Anglesey Mining plc              

 

5 July 2006                                                                            LSE: AYM 

Preliminary statement of results 2006

Highlights

·         Two financings completed raising £1,624,000

·         Option secured to earn a 70% interest in the Labrador Iron Mines project in Canada

·         Continued drilling success at Parys Mountain including delineation of the new Engine zone deposit in the Garth Daniel area

·         Appointment of Bill Hooley as Executive Director and Roger Turner as Non-Executive Director

 

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

"We have seen significant developments for the company over the past year and are very pleased with our progress. The drilling programme at Parys Mountain has continued to produce excellent results and we are confident that further drilling will lead to an increase in the resources. The Labrador Iron project is an exciting new initiative and the dramatic improvement in commodity prices over the past year has placed Anglesey in a strong position to become a metal producer on two continents. We will work hard to achieve this within a short time frame.”

 

For further information please contact:

Ian Cuthbertson, Finance Director                         + (44) 1248 361333

Bill Hooley, Executive Director                               + (44) 1492 541981

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

Cathy Malins / Annabel Leather,

Parkgreen Communications                                   + (44) 20 7493 3713

 

Chairman’s statement

The last year has been a most exciting one for our company and I am pleased to be able to report to shareholders that the improvements outlined last year have continued apace.

Despite some corrections in recent weeks, metal prices have increased very significantly over the past year and there is now a consensus that the prices for the metals we plan to produce are likely to stabilise at far higher levels than those experienced over the past ten years. Higher prices will, of course, ensure that the Parys Mountain project is profitable and financeable.

Of particular importance this year was our success in securing an option to earn a 70% interest in an advanced iron-ore project in eastern Canada. Given the continuing strength of iron-ore prices in recent negotiations this project is likely to be highly valuable to the company in the coming years.

At Parys Mountain we have been very encouraged by the success of our drilling programme and the delineation of the new Engine zone deposits in the Garth Daniel area. This new area has the potential to be extended both eastwards and westwards and should add significantly to the Parys Mountain resource base.

Further, we have been fortunate to make two noteworthy additions to our board. Roger Turner (non-executive) and Bill Hooley (executive), both experienced mine developers, have joined us and I believe that they will make very important contributions to the rapid development of Parys Mountain and the Labrador Iron project, as well as to the identification of potential new projects.

Financing

Two fundraisings have been effected during the year. The first (reported in last year’s chairman’s statement) raised £464,000 in May 2005 and the second raised £1,160,000 in February 2006. These funds have been and will continue to be applied to exploration at Parys Mountain and at the Labrador Iron project, and additionally will be used to progress studies aimed at financing both projects.

Parys Mountain

During the year the company completed 2,225 metres of diamond core drilling in four holes. Three of these were located in an area centred approximately 700 metres north-east of the Morris shaft, and the fourth was drilled, without a significant result, some 400 metres south of the Morris shaft. We have already reported on the considerable success achieved with the first three holes and on the delineation of a new zone in the Garth Daniel area. These three holes intersected three mineralised horizons: from the highest, the Carreg-y-Doll through the North Central to the lowest horizon, the Engine zone. These included intersections of 2.5 metres at 40% combined copper, lead and zinc and 5.5 metres at 22% combined Cu-Pb-Zn. The mineralisation in the Engine zone was not part of any previous resource estimates on the site. We believe that the Garth Daniel area has a potential strike length exceeding 1.5km and has the possibility of adding substantially to the resource base. We are currently drilling a further hole in this area and on the basis of the results from this new hole we will be able plan our ongoing drill programme for Garth Daniel.

In addition to the programme at Garth Daniel, we have commenced a close-spaced drill programme on the White Rock zone near to the Morris shaft. This drilling will be used for mine planning purposes, particularly for the earliest stopes in the planned underground mining programme.

In addition to the physical work on site, we have begun the task of creating an electronic geological model based on the prior and present geological data which, when completed, will be used for detailed mine planning and will be helpful to the search for further resources and for long term mine planning.  

The company is continuing the review of the feasibility study for the project. This review is based on the original 1991 Kilborn Study but will be brought up to date using the revised geological model, additional metallurgical test-work, a revised mine plan and updated costings. It is expected that this update will be completed during 2006 and will provide the basis for financing the project through to production. Subject to financing, it is expected that the mine could be in production in less than two years of commencement of construction.

The strategic location of Parys Mountain on the doorway of the major European smelters is of major benefit. With the recent upsurge in metal prices, especially zinc and copper, there has been widespread interest expressed in the project from mining and associated industry support companies. A number of detailed site visits have been carried out and we believe that it is likely that this interest could result in the provision of at least part of the finance required to develop the property.

Labrador Iron

In October 2005 the company obtained an option to earn a 70% interest in the Labrador Iron Mines (LIM) project in the province of Newfoundland and Labrador in Canada. As a matter of record I have declared that in a personal capacity I was partly responsible for assembling the portfolio of leases and that I hold an interest in part of the remaining 30% of the joint venture.

LIM is based in the vicinity of the original Iron Ore Company of Canada (IOCC) mines in the Schefferville region of Labrador. The leases subject to the joint venture were largely drilled by IOCC before 1984, resulting in an estimate of the resource remaining to be at least 100 million tonnes of haematite ore averaging around 55% iron. In addition to these drilled resources, the majority of the original infrastructure including a 575 kilometre railroad to the port of Sept-Iles remains in place and functioning.

The plan is to develop LIM as a relatively low tonnage operation of 2 to 5 million tonnes per annum with an equally low capital cost. Unlike IOCC, it is intended to wash and upgrade the run-of-mine product in order to sell both high value lump ore as well as sinter fines into the iron-ore market. We believe that this project can be developed quickly and at low cost, in contrast to other companies proposing larger but far more complex and expensive projects.

Studies on the various options for development have begun and will continue with a substantial confirmatory and exploration drilling programme during the summer of 2006. It is expected to have the results of a pre-feasibility study to hand by September, and if these are as positive as we expect then we will move straight to a full feasibility study to be completed during 2007 with the intention of completing finance by the end of 2007 and obtaining first production by 2008.

We believe this is a truly exciting prospect, selling sought-after material into a buoyant market and, assuming that the pre-feasibility study confirms our initial review, we expect it to considerably enhance the value of the company within a short period of time.

Financial Results

This year the accounts have been prepared under the International Financial Reporting Standards now being adopted for all listed companies, and this has led to the restatement throughout the accounts of the figures for 2005. For the year ended 31 March 2006 there was a loss of £517,405 compared to a loss of £186,769 in the previous year. An impairment provision of £194,065, an increase in share based compensation payments of £36,815 and generally higher levels of activity resulting in higher expenses are the reasons for the increase in the loss. The company has no revenue from the operation of its properties. Following the placings made during the year, the cash position at 31 March 2006 has improved to £1,201,381 from £44,070 last year.

Outlook

The continued long term improvement in commodity prices has now placed your company in a position where it is poised to become a metals producer on two continents within a short time frame. This is a significant turnaround from the difficult position that was faced just three years ago.

We intend to continue to explore and develop our two major projects at the same time as carrying out the necessary studies to bring them rapidly to production. Additionally we will continue to review other prospective properties that could give us the opportunity to rapidly develop other operating mines.

 

John F. Kearney   

Chairman

 

Consolidated income statement

for the year ended 31 March 2006

 All operations are continuing

 Notes

2006

2005

 

 

£

£

 Revenue

 

 - 

 - 

 Administration expenses

4

 (242,243)

 (118,612)

 Provision for impairment

7

 (194,065)

 - 

 

 

 

 

 Operating loss

 

 (436,308)

 (118,612)

 

 

 

 

 Investment income

 

22,545

2,434

 Finance costs

 5

 (103,642)

 (70,591)

 

 

 

 

 Loss before tax

 

 (517,405)

 (186,769)

 

 

 

 

 Tax

 

 - 

 - 

 

 

 

 

 Loss for the period

 

 (517,405)

 (186,769)

 

 

 

 

 Loss per share

 

 

 

 Basic and diluted loss per share

6

 (0.4)p

 (0.2)p

 

Consolidated statement of recognised income and expense

for the year ended 31 March 2006

 

 

2006

2005

 

 

£

£

 Loss attributable to ordinary shareholders

 

 (517,405)

 (186,769)

 Differences on translation of foreign operations

 

 (4,652)

 - 

 

 

 

 

 Recognised income and expense

 

 (522,057)

 (186,769)

Consolidated balance sheet

 

 

 

 31 March 2006

 31 March 2005 

 

 

 Notes

£

£

Assets

 

 

 

 

 Non-current assets

 

 

 

 

 Mineral property development costs

7

5,571,034

5,274,601

 

 Property, plant and equipment

 

185,102

185,602

 

 Deposit

 

111,679

109,276

 

 

 

 

 

 

 

 

5,867,815

5,569,479

 

 Current assets

 

 

 

 

 Other receivables

 

10,800

1,334

 

 Cash and cash equivalents

 

1,201,381

44,070

 

 

 

 

 

 

 

 

1,212,181

45,404

 

 

 

 

 

 Total assets

 

7,079,996

5,614,883


 

 

 

 

 

 

Liabilities

 

 

 

 

 Current liabilities

 

 

 

 

 Trade and other payables

 

 (627,945)

 (422,851)

 

 Loans

 

 - 

 (1,260,650)

 

 

 

 

 

 

 

 

 (627,945)

 (1,683,501)

 

 

 

 

 

 

 Net current assets/(liabilities)

 

584,236

 (1,638,097)

 

 

 

 

 

 

 Non-current liabilities

 

 

 

 

 Loans

 

 (1,336,392)

 - 

 

 Long term provision

 

 (42,000)

 - 

 

 

 

 

 

 

 

 

 (1,378,392)

 - 

 

 

 

 

 

 Total liabilities

 

 (2,006,337)

 (1,683,501)

 

 

 

 

 

 Net assets

 

5,073,659

3,931,382

 

 

 

 

 

Equity

 

 

 

 

 Share capital 

 

6,885,914

6,673,247

 

 Share premium

 

7,090,049

5,737,146

 

 Share based payment reserve

 

160,709

61,947

 

 Currency translation reserve

 

 (4,652)

 - 

 

 Retained losses

 

 (9,058,361)

 (8,540,958)

 

 

 

 

 

Total shareholders' equity

 

5,073,659

3,931,382

Statements of changes in equity

for the year ended 31 March 2006

Group

 Share
capital

 Share
premium

 Share based payments reserve

 Currency translation reserve

 Retained losses

 Total

 

 £    

 £    

 £    

 £     

 £    

 £    

 At 1 April 2004

6,673,247

5,737,146

 - 

 - 

 (8,354,189)

4,056,204

 Recognition of share based payments

 - 

 - 

61,947

 - 

 - 

61,947

 Loss for the year

 - 

 - 

 - 

 - 

 (186,769)

 (186,769)

 

 

 

 

 

 

 

 At 31 March 2005

6,673,247

5,737,146

61,947

 - 

 (8,540,958)

3,931,382

 

 

 

 

 - 

 

 

 Recognition of share based payments

 - 

 - 

98,762

 - 

 - 

98,762

 Shares issued for cash

212,667

1,411,333

 - 

 - 

 - 

1,624,000

 Share issue expenses

 - 

 (58,430)

 - 

 - 

 - 

 (58,430)

 Exchange differences on
    translation of foreign operations

 - 

 - 

 - 

 (4,652)

 - 

 (4,652)

 Loss for the year

 - 

 - 

 - 

 

 (517,403)

 (517,403)

 

 

 

 

 

 

 

 At 31 March 2006

6,885,914

7,090,049

160,709

 (4,652)

 (9,058,361)

5,073,659

 

Consolidated cash flow statement

for the year ended 31 March 2006

 

 

 

2006

2005

 

 

 

£

£

Operating activities

 

 

 

Loss from operations

 

 (436,308)

 (118,612)

 

 Adjustments for:

 

 

 

 

 Depreciation of plant & equipment

 

500

500

 

 Provision for impairment

 

194,065

 - 

 

 Share based payment charge

 

98,762

61,947

 

 

 

 

 

Operating cashflow before

 

 

 

 

movements in working capital

 

 (142,981)

 (56,165)

 

 Increase in payables

 

 (2,790)

44,932

 

 (Increase)/decrease in receivables

 

 (9,998)

578

 

 

 

 

 

Cash utilised by operations

 

 (155,769)

 (10,655)

 

 

 

 

 

 

 Interest paid

 

 - 

 (12)

 

 

 

 

 

Net cash used in operating activities

 

 (155,769)

 (10,667)

 

 

 

 

 

Investing activities

 

 

 

 

 Interest received

 

20,676

565

 

 Mineral property development

 

 (323,166)

 (7,094)

 

 

 

 

 

Net cash used in investing activities

 

 (302,490)

 (6,529)

 

 

 

 

 

Financing activities

 

 

 

 

 Proceeds from issue of ordinary shares, net of costs

1,615,570

 - 

 

 Proceeds from increase in loans

 

 - 

60,000

 

 

 

 

 

Net cash from financing activities

 

1,615,570

60,000

 

 

 

 

 

Net increase in cash

 

1,157,311

42,804

 

 

 

 

 

 Cash and cash equivalents at beginning of period

 

44,070

1,266

 Cash and cash equivalents at end of period

 

1,201,381

44,070

 

Notes to the preliminary statement of results

1          General information

Anglesey Mining plc is a company incorporated in the United Kingdom under the Companies Act 1985. The nature of the group’s operations and its principal activities are detailed in note 4.

These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the group operates.

2          Adoption of new and revised International Financial Reporting Standards

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning on 1 January 2005. The adoption of these new and revised Standards and Interpretations has resulted in changes to the Group’s accounting policies in the following areas that have affected the amounts reported for the current or prior years:

·          Share-based Payments (IFRS 2)

The impact of these changes in accounting policies is discussed in detail later in this note.

At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:

·          IRFS 6      Exploration for and Evaluation of Mineral Resources

·          IFRIC 3    Emission Rights

·          IFRIC 5    Right to Interest Arising from Decommissioning, Restoration and
              Environmental Rehabilitation Funds

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements.

IFRS 2 - Share-based Payments

IFRS 2 Share-based Payments requires the recognition of equity-settled share-based payments at fair value at the date of grant and the recognition of liabilities for cash-settled share-based payments at the current fair value at each balance sheet date. Prior to the adoption of IFRS 2, the Group did not recognise the financial effect of share-based payment until such payments were settled.

In accordance with the transitional provision of IFRS 2, the Standard has been applied retrospectively to all grants of equity instruments after 7 November 2002 that were unvested at 1 April 2005, and to liabilities for share-based transactions existing at 1 April 2005. The Standard therefore applies to share options granted in 2005 and 2006.

For 2005, the change in accounting policy has resulted in a net increase in the loss for the year of £61,947. The balance sheet at 31 March 2005 has been restated to reflect the recognition of a share options reserve of £61,947.

For 2006, the impact of share-based payments is a net charge to the income statement of £98,762. At 31 March 2006 the share options reserve amounted to £160,709.

The share-based payments expense of £98,762 (2005: £61,947) has been included with administration costs in the income statement.

3          Significant accounting policies

Basis of Accounting

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) for the first time. In these financial statements the 2005 comparatives have been presented in accordance with IFRS.

The financial statements have been prepared on the historical cost basis.

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 Parys Mountain property becoming available. Based on the assumptions 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, to their realisable values.

Other accounting policies are set out in full in the annual report.

4          Business and Geographical segments

Until September 2005 all development activities and expenditure were in the United Kingdom. Following the optioning of the Labrador Iron project in Canada in October 2005, expenditures in respect of that property have also been incurred.

 

United Kingdom

Canada

Total

 

          £   

          £

          £

Direct property expenses

 

 

 

Site labour and support

37,311

 - 

37,311

Drilling

197,465

 - 

197,465

Geology

45,965

49,860

95,825

Feasibility reports

14,457

10,187

24,644

Property rentals, fees and charges

62,900

 - 

62,900

Management

 - 

30,354

30,354

Provision for site reinstatement

42,000

 - 

42,000

 

 

 

 

 

400,098

90,400

490,498

 

 

 

 

Overhead expenses

 

 

 

Corporate salaries & related costs

78,448

 - 

78,448

Other corporate costs

65,033

 - 

65,033

Share based payments

98,762

 - 

98,762

 

 

 

 

 

242,243

 - 

242,243

 

 

 

 

 

642,341

90,400

732,741

Less

 

 

 

Capitalised to mineral property development costs

 (400,098)

 (90,400)

 (490,498)

 

 

 

 

Amount charged to income statement

242,243

 - 

242,243

 

 

 

 

Assets and liabilities

 

 

 

Assets

6,989,596

90,400

7,079,996

Liabilities

 (1,927,353)

 (78,984)

 (2,006,337)

 

 

 

 

Net assets

5,062,243

11,416

5,073,659

 

5          Finance costs

 

2006

 

2005

 

£ 

 

£ 

Loan interest to Juno Limited

75,742

 

70,580

Other interest

27,900

 

11

 

 

 

 

 

103,642

 

70,591

 

6          Loss per ordinary share

All operations are continuing

As there is a loss for the year, basic and diluted EPS are the same and are calculated on the following data:

 

2006

 

2005

 

 £

 

 £

Loss

 

 

 

Loss for the period

 (517,405)

 

 (186,769)

 

 

 

 

Number of shares

 

 

 

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

128,492,891

 

116,241,384

 

 

 

 

Loss per share – basic & diluted

(0.4) pence

 

 (0.1) pence

Impact of changes in accounting policy

The recognition of share-based payments as expenses has increased the loss per share – basic and diluted by 0.08 pence (2004: 0.05 pence).

 

7          Intangible assets

Group  -  Mineral property development costs

 

 

 Parys Mountain 

 Labrador

 Dolaucothi

 Total

 Cost

 £    

 £    

 £    

 £    

 At 1 April 2004

12,223,442

 - 

193,565

12,417,007

 Additions - own expenditure

57,094

 - 

500

57,594

 At 1 April 2005

12,280,536

 - 

194,065

12,474,601

 Additions - own expenditure

400,098

90,400

 - 

490,498

 

 

 

 

 

 At 31 March 2006

12,680,634

90,400

194,065

12,965,099

 

 

 

 

 

 Impairment provision

 

 

 

 

 At 1 April 2004 and 2005

 (7,200,000)

 - 

 - 

 (7,200,000)

 Provided in year

 - 

 - 

 (194,065)

 (194,065)

 

 

 

 

 

 At 31 March 2006

 (7,200,000)

 - 

 (194,065)

 (7,394,065)

 Carrying amount

 

 

 

 

 Net book value 2006

5,480,634

90,400

 - 

5,571,034

 Net book value 2005

5,080,536

 - 

194,065

5,274,601

           

Parys Mountain development expenditure incurred by the group is carried in the financial statements at cost less an impairment provision. The directors have given careful consideration to the value at which this development expenditure should be shown and are satisfied that in the financial environment forecast to prevail over the next few years, the fair value of the project exceeds the value shown in the balance sheet.

Development expenditures at Dolaucothi are shown at cost to the group on acquisition in 1997, plus expenditures since then at cost, less an impairment provision. This impairment provision was made this year, as the directors decided, in view of the current lack of activity, that it would be prudent to make a provision against all the Dolaucothi mineral development expenditure.

The realisation of these intangible fixed assets is subject to a number of significant potential risks. Should a project prove unsuccessful, the value included in the balance sheet would be written down to its net realisable value.

 

For further details:

Ian Cuthbertson, Finance Director        + (44) 1248 361333

Bill Hooley, Executive Director              + (44) 1492 541981

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

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


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  Anglesey Mining plc
Parys Mountain, Amlwch,
Anglesey, LL68 9RE, UK
  Phone  +44 1248 361333  
 mail@angleseymining.co.uk
 

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