22 September 2009
The group is making steady progress towards its target to achieve production at its Schefferville Area Iron Ore Project in Western Labrador in 2010. This project is wholly owned by the group’s 50% associate company Labrador Iron Mines Holdings Limited (“LIM”), a Toronto-listed company (TSX-LIM). There has been no major change in the status of the Parys project in North Wales or the Dolaucothi gold property in south Wales. The directors are encouraged by the recent strength in commodity prices and believe that, in addition to Labrador moving to production, these other company projects can be progressed in 2010, as well as external opportunities.
The 2009 summer exploration program began in early June and comprises a total of 6,000 metres of reverse circulation (RC) drilling and 3,000 metres of trenching. From June until early September, in excess of 3,600m of RC drilling in 56 holes was completed at an average depth of 70m.
Drilling has been completed at the James and Redmond deposits, part of the phase one deposits targeted for production in the summer of 2010. Drilling has also been completed on the Knob Lake deposit and continues on the Houston deposit, both scheduled for production in the second part of phase one. In addition, five holes were drilled on the larger Howse deposit forming part of phase three. Details are shown in the following table:
Deposit No. of Holes Metres Number of Samples
James 2 137 45
Redmond 2B 6 219 77
Redmond 5 8 420 150
Houston 30 2,200 430
Knob Lake 5 271 101
Howse 5 396 125
Total 56 3,643 928
Concurrent with the drilling program, trenching on the Redmond and Houston deposits has been completed with a total of 900m in 18 trenches.
During the remainder of the season, completion of drilling at the Houston deposit is planned, as well as drilling some additional holes in James to test the possible continuity of mineralization identified earlier.
The 2009 drilling program is designed to confirm and update the historical resource base which, together with the results from the 2008 drilling program, will be incorporated into a new resource estimate and applied to the final engineering study, both expected to be completed later this year.
A second program of hydro-geological drilling and testing has also been undertaken designed to confirm expected flow rates and water quality from future mining operations. This work involves drilling three large diameter test wells that will be used for future pit dewatering and will enable dewatering plans including perimeter wells to be designed and installed in a timely manner.
During 2008 a test mining program to excavate 6,500 tonnes of bulk ore samples from the phase one deposits was carried out. This material was crushed and screened to produce samples replicating the lump ore and sinter fines.
Some of this material was used by SGS Lakefield in the metallurgical testing program and in the design of the process circuit required to meet market specifications for the particular types of iron ore. The results indicated high iron grades with low levels of impurities as shown below:
Metallurgical Test Results (in %) Iron Silica Aluminium Phosphorus Manganese
Fe SiO2 Al2O3 P2O5 MnO
Lump 67.7 1.34 0.12 0.03 0.10
Sinter 66.8 2.52 0.20 0.05 0.12
Lump 62.4 6.55 0.24 0.05 0.44
Sinter 61.2 8.50 0.68 0.05 0.2
Lump 68.1 1.20 0.20 0.14 0.05
Sinter 65.8 3.80 0.43 0.18 0.07
Lump 58.9 5.02 0.69 0.26 0.09
Sinter 58.1 6.80 1.18 0.25 0.10
In addition to earlier work at RPC, SGS Lakefield, Outotec and Derrick Corporation, metallurgical testwork is being conducted at SGA and at Humboldt Wedag in Germany, as well as at COREM in Quebec City. James sinter ore is being tested for sintering properties at SGA. A BATAC Jig test will shortly be carried out at Humboldt Wedag. The Redmond yellow ore is being tested at the COREM for washability characteristics.
In August 2009 a revised Environmental Impact Statement (EIS) was submitted to the Department of Environment and Conservation of Newfoundland and Labrador. The revised EIS incorporates the original EIS submission of December 2008 and specifically addresses the requests for certain additional information issued by the Department in March 2009.
The EIS concludes that significant adverse environmental effects are not predicted in relation to the Project's construction, operation, and decommissioning phases. Filing of the EIS on 21 August 2009 is followed by a 50-day public comment period and up to a further 20 days for the Minister of Environment and Conservation to determine the Project's environmental acceptability.
As part of the preparation of the EIS, extensive discussions took place with the Government of Newfoundland and Labrador and led to a "Newfoundland and Labrador Benefits Plan," which is incorporated in the Socio-Economic part of the EIS.
Under the Benefits Plan, LIM has committed to the maximization of benefits, including employment, procurement, education, training and economic development to the Province and in particular to Labrador, and to providing full and fair opportunity and giving first consideration to residents and businesses of the Province to participate in, and benefit from, the Project.
In its Newfoundland and Labrador Benefits Plan, LIM has also committed to achieving a minimum of 78 percent of construction, and operations phase employment accruing to residents of Newfoundland and Labrador, and to achieving a minimum of 85 percent of total value of construction and 85 percent of total value of operations phase contracts and goods and services being awarded/procured through companies and suppliers based in the Province.
It is expected that during both the construction phase and operations phase, approximately 25 percent of total employees will be members of the Aboriginal First Nations. In 2008, an Impact Benefit Agreement (IBA) was signed with Innu Nation of Labrador. LIM has also signed Memoranda of Understanding with two local Aboriginal First Nations communities, the Innu Nation of Matimekush-Lac Jean (Schefferville) and the Naskapi Nation (Kawawachikamach), both located in Quebec in proximity to the Project, and expects that a similar agreement will also be signed with the Innu communities of Uashat and Mani-Utenam, near Sept-Iles.
Metallurgical testwork will continue aimed at improving expected recovery levels from mined material while maintaining the high iron and low impurity levels in the final product. This work will be associated with final design of the process flow-sheet and selection of the suitable items of plant and equipment. This selection will be based on achieving the expected initial start-up production rate of one million tonnes per year, meeting the grade and product specifications, while ensuring that the plant is easily movable from deposit to deposit.
Extensive ongoing bio-physical and environmental baseline activities are being conducted in the current James and Redmond project areas, as well as in the proposed development areas of the second part of Phase One. The baseline data collected will be used to support the preparation of the Project Registration document for the next phase of the proposed development.
Upon release and approval of the EIS, LIM will submit the applications for the necessary operating permits and licenses. Assuming the relevant permits and licences are issued on a timely basis initial production of iron ore is currently planned for the second quarter of calendar 2010.
Activities at the 100% owned Parys Mountain copper-lead-zinc project in North Wales have been limited over the period. However the recent rise in base metal prices has led to a much more favourable outlook for the production of base metals and the directors intend to continue an active search for routes which will result in the re-activation of this project. The recent changes in the price of gold have also raised some interest in the group’s exploration property at Dolaucothi in south Wales and the directors will be keeping this under review.
Labrador Iron is moving steadily closer to first production and the expected generation of significant cashflows. Meanwhile, the outlook for Parys Mountain is improving along with base metal prices, market sentiment and financing conditions generally. In this situation, and with obvious caveats concerning the strength of the recent rally in iron ore and base metals prices and markets, the directors see reasonable and improving grounds for optimism about the future of the group. In addition the directors continue to look for other favourable opportunities that may present themselves in the ferrous, non-ferrous and precious metals business both within Europe and elsewhere.
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 2010. 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.
Bill Hooley, Chief Executive +(44) 1492 541981
Ian Cuthbertson, Finance Director +(44) 1248 361333