 of Canadian $1.05 (2008 - $4.75) per common share. At 8 July 2009 the published fair value of the group’s investment in LIM was £12.9 million based on a share price of Canadian $1.30 per common share at that date. These values have fallen significantly since last year in line with similar large falls in the quoted market values of many other mineral companies.

The directors have considered whether there has been any impairment to the carrying value of the group’s investment in LIM; although the group’s carrying value is more than the year end market value of the shares owned in LIM, the directors believe that this is a temporary situation. Furthermore the directors’ believe that the value in use will significantly exceed the carrying value.

Values as shown in the published accounts of the associate (100%) including a fair value uplift in respect of mineral properties, after conversion into sterling:

 £  

 

 £  

 

Total assets

 

100,048,329

 

86,210,124

 

Total liabilities

 

 (20,699,563)

 

 (17,787,265)

 

 

 

 

 

 

 

Total net assets

 

79,348,766

 

68,422,859

 

 

 

 

 

 

 

 

 

 2009

 

 2008

 

Revenues

 

 - 

 

 - 

 

(Loss)/profit for the year

 

 (184,163)

 

977,758

 

 

 

 

 

 

  

Reconciliation of values shown in the associate's published accounts with the group accounts

 

 

 

 

 

 

 Shareholders' equity in associate

 

 $140,923,409

 

 $139,466,310

 

 

 Less: fair value uplift net of tax - see note below

 

 $(91,899,196)

 

 $(89,946,158)

 

 

 

 

 $49,024,213

 

 $49,520,152

 

 

 Group share - 50.069%  (2008 - 50.008%)

 

 $24,546,121

 

 $24,764,103

 

 

 Group carrying value after conversion to sterling

 

£13,821,013

 

£12,068,276

 

 

 

 

 

 

 

 

 

In the financial statements of LIM for the period to 31 March 2009, the Labrador mineral properties are recognised at fair value as indicated by the value ascribed to the Labrador companies in the December 2007 Canadian flotation after subsequent adjustments. If the group were to use a similar basis for its accounts, its share of this fair value uplift, net of tax, would add approximately £26 million (2008 - £22 million) to the group net assets. 

 

The associated undertakings of the company at 31 March 2009 were as follows:

Name of company

Country of incorporation

Percentage owned

Principal activity

Labrador Iron Mines Holdings Limited (LIM), an associated company from 3 December 2007

Canada

50.1%

Holding company for Labrador Iron Mines Limited (100%)

Labrador Iron Mines Limited, an associated company, a 100% owned subsidiary of LIM

Canada

50.1%

Development of Labrador Iron property

LabRail Inc, a 100% owned subsidiary of LIM

Canada

50.1%

Transport operations

7056605 Canada Inc, a 100% owned subsidiary of LIM

Canada

50.1%

Property holding

The group holds its interest in these associated companies through Labrador Iron plc, a 100% owned subsidiary. The fully diluted interest of the group in these companies at 31 March 2009 was 38.8%; on 3 June 2009 following the expiry of certain LIM warrants the group’s fully diluted interest rose to 39.5%.

 

 

8      Share capital

 

     Ordinary shares of 1p 

      Deferred shares of 4p

 Total

 

 

 Nominal
value £

 Number    

 Nominal
value £

 Number

 Nominal
value £

 

 Authorised share capital

 

 

 

 

 

 

 At 1 April 2007

1,840,000

184,000,000

7,320,000

183,000,000

9,160,000

 

 Created 30 November 2007

400,000

40,000,000

 - 

 - 

400,000

 

 

 

 

 

 

 

 

 At 31 March 2008 & 31 March 2009

2,240,000

224,000,000

7,320,000

183,000,000

9,560,000

 

 

 

 

 

 

 

 

 Issued and fully paid

 

 

 

 

 

 

 At 1 April 2007

1,388,081

138,808,051

5,510,833

137,770,835

6,898,914

 

 Issued 20 July 2007

137,500

13,750,000

 - 

 - 

137,500

 

 

 

 

 

 

 

 

 At 31 March 2008 & 31 March 2009

1,525,581

152,558,051

5,510,833

137,770,835

7,036,414

 

 

 

 

 

 

 

 

The deferred shares are non-voting, have no entitlement to dividends and have negligible rights to return of capital on a winding up. Following a share issue in respect of an option exercise on 23 April 2009 the number of ordinary shares in issue increased to 152,858,051.

 

 

9      Related party transactions

 

Juno Limited

 

Juno Limited (“Juno”) which is registered in Bermuda holds 37.9% of the company’s issued ordinary share capital. The group has the following agreements with Juno: (a) a controlling shareholder agreement dated September 1996 and (b) a consolidated working capital agreement of 12 June 2002. There were no transactions between the group and Juno or its group during the year other than a loan of £200,000 from Juno to the group and the accrual of interest due to Juno. Danesh Varma is a director and, through his family interests, a significant shareholder of Juno.

 

Labrador Iron

 

John Kearney is chairman 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. During the year the parent company charged LIM with £122,889 (2008 - nil) in respect of remuneration and associated social security costs. There are no other transactions between LIM and the group 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.

 

 

10     Post balance sheet events

 

There are no post balance sheet events to be disclosed.

 

 

Contact addresses

 

Parys Mountain
Amlwch, Anglesey, LL68 9RE

Phone 01248 361333
Fax 01248 361419
mail@angleseymining.co.uk

 

London office

Painter’s Hall Chambers
8 Little Trinity Lane,

London, EC4V 2AN

 

Labrador Iron - Toronto

220 Bay Street, Suite 700
Toronto, Ontario, M5J 2W4, Canada
Phone +1 647 728 4107

 

Registrars    Capita Registrars
Northern House, Woodsome Park
Fenay Bridge, Huddersfield, HD8 0LA

Phone 0871 664 0300

Calls cost 10p per minute plus network extras
From overseas +44 208 639 3399

Fax 01484 600911

 

Registered office   

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

 

Web site      www.angleseymining.co.uk

 

Company registered number 1849957

 

Shares listed The London Stock Exchange - LSE:AYM

 

www.angleseymining.co.uk
www.labradorironmines.ca

For further information:


Bill Hooley, Chief Executive            +(44) 1492 541981

Ian Cuthbertson, Finance Director       +(44) 1248 361333

 

 

About Anglesey Mining

Anglesey Mining plc is a UK based company listed on the London Stock Exchange with a 50% interest in a 90 million ton iron ore project in Labrador, Canada, which is under active development towards mining production in 2009. The company also holds the Parys Mountain base metals project with a historical resource of 7.7 million tonnes at 9.3% combined copper, lead and zinc in Anglesey, UK.

www.angleseymining.co.uk