Anglesey Mining plc              

 

4 October 2006                                                                            LSE: AYM   

Anglesey Mining moves towards development of Labrador Iron Mines

·         Feasibility Study completed

·         Acquires direct interests in Labrador Properties

Anglesey Mining Plc (“Anglesey”) is pleased to announce that it has completed an initial Feasibility Study on its iron ore properties in Labrador, Canada and has elected to continue with the development of the properties by committing to put a mine into production at a rate, as projected by the Feasibility Study, of 2 million tonnes a year by 2010, producing high quality direct shipping lump and sinter iron ore.

During the last 12 months, Anglesey, through its wholly owned subsidiary, Labrador Iron Mines Limited (“LIM”), has conducted comprehensive investigations and analysis on the properties. These have included an exploration drilling programme, an environmental review and base line study, geological and mine modelling, metallurgical test work, a rail transportation study and detailed capital and operating cost estimates. The total expenditure through to the end of September 2006 has amounted to approximately £500,000.

Feasibility Study completed

The Feasibility Study confirms that an economic operation is viable at the Labrador properties. The proposed project will involve the open pit mining from one deposit initially at a rate of 5,000 tonnes per day, using a mining contractor, over a period of 8 months per year, to be followed by a washing and screening process, which will separate the mined material into lump and fine sinter ore, which will then be loaded on to rail cars for transportation to the port of Sept Iles for onward shipping, either to Europe or the Far East. First production is expected in 2008. The preliminary capital cost estimate is $US30 million and projected operating costs are about $US22 per tonne. Currently 68% Fe Lump Ore is priced at over $US60 per tonne FOB.

Revised Agreement terms

Anglesey also reports that the terms of the previously announced option agreement have been revised.  Under the revised Agreements, Anglesey, through LIM, will hold an 80% interest (increased from 70% previously) in the Labrador Joint Venture which has been established to hold the properties and operate the project. The interests previously held by Energold, a company controlled by John Kearney, chairman of Anglesey, have been conveyed to LIM at no cost.

The other 20% joint venture interest, which is held by arms-length parties, is carried through all development and preproduction capital expenditures, however LIM is entitled to recover the principal amount of development and capital costs from the net revenue.

In addition, LIM has the right, upon arranging project financing, to purchase the outstanding 20% joint venture interest at a valuation equivalent to 20% of the net present value of the project, as determined from the mine plan upon which the project financing is based.

LIM will be the operator of the joint venture and the project, and is responsible for maintaining the mining claims and leases in good standing with the Government of Newfoundland and Labrador.

Interest earned in Properties

Having incurred the expenditure of £500,000, completed the Feasibility Study and committed to put the properties into production, the Labrador Joint Venture has now earned a 100% interest in the James, Knob Lake, Houston, Redmond, Howse and Kivivic properties together with a 40% interest in the Astray and Sawyer properties.  It can convert this interest in Astray and Sawyer to 100% by committing to put them into production either individually or in combination with one of the other properties.  The Joint Venture has until 30th March 2007 to make this election to earn this 100% interest.  In total these eight properties are comprised of 26 mining licenses covering 134 mining claims, all subject to a 3% royalty.

Under the terms of the revised agreements, in the event that project financing has not been arranged for the first one million tonnes of production from one or more of the properties by September 2008, or commercial production has not been achieved by September 2010, the Labrador Joint Venture interest shall be adjusted to those shown below:

 Labrador Joint Venture Interest (Anglesey 80%) in various properties

Property

Interest after

30th September 2006

Interest with financing and production achieved

Interest if financing or production not achieved by target dates

James, Redmond, Knob and Houston

100%

100%

20%

Sawyer and Astray

40%

100%

40%

Houston extension

100%

100%

100%

Astray extension

100%

100%

100%

Howse and Kivivic

100%

100%

100%

Future Plans

LIM plans to move ahead with the development of the properties as quickly as possible.  In addition to continuing with further exploration programmes on the deposits, LIM also intends to undertake a full Bankable Feasibility Study to be completed within the next year, as well as commencing discussions with potential project financiers and banks.

LIM also plans to negotiate an Impact Benefits Agreement with the First Nations who have traditional rights in the area, and to negotiate transportation arrangements with railway and shipping interests, as well as holding discussions with adjoining property owners and with the Government of Newfoundland and Labrador and the Government of Quebec.

Comment

“Our work over the past twelve months has indicated that Labrador Iron Mines is a viable project and we are pleased with the positive result of the Feasibility Study”, said Bill Hooley, Executive Director of Anglesey. “The revised contractual arrangements are a significant improvement for Anglesey. Our interest in the joint venture has increased from 70% to 80%, and we have the right to buy out the remaining 20%. Further, by our expenditure and work to date LIM has now earned an 80% joint venture interest in various property Interests, including a direct 80% (of 100%) interest in the Kivivic and Howse Properties, which, based on historical Iron Ore Company of Canada records, are reported to contain a total of about 60 million tonnes of iron ore.”

“The co-operation of the Anglesey’s chairman, John Kearney, in assigning to Anglesey his 10% joint venture interest in the properties for no consideration, which will avoid any potential for conflicts of interest, should be noted and is greatly appreciated.” said Bill Hooley.

 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

 


  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