16 September 1999
Anglesey Mining plc today announces its preliminary results for the year ended 31 March 1999.
The loss for the year before taxation was £111,465 (1998 £97,551). The group has no revenues from the operation of its properties and almost all of this loss represents interest, administrative and corporate expenses which, in accordance with the group's accounting policy, are charged to the Profit and Loss Account. During the year fixed assets totalling £1,191 (1998 - £121,549) were acquired, £281,419 (1998 - £414,658) was capitalised in respect of the development of the Parys Mountain property, £13,885 was capitalised in respect of the Dolaucothi property and £88,220 (1998 - £98,551) was expended on corporate costs, administration expenses and the investigation of exploration and development opportunities. The expenditure on development at Parys Mountain decreased in comparison with last year because there were no costs associated with the acquisition of the leasehold and freehold of Parys Mountain or the acquisition of Parys Mountain Mines Limited.
The group is continuing the exploration of the Parys Mountain property by its geological re-assessment programme. A major lithogeochemical study and review of Parys Mountain geology was completed during the year. A programme of diamond core drilling is planned. Drilling took place at Dolaucothi and further geological evaluation is planned there. In order to carry out all these activities further funding will be required. In June and December 1998 further working capital agreements with Juno were negotiated in order to provide funding for the company's activities. The directors remain attentive for opportunities to be involved in appropriate new mineral ventures and are reviewing several such opportunities at present.
Although lack of finance restricted active field programmes, Anglesey Mining continued to make headway during the past year. Exploration continued at Parys Mountain with the drilling of a fourth diamond drill hole and the completion of major geological studies initiated in 1995. At the Dolaucothi gold property diamond drilling provided very encouraging results.
This progress has been achieved against a background of great difficulty for the mining and mineral industry. In particular prices for gold and copper have been plumbing new depths, with predictable effects of lowered confidence within the industry and negative attitudes towards it. These are features of a cyclical business and are felt most keenly when the downturns are as prolonged and severe as that now being experienced.
As we have previously reported to shareholders, our objective is to carry out a major drilling programme at Parys Mountain to increase reserves. The plan is to drill about 10,000 metres in 10 to 15 holes, much of this in the eastern parts of the property which are largely unexplored to date. This planned programme is budgeted to cost about £500,000 and would last at least one year. Obviously this programme requires new funding. However recent financing conditions in the minerals industry have been the worst in memory and new funding efforts will not be undertaken until market conditions permit.
The company has concentrated its efforts on geological and scientific studies with limited field work and drilling. Much has been accomplished during the past year as the multi-disciplined geological study reached conclusion. Palaeontological, geochronological, lithogeochemical and geological studies were completed by the company's own staff and consultants together with the British Geological Survey and Cardiff and Leicester Universities.
The results of all of these studies have considerably improved the knowledge base of Parys Mountain and enhanced the potential for expansion of reserves in the east and north-east parts of the property where the target horizon (the Engine Zone) has not previously been tested. It is clear that the property requires and justifies further detailed exploration and a major new drilling programme once funding is available.
Anglesey Mining acquired the Dolaucothi property in late 1997 because of its potential for a small 'model' gold mining operation that would attract the price premium for Welsh gold and be compatible with the special requirements of a historically significant site. The property is situated at Pumpsaint near Lampeter, Dyfed, south Wales.
We have been very encouraged by the initial exploration results. Two holes were drilled over the past year as part of the research and training programme of the Department of Earth Sciences at Cardiff University. Assay results (released in April) indicated high grade gold values over widths up to 2.5 metres. These holes intersected mineralised quartz veins within a newly identified deformation zone. The identification of the deformation zone and the four new mineral intersections below the old Roman lode have opened up a new target area and have extended the gold mineralisation known on the property. These results provide considerable encouragement and will be followed up.
In 1998 the company concluded extensions to the financing agreements with Juno Limited, its major shareholder. To date Juno has advanced almost £500,000 to fund ongoing programmes and working capital. The loans from Juno are denominated in sterling, unsecured, carry interest at 10% and are repayable from any future financings. These agreements have enabled our activities to be continued on a limited basis. However, additional funding will be required to increase exploration and drilling activities and to expand the asset base of the company.
We believe that despite the continuing low metal prices and lack of investor interest in the mining sector, conditions will look up in the near future. In order to position the company to take advantage of the anticipated improvement in the metal cycle we continue to evaluate other mining and mineral development opportunities. Over the past year we have been reviewing opportunities for both polymetallic massive sulphide (VMS) deposits and other types of base metal deposit. We are looking for projects similar to Parys Mountain, where there is potential for near-term production, or projects where we can apply the company's technical expertise and which are located in areas with good infrastructure and low political risk. In this regard, the company has identified a number of projects that it plans to pursue depending upon the availability of financial resources. Specifically, we are reviewing an opportunity relating to a known undeveloped zinc deposit in Ireland which has recently been placed on the market, as well as other exploration projects within the British Isles.
Anglesey Mining has made good progress in very poor conditions for the industry and is poised on the brink of an exciting drilling programme on its core asset at Parys Mountain. In addition, a new strategy has been developed to broaden the asset base of the company. At this low point in the metals cycle, there are many opportunities and we are confident that we will shortly be able to acquire suitable projects that are within our capabilities. We believe that the broader asset base and a focused approach will facilitate our financing efforts.
World metal prices have had another bad year but the outlook, particularly for zinc, is quite positive. There has also been some slight improvement in the copper price recently. Unfortunately, gold prices have reached twenty year lows, partly because of the extraordinary and regrettable decision by the Government and the Bank of England to sell off almost half of the country's gold reserves. However mining is a cyclical industry and better metal prices and investor interest will undoubtedly return. We intend to be in a position to advance quickly as soon as market conditions permit.
I would like to thank the company's employees, directors, consultants and advisors for their continued enthusiasm and I should also like to commend shareholders for their continuing patience and support.
John F. Kearney
16 September 1999
Contacts : Ian Cuthbertson John F. Kearney Company Secretary Chairman (44)1248 361333 (1)416 362 6686
|Anglesey Mining plc
Parys Mountain, Amlwch,
Anglesey, LL68 9RE, UK
|Phone +44 1248 361333