Anglesey Mining plc              

 

Interim Results for the six months to 30 September 2005

 

Highlights

 

 

Commenting on the results, John F. Kearney, chairman of Anglesey Mining, said:

"The past six months has been certainly the most exciting period for the company in the last ten years. We have made considerable progress: the drilling program at Parys Mountain has yielded very encouraging results; simultaneously we have embarked on a new major initiative to develop an iron ore mine in Labrador, Canada. Meanwhile the zinc price finally burst into life and the company's share price improved strongly.

The outlook for all of the company’s metals: zinc, copper, lead, silver and gold at Parys Mountain and iron ore In Labrador is extremely positive. We look forward to the further development of the company's two mining projects in 2006.”

 

For further information please contact:
Ian Cuthbertson, Finance Director            + (44) 1248 361333

John F. Kearney, Chairman                      + (1) 416 362 6686

Cathy Malins / Annabel Leather,
Parkgreen Communications                      + (44) 20 7493 3713

 

Chairman’s statement

This has been the most encouraging period for the company in the past ten years.

The past six months has been a very active, productive and successful period which has seen the company steadily moving forward on a number of fronts. Heightened investor interest in the mining sector, buoyed by strong metal prices particularly for copper and zinc, the major metals at Parys Mountain, saw the company’s share price increase strongly from 4p per share in April to a high of almost 17p in September, before settling back to the 9p to 12p range recently. Importantly, the trading volume in the company’s shares has been strong, reflecting renewed investor interest in the company.

However, recently, the market capitalization of the company has been only £12 million compared with a market capitalization of more than £40 million way back in 1990 - the last time the zinc price was over £850 or $1,500 per tonne. Note, of course, that in 1990 the company had essentially the same Parys Mountain assets, but with the geology less well understood and did not have its new Labrador Iron ore project.

Activity

During the six months the company was very active on many fronts. Most importantly, we embarked on a major new initiative to establish an iron ore producing mine in Labrador, Canada. This is a very exciting development for which we have high hopes.

A financing of £464,000 was successfully completed in April, and a drilling program was launched at the Parys Mountain property, the first two holes yielding very successful results. A review of the Parys Mountain feasibility study was initiated.

As a result of the geological reassessments at Parys Mountain carried out since 1995 the geology is better understood and it is clear that the opportunity for the discovery of more resources is very good. The funding enabled the company to launch its long planned exploration drilling programme at Parys Mountain which commenced in June and continued throughout the year with very encouraging results.

Hole AMC15 intersected 2.5 meters of massive sulphides at the Engine Zone horizon with values of 22.2% zinc, 11.9% lead and 6.3% copper, together with 886 grams of silver and 0.46 grams of gold per tonne, whilst a narrow intersection at the Central Zone horizon returned grades of 11.2% zinc, 8.5% lead and 8.4% copper. These high grade intersections in AMC 15 contained metal grades which are amongst the highest recorded at Parys Mountain.

AMC16 was drilled to a depth of 640 meters and was intensely altered throughout most of its depth. The hole successfully intersected the three target horizons and a further mineralized interval. A third hole, AMC17, located approximately 100 meters west of AMC16 had reached a depth of 530 meters by 17 December 2005.

Parys Feasibility Study re-examined

We have commenced the re-examination of the existing 1990 feasibility study for placing the Parys Mountain property into production. The study is based on a mining operation of 1,000 tonnes per day producing copper, lead and zinc concentrates. The existing resource at Parys Mountain comprises 6.5 million tonnes at a grade of 5.3% zinc, 2.3% copper and 3.4% lead with silver and gold that lie within reach of the existing Morris shaft which has been sunk to a depth of 300 meters and provides access to the minerals by 930 meters of underground development. The first stage mineable reserve was forecast by the study to be mined over 6 years while the inferred resources increase the projected mine life to 18 years.

A preliminary review has been made by consulting engineers of a staged production scenario which would involve initial mining from a decline without further deepening of the shaft. Work is continuing on improving metallurgical recoveries in line with what can be achieved with new advances in technology.

A review of the planning and permitting required for the operation of the Parys Mountain mine indicates that the planning consents are in place and only minor permits are required. A preliminary study by Golder Associates on the underground deposition of tailings has been initiated and we are encouraged by the results to date. A review of the capital costs is still to be carried out as are further economic assessments of the project.

New Labrador Iron Ore Project

We have launched a major new initiative in Canada. The company has entered into an agreement to acquire an interest in the Labrador Iron ore project in Labrador, Canada. This project is partially developed and has near term production prospects. The agreement gives the company a unique opportunity to re-establish major iron ore mines previously operated by the Iron Ore Company of Canada (“IOCC”) with estimated remaining resources of over 100,000,000 tonnes of hematite iron ore.

The company has an option to earn a 70% interest in most of the identified former IOCC deposits in Labrador, which comprise eight areas within twenty two mining licences covering 92 mining claims, all subject to a 3% royalty. The agreement gives Anglesey the exclusive right to evaluate the project for a period of one year, following which a 70% interest can be earned by putting the project into production at a minimum rate of 2,000,000 tonnes per year by 2007 or 2008. More details are in our 10 October press release, available on the website.

The company has initiated a prefeasibility study of the technical and economic viability of a direct shipping iron ore project. Unlike the historic IOCC operations, it is planned to upgrade the ore by screening and washing, which will result in the production of two iron ore products – a premium grade lump ore with 67% Fe (iron) content and a sinter ore with a 63% Fe content. The company expects to increase the initial production rate to between 3 and 5 million tones per year after three years, resulting in a potential mine life of about 20 years.

In a very short period over the past few months considerable progress has been made. An initial field work programme comprised bulk sampling from surface trenches for metallurgical test work and the checking of resource grades previously established by the IOCC for the various deposits. Results of the sampling programme largely confirm the resource grades for the James, Knob Lake, and Redmond deposits. In some cases iron grades were significantly higher than previously indicated. Geological work at Astray Lake indicates that the deposit may extend along strike from the known deposit, which could have a very significant positive impact on resource potential. Initial studies suggest that the higher grade Astray Lake and Sawyer Lake deposits will produce an above-average premium lump ore. Ground magnetometer surveys were completed over the Howse deposit and a geological re-assessment was carried out.

An in-house scoping study for the development of the James, Knob Lake and Redmond deposits at an initial rate of 2 million tonnes of direct shipping lump and sinter fine ore products per year was initiated with a view to bringing it to the feasibility stage during the first half of 2006. Met-Chem Inc. of Montreal was retained to conduct a preliminary assessment of the transportation and shipping alternatives and Earth Tech, a major environmental firm, has been retained to advise on the environmental and permitting aspects. Base line environmental data has been collected and applications for permits are being made.

Financial Results

For the six months ended 30 September 2005 the company incurred a loss of £125,175 (2004 - £31,063). The increase in this loss is due to administrative costs associated with increased activities and a non-cash charge for the period in accordance with International Financial Reporting Standards (IFRS) of £70,852 in respect of share based payments arising on the grant of share options to management, which is unusually high because a batch of options issued in October 2004 were largely carry-overs from previous years.

Outlook

The focus of the company now is the development of its two mining projects. The short term objective is to complete the feasibility studies of the Labrador Iron ore project and the Parys Mountain copper-zinc project in parallel. This will take place over the next several months. We have made excellent progress and now need to gear up do more.

Current prices of base metals and iron ore are, of course, at record levels. More importantly, there is a consensus among forecasters that they will remain relatively strong over the next few years. Continued strong demand indicates no significant downturn is anywhere on the horizon.

In order to undertake these ambitious programs further funding will be required however the timing of any fund-raisings will be carefully judged. The company is evaluating alternatives with its advisors.

Anglesey may be unique among mining juniors in having two exciting projects with established resources at the feasibility study stage, both of which have the potential to be near-term cash producers. We look forward to turning that potential into reality.

On behalf of the board of directors

John F Kearney

Chairman

19 December 2005

 


Significant accounting policies and notes to accounts.

1.  BASIS OF ACCOUNTING:  The group has adopted the new and revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning after 1 January 2005. In respect of share-based payments (IFRS 2) this change in the group’s accounting policies has resulted in the restatement of the reported comparative period results.

The financial statements have been prepared under the historical cost convention, and on a going concern basis. There are no minority interests or extraordinary items.

2.  EARNINGS PER SHARE:  The calculation and reporting of basic and diluted earnings per share (EPS) are in accordance with FRS 14. Basic earnings per share is computed by dividing the loss of £151,102 available to ordinary shareholders by 121,358,096 - the weighted average number of ordinary shares in issue during the period. Since there is a loss for the year, basic and diluted EPS are the same.

3.  DEVELOPMENT EXPENDITURE:  Mineral development expenditure incurred by the group is carried in the financial statements at cost less an impairment provision. The recovery of this expenditure is dependent upon the successful development of the Parys Mountain project which is itself conditional on finance being available to fund that development.

4.  LIABILITIES:  Agreement has been reached with Juno Limited, the ultimate parent company, that will extend the notice period for repayment of the company’s loans from Juno to more than one year. Accordingly the loan outstanding of £1,295,650 (2004 £1,195,528) due to Juno has been reclassified to non-current liabilities.

5.  SHARE-BASED PAYMENTS:  IFRS 2 “Share-based Payment” requires the recognition of share-based payments (which in the case of the group during the period are share options only) at fair value at the date of grant. Prior to the adoption of IFRS 2, the group did not recognise the financial effect of share-based payments. In accordance with the transitional provisions of IFRS 2, the standard has been applied retrospectively to all grants of share options after 7 November 2002 which had not vested by 1 April 2005. The fair value of the options to be expensed has been determined by a Black-Scholes option pricing model using a volatility factor of 70% and an option life of 3 years as the significant assumptions.

For the six months ended 30 September 2005, the change in accounting policy has resulted in a charge of £70,852 (2004 - originally nil, £61,947 when restated) to the profit and loss account. The balance sheet at 31 March 2005 has been restated to reflect share-based payments prior to 1 April 2005 of £61,947, resulting in a cumulative adjustment of £132,799. A further £8,518 will be charged in the next financial period.

6.  DEFERRED TAX:  The group has accumulated losses for taxation purposes of £3.2 million up to 30 September 2005. There are also capital allowances, including mineral extraction allowances, exceeding £9 million unclaimed and available at 30 September 2005. Because the recoverability of any taxation relative to these amounts from future operations is uncertain, no deferred tax asset is reflected in the financial statements.

7.  FINANCIAL INFORMATION:  This financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 March 2005 which were prepared under the applicable accounting standards generally accepted in the UK, have been delivered to the Registrar of Companies. The report of the auditors on those accounts did not contain a statement under Section 237 of the Companies Act 1985 and was not qualified, but did contain a reference to fundamental uncertainties.

8.  BOARD APPROVAL:  These interim results were approved by the board on 19 December 2005.

 


  Home
Press releases
Copyright
© 1996-2010
  Anglesey Mining plc
Parys Mountain, Amlwch,
Anglesey, LL68 9RE, UK
  Phone  +44 1248 361333  
 mail@angleseymining.co.uk
 

LSE:AYM
share price