21 July 2010
Announcement of annual results
A UK mining company listed on the London Stock Exchange with -
A 41% interest in Labrador Iron Mines Holdings Limited, a TSX quoted Canadian company developing 150 million tons of direct shipping hematite iron ore near Schefferville in Canada, with production due to commence later in 2010
100% of the Parys Mountain copper-lead-zinc project in North Wales with a total historical resource of 7.76 million tonnes at 9.3% combined copper, lead and zinc, held awaiting development
2010 - a special year - £8.2 million profit
"During the past year Labrador Iron has continued to develop its Labrador and Quebec properties, increased its resources and completed a C$35 million fund-raising. We are now poised to complete the construction and bring the stage 1 deposits into production. Iron ore prices at very satisfactory levels look set to continue for some time."
John Kearney - Chairman
"While our emphasis during the year has been very much on the Labrador developments, Parys Mountain remains a significant asset, and one which we would like to develop in co-operation with others."
Bill Hooley - Chief Executive
This past year has been extremely satisfactory for Anglesey Mining plc. The main project and major driver of shareholder value is the group's interest in Labrador Iron Mines (LIM) where excellent progress has been made.
LIM successfully raised a further C$35 million in equity for its operations and Anglesey raised £2.7 million through the sale of a small portion of its shares in LIM. As a consequence of these fund raisings the group's interest in LIM is now 41%, compared to its 50% interest at 31 March 2009 and the quoted market value of the group's holding is £45 million at 6 July 2010 compared to £11 million at 31 March 2009.
The profit this year of £8.2 million results from the deemed disposal arising on LIM's March 2010 placing in Toronto and the profit on sale of LIM shares.
Steady progress has been made in advancing the Schefferville Projects toward production with ongoing active programmes in respect of drilling, metallurgical testing, environmental, permitting, marketing, engineering and purchasing.
Since the last annual report we have -
acquired additional significant deposits in both Labrador and Quebec, including some with potential for the extraction of manganese,
carried out a property exchange which rationalised our mineral holdings and improved the potential of our iron ore deposits,
completed the environmental approval process for the stage 1 operations and obtained project approval from the Government of Newfoundland and Labrador,
established new estimates of resources (NI 43-101 compliant) on the James, Redmond and Houston deposits showing a significant increase in tonnage over the historical resources,
carried out metallurgical testwork confirming the high iron content, low gangue content and high quality of the ore to be produced in stage I of operations,
laid the 2.5 mile rail spur from the Sept-Īles - Schefferville main line to the Silver Yards area where it is planned to install the beneficiation plant,
signed an agreement with the Sept-Īles Port Authority for the use of the port to ship LIM's iron ore products.
In 2008, LIM and the Innu Nation of Labrador signed an Impact Benefit Agreement. The Labrador Innu, as represented by the Innu Nation, are the only aboriginal party with a land claim that has been accepted by the Government of Newfoundland and Labrador. LIM has recently been in negotiations towards an Impact Benefit Agreement with the Quebec Innu who claim Aboriginal rights in the general Schefferville area but has not yet concluded an agreement.
Numerous permits and approvals have been received including the mining leases for the first stage James and Redmond deposits, the surface use leases over the Silver Yards beneficiation area and the camp. LIM is awaiting the Certificate of Approval for the operation of the rail spur from the Government of Newfoundland and Labrador. The receipt of these permits has taken longer than anticipated, which has resulted in some delay in LIM's planned construction and production timeline.
Upon receipt of all remaining necessary permits, licenses and approvals, and the completion of the aboriginal agreements, LIM is planning to commence construction of the mine and beneficiation facilities during the summer of 2010 and hopes to achieve start up and initial production before the seasonal shut down of operations at the end of November 2010. LIM plans to commence full scale commercial production in April 2011 and expects output of 2 million tonnes of iron ore during that calendar year.
LIM has not yet entered into agreements for the sale of any iron ore but it anticipates that it will sell most of its early production into the spot market. Iron ore prices grew strongly during the year and whilst there has been some softening recently it is expected that these prices will continue to be supported by robust Chinese demand.
During most of the year activities at Parys Mountain have been overshadowed by the drive towards production in Labrador. We feel that the best route forward for developing Parys Mountain would be with a partner. Efforts in this direction will be increased in conjunction with limited technical programmes designed to improve geological understanding on the Parys deposits and the potential of the property, such as the computer-based geological remodelling which was carried out over the past few months.
The fundraising by LIM resulted in the dilution of our stake in that company, and the operation of accounting standards means that this dilution is treated for accounting purposes as a 'deemed disposal' or partial sale; in addition some of our shares were sold to raise funds for Anglesey. We have recorded profits on the deemed and actual disposals of LIM shares of £8.8 million in the year. After taking into account operating expenses and other items there was a net profit for the year of £8.2 million. The Canadian dollar has strengthened against the pound sterling during the year so we have for the second year running recorded an exchange rate gain on our investment in LIM and this together with the profits on sale mean that total shareholders' equity has increased by more than £10 million during the year.
The progress of the past year, together with high iron ore prices and a great deal of market interest in iron ore generally, lead to the company's share price peaking at 44 pence in April 2010. This is a dramatic improvement on the price of 4.75 pence when the 2009 annual report was issued.
The stock market has been more than usually volatile and unpredictable over the past few months following concerns that growth in the Chinese economy might be weaker than previously anticipated. We remain confident that iron ore price levels in 2011 will provide strong cashflows from the Labrador operations.
The short term objective is very clear: to put Labrador Iron Mines into production. In the medium term we would like to move Parys Mountain forward, preferably with an industry partner, and bring new projects into the group for development.
John F. Kearney
21 July 2010
The Schefferville Projects - Western Labrador and North-Eastern Quebec
The group has a 41% interest in Toronto-listed Labrador Iron Mines Holdings Limited (LIM) which is now poised to begin mining direct shipping iron ore in western Labrador near Schefferville, Quebec.
The Schefferville Projects are located in the west-central part of the Labrador Trough iron range, one of the major iron ore producing regions in the world, and are divided into two separate portions, one within the Province of Newfoundland and Labrador, and the other within the Province of Quebec, both located near the town of Schefferville, Quebec.
The iron ore deposits forming the Schefferville Projects are predominantly hematite ore and were part of the original Iron Ore Company of Canada direct-shipping Schefferville operations conducted from 1954 to 1982.
A compliant resource of 25.7 million tonnes has now been estimated in the James, Redmond and Houston deposits. The remaining seventeen deposits, excluding James, Redmond and Houston, have a historical resource estimated at approximately 125 million tons of direct shipping iron ore, based on work carried out by IOC prior to the closure of its Schefferville operations in 1984. The historical estimate was prepared according to the standards used by IOC and, while still considered relevant, is not compliant with NI 43-101.
The plans for the Schefferville Projects envision the mining of the deposits in four stages. Stage 1 comprises the deposits closest to existing infrastructure, the mining of which will be undertaken in two phases. The first phase will involve mining of the James and Redmond deposits and the second phase the Houston, Knob, Gill and Ruth deposits, all in Labrador, together with the Denault, Star Creek and Malcolm deposits in Quebec.
The James deposit is accessible by existing gravel roads and is located approximately 5 km southwest of the town of Schefferville. The Redmond deposit is located approximately 12 km south of the James deposit and can be reached by existing gravel roads. The Knob Lake deposit, located approximately 3 km southwest of the town of Schefferville, and the Houston deposit, located approximately 20 km southeast of Schefferville, can also be reached by existing gravel roads.
During the mining of the stage 1 deposits, planning will be undertaken for the future operation of the more distant deposits in stages 2, 3 and 4. As currently envisioned stage 2 will comprise the Howse, Barney and other adjacent deposits which are relatively close to existing infrastructure. The deposits of stages 3 and 4 are more than 60 km from Schefferville and will require substantial infrastructure investment.
The in-situ ore is estimated to contain around 56% to 58% iron and it is expected that the beneficiation process will enhance the product grade to approximately 65% iron and remove unwanted material; production will be coarse lump ore (about 25%) and a finer sinter feed. These products will be transported by the existing railroad systems to the port of Sept-Īles on the St. Lawrence River for onward shipping, most likely to steel mills in Europe or Asia. The whole operation will utilize well proven, relatively basic technology and will closely reflect that previously carried out by IOC in the same general location for almost thirty years from 1954 to 1982.
Mining and processing operations will be conducted for eight months per year from April to November using conventional open pit mining methods employing drilling and blasting operations at an anticipated initial rate of 6,000 tonnes per day. The processing schedule is anticipated to be over a period of approximately 212 days per year.
Following plant assembly, stockpiled ore will be fed to the plant to allow commissioning to take place. As soon as a steady state condition has been reached saleable product of both lump ore and sinter fines will be produced. These will be loaded into leased rail cars that will be transported to a port facility in Sept-Īles.
The 355 mile rail line between Schefferville and Sept-Iles has been in continuous operation for over fifty years. Tshiuetin Rail Transportation Inc ("TSH"), a consortium of three local Aboriginal First Nations, owns and operates the approximately 130 mile main line track between Schefferville and Ross Bay Junction where it connects to IOC's railway which runs the remaining 225 miles to Sept-Iles. Some refurbishment of the rails, ties and culverts of the TSH main line track will need to be carried out to enable it to continuously carry large volumes of iron ore traffic. LIM will lease rail cars and engines to transport its ore to Schefferville. The operation of the line is subject to common carrier arrangements.
Ore will be shipped from the port of Sept-Īles on the North Shore of the Gulf of St. Lawrence on the Atlantic Ocean. Sept-Īles is a large natural harbour, more than 80 metres in depth, which is open to navigation year round, and is the most important port for the shipment of iron ore in North America, serving the Quebec and Labrador mining industry. Each year approximately 23 million tonnes of merchandise is handled, comprised mainly of iron ore. It is an international marine hub for major maritime routes between North America, Europe and Asia, and nearly 80% of its merchandise traffic, mostly iron ore, is destined for international markets.
In July 2008, LIM and the Innu Nation of Labrador signed an impact benefit agreement. The Labrador Innu, as represented by the Innu Nation, are the only aboriginal party with a land claim that has been accepted by the Government of Newfoundland and Labrador. LIM has recently been in negotiations towards an impact benefit agreement with the Quebec Innu based in Quebec, one of four First Nations who claim aboriginal rights in the general Schefferville area. LIM respects the legitimate aspirations of all First Nations but believes that negotiations on impact benefit agreements for mining projects should not be side-tracked by larger land claim considerations between the Quebec Innu and the Quebec and Labrador governments, where LIM has no say or ability to provide solutions. LIM has indicated that it is ready to continue negotiations and is currently in discussions with representatives of the Quebec Innu and with the relevant governments.
Marketing discussions have continued with potential end users and samples have been dispatched to a number of steel mills and independent laboratories. These discussions have indicated an encouraging level of interest in the LIM products based on the metallurgical test results and analysis of the samples supplied. The indicated high iron grades and the low level of impurities are important and should ensure that both lump ore and sinter fines will be readily accepted by a wide range of customers.
Chinese and other Far Eastern consumers are showing a growing interest in seeking iron ore from Eastern Canada. The rapid development in Chinese demand for iron ore, coupled with a desire by China to diversify from its traditional sources of supply, has begun to make Eastern Canada a viable source for this market. Discussions continue with a number of Chinese customers and importers as well as a number of European producers.
LIM has not yet concluded any agreements for the sale of any iron ore. Initially LIM anticipates that it will sell all its production into the spot market and will utilize the services of a trading company for this process.
Quebec iron ore properties
During the year LIM established Schefferville Mines Inc ("SMI") to acquire interests in mining rights in Quebec covering approximately 9,014 hectares together with an exclusive operating interest in a mining lease covering about 2,816 hectares. These rights and interests are held subject to a royalty of $2 per tonne of iron ore produced from the properties.
A preliminary review of these properties has been completed and an initial development plan generated and incorporated into the exploration plan. It is expected that this will permit at least one deposit to be brought into production in 2012, subject to receipt of satisfactory engineering, environmental and other permits.
The introduction of these Quebec properties, particularly those close to the town of Schefferville, will have a positive effect on the overall project development plan as it will extend the life of stage 1 and will as a result defer the time at which capital expenditure to reach the more distant phases 3 and 4 deposits needs to be made.
The manganese properties in both Quebec and Labrador that were acquired in 2009 will also be the subject of exploration during 2010. It may be possible to develop compliant resource estimates for one or two of these deposits in 2010 and dependent upon engineering, environmental approvals and permit releases some manganese concentrate may be able to be produced by 2012.
The directors have pleasure in submitting their report and the audited accounts for the year ended 31 March 2010.
Principal activities and business review
The group's principal activities are the development of the Labrador iron project in eastern Canada in which the group has a 41% interest, and the Parys Mountain project in North Wales which is wholly owned.
Development of the Labrador properties is proceeding at an increased level. A rail spur has been completed and equipment for mining and processing is ready to be transported to site.
In March 2010 Labrador Iron completed an underwritten placing in Toronto for C$35 million and as part of that placing Anglesey sold, for £2.7 million in cash, 810,900 of the 18,600,000 LIM shares which it had previously held. These transactions mean that both companies are now well-funded to carry out their planned activities. The group recorded a profit of £8.8 million on these transactions.
The group maintains its search for other mineral exploration and development opportunities with renewed vigour following the fund-raisings mentioned above.
The aim of the group is to continue to develop and operate the Labrador projects, to create value in the Parys Mountain property, including by co-operative arrangements, and to actively engage in other mineral ventures using the group's own resources together with such external investment and finance as may be required.
The group has a 41% interest in Toronto-listed LIM which is developing direct shipping iron ore operations in western Labrador and north-eastern Quebec near Schefferville in Canada.
Steady progress has been made in advancing the Schefferville Projects toward production with ongoing active programmes, including drilling, metallurgical testing, environmental, permitting, marketing, engineering and purchasing.
Upon receipt of all remaining necessary permits, licenses, approvals and re-established access to the site, LIM is planning to commence construction of the mine and beneficiation facilities during the summer of 2010 and hopes to achieve start up and initial production before the seasonal shut down of operations at the end of November 2010. LIM plans to commence full scale production in April 2011 and expects production of 2 million tonnes of iron ore during that calendar year.
Drilling and testwork
A programme of reverse circulation drilling commenced at the beginning of June 2009 and was completed at the end of October 2009. The deposits tested comprise the four deposits planned to be mined in the stage 1 plan, being James, Redmond, Knob Lake and Houston, together with some limited drilling on the more distant stage 2 Howse deposit.
The results of this testwork formed the basis for NI 43-101 compliant resource estimates on the James and Redmond deposits reported in November 2009 and for the Houston deposit reported in April 2010, totalling 25.7 million tonnes. The new resource estimate for Houston showed a significant increase in tonnage over the historical resources (not NI 43-101 compliant), previously estimated by the Iron Ore Company of Canada prior to 1982.
Metallurgical testwork continued during 2009 aimed at improving expected recovery levels from all size fractions of mined material while maintaining high iron and low impurity levels in the final product. The results and report from that testwork on the James South samples indicate products will have a high iron content of approximately 67% with favourably low content of deleterious non-ferrous metals. The high iron content and low gangue content indicate the high quality of these ores, and that they will be well accepted in the European market.
Environmental and permitting work
In February 2010 the Schefferville Area Iron Ore Mine (the first phase of the Schefferville Projects) was released from environmental assessment and received project approval from the Government of Newfoundland and Labrador, subject to terms and conditions which LIM believes are achievable within the planned operating parameters. Subsequent phases and stages of the Schefferville Projects will be subject to further environmental assessments by regulatory authorities in Labrador.
All the applications and plans required for the operating permits, licenses and regulatory approvals have been submitted. Many of these have now been approved, including the construction permit for the Silver Yards Spur Line Railroad. Construction of this spur line has been completed.
Mining leases for the James and Redmond properties have been received from the Province of Newfoundland and Labrador. In addition surface use leases for all those additional areas required for the construction and operation of the James and Redmond stage of the Schefferville Projects, including the Silver Yards beneficiation area and the rail spur line, have also been received.
An Environmental Protection Plan ("EPP") was approved by the Minister of Environment and Conservation. The EPP addressed process effluent treatment and monitoring procedures, settling pond design and operation for storm water and pit dewatering discharges, as well as caribou monitoring and mitigation in the vicinity of the Schefferville Projects.
LIM has continued to hold discussions with the relevant rail transportation companies and port operators regarding providing the necessary levels of service from 2010 onwards. There are a number of companies involved in these discussions, some with inter-connecting interests.
In February 2010, LIM signed an agreement with the Sept-Īles Port Authority for the use of the port to ship LIM's iron ore products. LIM agreed to a base fee schedule with the Port Authority regarding wharfage fees for iron ore loading for LIM's shipping operations beginning in mid 2010. Agreements with the relevant rail companies or port operators for the transportation and handling of the planned production of iron ore have not yet been concluded.
Planned site programme - summer 2010
A new programme of reverse circulation drilling and trenching is planned for 2010. This programme will target both extensions to existing resources in Labrador previously drilled by LIM, other deposits in Labrador not previously drilled by LIM but included in the IOC historical resources, as well as on a number of the Quebec deposits and properties recently acquired by LIM.
A continuing programme of environmental baseline work will take place on those deposits designated for the next phases and stages of the project. This will include work on archaeology, terrestrial biology, wildlife (including fish), hydrology and noise and air quality. Offsite metallurgical testwork to assist in recovery of fine iron units as well as high silica material will continue.
The first major construction activity has been the laying of the 2.5 mile rail spur from the Sept-Īles to Schefferville main line to the Silver Yards area where it is planned to install the beneficiation plant. The majority of the rail hardware was assembled offsite into track panels to permit speedy installation.
A contract has been signed with a Labrador City based contractor for the mining and beneficiation activities. Once site access has been re-established a new accommodation camp which has been built offsite will be brought to site and assembled. At about the same time the mining contractor will be mobilised to site to commence mining activities including stockpiling of iron ore ahead of the crusher pad. A contract has also been signed for camp catering.
All of the items of the beneficiation plant have been ordered and manufacturing has been completed. These items are now at railheads at Sept-Īles and at Labrador City awaiting delivery to site. Some pre-assembly is taking place in Labrador City. Final assembly on site, subject to receipt of permits and licences, should take place in the middle of the summer.
The Parys Mountain property is the largest known base metal deposit in the United Kingdom. A feasibility study carried out in 1991 identified a resource of 6.5 million tonnes of zinc, copper and lead with small amounts of silver and gold. This historic resource together with the White Rock JORC compliant resource identified more recently amounts in aggregate to 7.8 million tonnes at 9.3% combined metals. The 1991 feasibility study demonstrated the technical and economic viability of bringing the property into production at a rate of 350,000 tonnes per annum, producing zinc, copper and lead concentrates. However there was limited development over the period from 1991 to 2003 chiefly due to poor metal prices. Efforts to develop the property since then have been frustrated by external factors unrelated to the property itself.
Activities during the year have been limited. Work on the geological modelling of the Parys deposits was brought up to date and a new computer simulation produced. A new geological report has been received and reviewed. Further drilling has been recommended however no decision has yet been taken as to whether to go forward; it is not planned to undertake any major programmes.
The directors considered the carrying value of the Parys Mountain property and carried out an impairment review the detail of which is set out in note 10. The review indicated that no impairment provision was required or justified. Operation of the mine and the receipt of cashflows from it are dependent on finance being available to fund the development of the property.
In addition to its other mineral assets, the group holds the Dolaucothi gold property in South Wales. It is not the company's current intention to incur significant expenditures on this property, however this situation will be kept under review.
Management continues to search for new properties suitable for development within a relatively short time frame and within the financing capability likely to be available to the group.
So far as the directors are aware, there are no standardised indicators which can usefully be employed to gauge the performance of the group at this stage of its development other than the performance of the parent company's listed shares. The directors expect to be judged by their success in creating value for shareholders.
The chief external factors affecting the ability of the group to move forward are the availability of finance, levels of metal prices and exchange rates; these and other factors are dealt with in the risks and uncertainties section below.
The group has no revenues and the directors are unable to recommend a dividend (2009 - nil). Since the date of the accounts the activities of the group have continued in accordance with the directors' expectations.
The group has no revenues from the operation of its properties. The profit for the year after tax was £8,204,337 (2009 - restated loss £573,203). Of this profit £8,788,063 (2009 - nil) was attributable to the effects of the LIM financing and to Anglesey's sale of part of its LIM shareholding, both of which took place in March 2010 in Canada.
During the year there were no additions to fixed assets (2009 - nil) and £175,994 was capitalised in respect of the development of the Parys Mountain property (2009 - £192,189). The Labrador properties are held in an associated company.
The group's cash position at 31 March 2009 was £2,766,074 (2009 - £150,431), this significant increase from last year being due to the receipt of proceeds from the sale of shares in LIM referred to above.
At 31 March 2010 the company had 153,158,051 ordinary shares in issue, 600,000 more than in 2009 as a result of the exercise of share options.
The directors believe that the group has adequate funding for its current and proposed operations. Further finance may be required for any new mineral properties which may be evaluated, engaged in or acquired; however such outlays are at the discretion of the directors and would not be made unless finance was available.
Risks and uncertainties
In conducting its business the group faces a number of risks and uncertainties some of which have been described above in regard to particular projects. However, there are also risks and uncertainties of a nature common to all mineral projects and these are summarised below.
General mining risks
Actual results relating to, amongst other things, mineral reserves, mineral resources, results of exploration, capital costs, mining production costs and reclamation and post closure costs, could differ materially from those currently anticipated by reason of factors such as changes in general economic conditions and conditions in the financial markets, changes in demand and prices for minerals that the group expects to produce, legislative, environmental and other judicial, regulatory, political and competitive developments in areas in which the group operates, technological and operational difficulties encountered in connection with the group's activities, labour relations matters, costs and changing foreign exchange rates and other matters.
The mining industry is competitive in all of its phases. There is aggressive competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential. The group faces strong competition from other mining companies in connection with the acquisition and retention of properties, mineral claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees and other personnel.
Development and liquidity risk
The injection of £2.7 million into the UK operations from the sale of shares in LIM will provide adequate funding for its current and proposed operations. As well as this source of funds, the company has in the past and may in the future rely upon share issues and/or on loans from its major shareholder Juno Limited. Labrador Iron Mines Holdings Limited is believed to be fully funded for the foreseeable future.
Exploration and development
Exploration for minerals and development of mining operations involve many risks, many of which are outside the group's control. The group currently operates in politically stable environments and hence is unlikely to be subject to expropriation of its properties but exploration by its nature is looking into the unknown or little known and unforeseen or unwanted results are always possible.
The prices of metals fluctuate widely and are affected by many factors outside the group's control. The relative prices of metals and future expectations for such prices have a significant impact on the market sentiment for investment in mining and mineral exploration companies. Metal price fluctuations may be either exacerbated or mitigated by international currency fluctuations which affect the actual amount which might be received by the group in sterling.
The activities of LIM are carried out in Canada; the group's interest in LIM is carried in the group accounts on an equity basis and is affected by an exchange rate risk. Operations at Parys Mountain are in the UK and exchange rate risks are minor. Most of the cash balance at the year end was held in Canadian dollars - see notes 17 and 24.
Permitting, environment and social
LIM does not currently have all of the operating permits required for the Labrador Iron project. The directors believe that all required permits will be obtainable although any delay in the issue of permits is likely to result in a delay to the expected time of first production.
LIM conducts its operations in Labrador and Quebec, in areas which are subject to conflicting First Nations land claims. There are a number of First Nations peoples living in the Quebec-Labrador peninsula with overlapping claims to treaty or asserted aboriginal land rights. Aboriginal claims to lands, and the conflicting claims to traditional rights between aboriginal groups, may have an impact on LIM's ability to develop the Schefferville Projects.
The group holds a planning permission for the development of the Parys Mountain property but further consents will be required to carry out proposed activities and these permits may be subject to various reclamation and operational conditions.
Employees and personnel
The group is dependent on the services of a small number of key executives including the chairman, chief executive and finance director. Due to the small size of the group, the loss of these persons or the group's inability to attract and retain additional highly skilled and experienced employees may adversely affect its business or future operations.
The group's use of financial instruments is not significant and is described in note 24.
The names of the directors with biographical details are shown on the inside rear cover. In accordance with the company's practice, John Kearney and Ian Cuthbertson retire by rotation and, being eligible, offer themselves for re-election. Since Danesh Varma has served for more than nine years as a non-executive director, current corporate governance practice requires that he be re-elected annually, and, being eligible, he is also proposed for re-election.
The company maintains a directors' and officers' liability policy on normal commercial terms which includes third party indemnity provisions. Unless otherwise determined by ordinary resolution, the number of directors, other than alternate directors, shall not be subject to any maximum, but shall not be less than two. The powers of the directors are described in the Corporate Governance Report.
With regard to the appointment and replacement of directors, the company is governed by its Articles, the Combined Code, the Companies Acts and related legislation. The Articles themselves may be amended by special resolution of the shareholders. Under the Articles, any director appointed by the board during the year must retire at the Annual General Meeting following his appointment. In addition, the Articles require that one-third of the remaining directors retire by rotation at each general meeting and seek re-appointment.
The company wishes to adopt new Articles following the implementation of the Companies Act 2006 and a resolution to that effect will be proposed at the forthcoming AGM. The provisions of the preceding paragraph are also included in the new Articles.
Directors' interests in material contracts
Juno Limited (Juno), which is registered in Bermuda, holds 37.8% of the company's ordinary share capital. The company has a controlling shareholder agreement and working capital agreement with Juno. Advances made under the working capital agreement are shown in note 19. Apart from interest charges and an advance to the group of £100,000 in September 2009 (2008 - £200,000) there were no transactions between the group and Juno or its group during the year. An independent committee reviews and approves any transactions and potential transactions with Juno. Danesh Varma is a director and, through his family interests, a significant shareholder of Juno.
John Kearney is chairman and chief executive 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. There are no transactions between LIM, the group and the company 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.
The interests of the directors in the share capital of the company, all of which are beneficial, are set out below:6 July 2010 31 March 2010 31 March 2009 Director Number of Number of Number of Number of Number of Number options ordinary options ordinary options of shares shares ordinary shares John Kearney 5,400,000 - 5,400,000 - 5,400,000 - Bill Hooley 2,900,000 100,000 2,900,000 100,000 2,900,000 100,000 Ian Cuthbertson 2,100,000 1,027,300 2,100,000 1,027,300 2,400,000 727,300 David Lean 700,000 - 700,000 - 700,000 - Howard Miller 900,000 - 900,000 - 1,200,000 - Roger Turner 1,100,000 - 1,100,000 - 1,100,000 - Danesh Varma 1,400,000 - 1,400,000 - 1,400,000 -
Further details of directors' options are provided in the Directors' Remuneration Report.
At 6 July 2010 the following shareholders had advised the company of interests in the issued ordinary share capital of the company, all of which are directly held:Name Number Percentage of of shares share capital Juno Limited 57,924,248 37.8% Passport Special Opportunities Master Fund 26,525,000 17.3% Morgan Stanley Securities Limited 10,652,000 7.0%
10,600,000 of the shares notified by Passport Special Opportunities Master Fund were disclosed (under UKLA rules introduced on 1 June 09) in connection with a swap. The directors believe that these 10,600,000 shares might also form part of the Morgan Stanley Securities Limited disclosure.
Authority to allot shares
Under the Articles of Association, the company has authority to allot the unissued shares of the company, and a resolution will be put to the AGM granting authority to the directors to do so in respect of £510,000 of share capital (representing 33% of the company's issued ordinary share capital at 6 July 2010). This will enable the directors to issue up to 51,000,000 ordinary shares within five years of the date of the AGM. The directors have no present intention of exercising this authority.
The directors would usually wish to allot any new share capital on a pre-emptive basis, however in the light of the group's potential requirement to raise further funds for the acquisition of new mineral ventures, other activities and working capital, they believe that it is appropriate to have a larger amount available for issue at their discretion without pre-emption than is normal for larger listed companies. Accordingly a further resolution will be put to the AGM to renew the directors' authority to allot shares in the company for cash without pre-emption. In the case of allotments other than for rights or other pre-emptive issues, it is proposed that such authority will be for up to £382,000 of share capital being 38,200,000 ordinary shares, which is equivalent to 25% of the issued ordinary share capital at 5H6 July 2010. Whilst such authority is in excess of the 5% of existing issued ordinary share capital which is commonly accepted for larger listed companies, it will provide additional flexibility which the directors believe is in the best interests of the group in its present circumstances. It is the directors' present intention to renew this power each year.
Rights and obligations attaching to shares
The rights and obligations attaching to the ordinary and deferred shares are set out in the Articles of Association. Details of the authorised and issued share capital are shown in note 21.
Each ordinary share carries the right to one vote at general meetings of the company. Holders of deferred shares, which are of negligible value, are not entitled to attend, speak or vote at any general meeting of the company, nor are they entitled to receive notice of general meetings.
Subject to the provisions of the Companies Acts, the rights attached to any class may be varied with the consent of the holders of three-quarters in nominal value of the issued shares of the class or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of the shares of the class.
There are no restrictions on the transfer of the company's shares.
Votes may be exercised at general meetings in relation to the business being transacted either in person, by proxy or, in relation to corporate members, by corporate representative. The Articles provide that forms of proxy shall be submitted not less than 48 hours before the time appointed for holding the meeting or adjourned meeting.
No member shall be entitled to vote at a general meeting or at a separate meeting of the holders of any class of shares in the capital of the company, either in person or by proxy, in respect of any share held by him unless all monies presently payable by him in respect of that share have been paid. Furthermore, no shareholder shall be entitled to attend or vote either personally or by proxy at a general meeting or at a separate meeting of the holders of that class of shares or on a poll if he has been served with a notice after failing to provide the company with information concerning interests in his shares required to be provided under the Companies Acts.
Shares held in uncertificated form
Subject to the provisions of the Uncertificated Securities Regulations 2001, the Board may permit the holding of shares in any class of shares in uncertificated form and the transfer of title to shares in that class by means of a relevant system and may determine that any class of shares shall cease to be a participating security.
Significant agreements and change of control
There are no agreements between the company and its directors or employees that provide for compensation for loss of office or employment that may occur because of a takeover bid. The company's share plans contain provisions relating to a change of control. Outstanding awards and options would normally vest and become exercisable on a change of control, subject to the satisfaction of any performance conditions.
Employment, community, donations and environment
The group is an equal opportunity employer in all respects and aims for high standards from and for its employees. It also aims to be a valued and responsible member of the communities which it affects or operates in. Since there are no revenues from operations, it is the group's general policy not to make charitable or political donations and none were made during the year (2009 - nil).
The group, which for these purposes does not include LIM, is small and has no operations; consequently its affect on the environment is very slight, being limited to the operation of two small offices, where recycling and energy usage minimisation are taken seriously and encouraged. It is not practical or useful to quantify the effects of these measures.
Creditor payment policy
The group conducts its business on the normal trade credit terms of each of its suppliers and tries to ensure that suppliers are paid in accordance with those terms. The group's average creditor payment period at 31 March 2010 was 59 days (2009 - 61 days).
The directors have considered the business activities of the group as well as its principal risks and uncertainties as set out in this report. Based on the group's cash flow forecasts and projections, and after making due enquiry in the light of current and anticipated economic conditions, the directors consider that the group and company have adequate resources to continue in business for the foreseeable future. For this reason, the going concern basis continues to be adopted in the preparation of the financial statements.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements. The directors are required to prepare the financial statements for the group in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and have also elected to prepare financial statements for the company in accordance with IFRS-EU. Company law requires the directors to prepare such financial statements in accordance with IFRS-EU, the Companies Act 2006 and, in relation to the group financial statements, Article 4 of the IAS Regulation.
International Accounting Standard 1 requires that financial statements present fairly for each financial year the group's financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's 'Framework for the Preparation and Presentation of Financial Statements'. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable International Financial Reporting Standards.
Directors are also required to:
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable comparable and understandable information; and
provide additional disclosures when compliance with the specific requirements in IFRS-EU is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the group, for safeguarding the assets, for taking reasonable steps for the prevention and detection of fraud and other irregularities and for the preparation of a directors' report and directors' remuneration report which comply with the requirements of the Companies Act 2006.
The directors confirm that the financial statements have (a) been prepared in accordance with applicable accounting standards; (b) give a true and fair view of the results of the group and the assets, liabilities and financial position of the group and the parent company; and (c) that the directors' report includes a fair review of the development and performance of the business and the position of the group and the parent company together with a description of the principal risks and uncertainties that they face.
The directors are responsible for the maintenance and integrity of the group website.
Each of the directors in office at the date of the annual report confirms that so far as they are aware there is no relevant audit information of which the group's auditors are unaware and that each director has taken all of the steps which they ought to have taken as directors in order to make themselves aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.
A resolution to reappoint Mazars LLP as auditors and to authorise the directors to fix their remuneration will be proposed at the annual general meeting.
Articles of Association
The company wishes to bring its Articles up to date following the implementation of the provisions of the Companies Act 2006 and a resolution to that effect will be proposed at the forthcoming AGM.
By order of the board
Ian Cuthbertson Company Secretary 21 July 2010
Group income statement All attributable to equity holders of the company Notes Year ended Year ended 31 March 31 March 2009 2010 (restated) All operations are continuing Revenue - - Expenses (253,684) (224,737) Equity-settled employee benefits 22 (28,127) (271,112) Share of (loss) of associate 14 (203,173) (698,258) Gains on deemed disposals in associate 14 7,054,967 - Profit on sale of shares in associate 14 1,733,096 - Investment income 6 1,076 7,118 Finance costs 7 (99,818) (84,535) Parys properties fair value adjustments 10 - 698,321 Profit/(loss) before tax 4 8,204,337 (573,203) Tax 8 - - Profit/(loss) for the period 8,204,337 (573,203) Profit/(loss) per share Basic - pence per share 9 5.4 p (0.4)p Diluted - pence per share 9 5.3 p (0.4)p Statement of comprehensive income Profit/(loss) for the period 8,204,337 (573,203) Other comprehensive income: Translation differences on foreign operations 2,148,426 1,835,562 Total comprehensive income for the period 10,352,763 1,262,359
Please view the company's full financial statements via the Adobe pdf file to be found here.
LIM's Schefferville area project involves the development of twenty direct shipping iron ore deposits in western Labrador and north-eastern Quebec near Schefferville, Quebec. LIM's properties are part of the historic Schefferville area iron ore district where mining of adjacent deposits was previously carried out by the Iron Ore Company of Canada from 1954 to 1982. Labrador Iron Mines contemplates mining in four stages, the first phase of Stage 1 comprising the James and Redmond deposits, which are located in close proximity to existing infrastructure. LIM plans to start up production in the fall of 2010, subject to timely receipt of remaining permits.
For further information, please see www.labradorironmines.ca.
Anglesey Mining with its LSE main board listing is primarily focused on its 41% interest in LIM. In addition to any new projects that may be brought forward the company owns 100% of Parys Mountain in North Wales with an historical resource in excess of 7 million tonnes at over 9% combined copper, lead and zinc.
For further information contact:
Bill Hooley, Chief Executive +44 (0) 1492 541981
Ian Cuthbertson, Finance Director +44 (0) 1248 361333
Emily Fenton/Charlie Geller, Conduit PR +44 (0) 20 7429 6608 / +44 (0) 7788 554035