Half-Yearly Report
Anglesey Mining plc LSE:AYM
25 November 2010
Report for the half year ended 30 September 2010
Chairman's statement and management report - November 2010
We are pleased to report that during the half year ended 30 September 2010 and
up to date, excellent progress has been made with the ongoing development of
Labrador Iron Mines' (LIM's) iron ore projects in Western Labrador and Quebec,
currently the group's main activity. Since on-site construction commenced in
early September 2010, the rate of advance indicates that the plant and
accommodation camp for the first phase of Stage 1 are on track to be
substantially completed by the end of calendar 2010; mining and production
activities are planned to commence in April 2011.
Labrador Iron Ore
Labrador Iron Mines, the group's 41% owned Toronto Stock Exchange listed
associate, is advancing its Schefferville direct shipping iron ore project
towards production. LIM had respected and did not try to cross the barrier that
had been erected in June 2010 which had restricted normal access from the town
of Schefferville to LIM's properties in Western Labrador and caused delays in
the exploration and development of the projects. Following an agreement in
early September with the Innu Matimekush-Lac John to remove the barriers,
construction and installation work is being carried out on site.
Mine site preparation at the James Mine has commenced with the development of
the haul road, clearing and grubbing of the entire mining site and exposing the
ore body. Development of the first production bench in the mine will follow.
Some small ore stock piles have been moved to Silver Yards and, together with
the first ore mined from the bench development, will be stockpiled ahead of the
primary crusher ready for feed to the processing plant at the commencement of
production.
Construction of the beneficiation plant and associated facilities has
progressed well since early September. All the piers for the conveyors have
been installed, including those for the radial stackers and the secondary
crusher, and most of the conveyor structures are in place. The steel structure
for the secondary screens tower has been completed and the chutes, stairs and
flooring for the transfer tower are all installed. All the major items of
processing equipment have been installed, and the dome roof structure is being
assembled at site and is expected to be installed shortly. This will enable
installation of the piping, electrical and other work to be carried out during
periods of poor winter weather.
The accommodation camp at Bean Lake has also progressed rapidly, is currently
almost complete and should be available for use over the winter.
In September 2010 LIM entered into an Impact Benefits Agreement (IBA) with the
Naskapi Nation of Kawawachikamach. Discussions continue with the Innu
Matimekush-Lac John and with the Innu Takuaikan Uashat Mak Mani-Utenam towards
concluding Impact Benefits Agreements. LIM has committed to negotiate in good
faith and to respect the rights of the Innu, however, it should be emphasized
that no formal IBA or other agreements have yet been signed between LIM and
either Innu Uashat or Innu Matimekush and several outstanding issues remain to
be resolved.
In the six months ended 30 September 2010 LIM made significant progress in its
permitting activities with the Government of Newfoundland and Labrador and has
now received from the Government of Newfoundland and Labrador all major permits
that are required to advance the first phase of Stage 1 of its Schefferville
Projects in Labrador through construction and into mining operations.
The 2010 summer exploration programme has been completed with 4,500 metres of
drilling and 1,400 metres of trenching achieved at the Denault, Ruth 8, and
Houston properties. Drilling at Houston has indicated some extensions to the
resource and these, together with Denault results, will be incorporated into
revised resource estimates when assay results are received.
As a result of recent progress, LIM believes it is on track to substantially
complete construction of the processing plant and accommodation camp by the end
of December and to commence production activities in April 2011. The target is
production of about 2 million tonnes of iron ore in 2011, which assumes
completion of construction, plant commissioning and a satisfactory start-up of
mining operations in the second quarter of calendar 2011.
Parys Mountain
We continue to believe that there is a significant value in the group's 100%
owned Parys Mountain zinc/copper/lead property and although the current
management focus is on Labrador we are continuing to talk with interested
parties in our efforts to realise that value for shareholders.
Financial
The loss for the six month period was £756,132 (2009 - £368,100), which
included an exchange rate loss on cash held in Canadian dollars of £149,974
(2009 - nil) and the group's share of the loss in Labrador, largely comprising
administration expenses, of £407,016 (2009 - £226,880). Development expenses
capitalised in respect of Parys Mountain amounted to £27,827 (2009 - £52,245).
The group has no revenues from the operation of its properties. At the period
end the group had cash in treasury of £2.4 million and LIM had in excess of
Canadian $35 million (£21 million).
Outlook
Recently there has been a strengthening in the price of iron ore, with prices
reaching over US$160 per tonne (62% iron sinter fines CFR Chinese ports).
Shipping rates from eastern North America to China in cape-size vessels is
currently around $40 per tonne giving an indicated effective FOB price of
around US$120 per tonne. The traditional annual benchmark pricing mechanism for
iron ore has now been more or less abandoned with more and more iron ore being
traded against a prior one month spot average determination.
The level of demand in China for all commodities, and in particular iron ore
remains strong. Analysts' consensus seems to suggest price forecasts at or
above current levels well into 2011, although some weakening in prices is
possible. Worldwide iron ore demand is expected to continue to grow through
2012, continuously driven by China, while demand in Europe for iron and steel
appears to be flat, but with some small increase forecast for 2011. These
forecasts should work positively for LIM with first sales of lump ore and
sinter fines expected towards the end of the second calendar quarter of 2011
into what appears will be a positive iron ore market.
The investment in Labrador Iron is the company's major asset. We believe that
the commencement of production and ore sales by LIM will be a major milestone
and that it will bring to the attention of the market the significant under
valuation of Anglesey's shares.
John F Kearney
Chairman
25 November 2010
Anglesey Mining plc - Group
Condensed consolidated income statement
Unaudited
Unaudited six Six months
months ended ended 30 Audited Year
30 September September ended 31 March
Notes 2010 2009 2010
All operations are continuing £ £ £
Revenue - - -
Expenses (161,955) (85,419) (253,684)
Equity-settled employee benefits 6 - (14,298) (28,127)
Share of (loss) of associate 11 (407,016) (226,880) (203,173)
Gains on deemed disposals in associate 11 17,279 - 7,054,967
Profit on sale of shares in associate - - 1,733,096
Investment income 5,394 1,352 1,076
Finance costs (59,860) (42,855) (99,818)
Foreign exchange loss (149,974) - -
(Loss)/profit before tax (756,132) (368,100) 8,204,337
Tax 9 - - -
(Loss)/profit for the period (756,132) (368,100) 8,204,337
All attributable to equity holders of the company
(Loss)/profit per share 7
Basic - pence per share (0.5)p (0.2)p 5.4 p
Diluted - pence per share (0.5)p (0.2)p 5.3 p
Condensed consolidated statement of comprehensive income
(Loss)/profit for the period (756,132) (368,100) 8,204,337
Other comprehensive income:
Exchange movement on foreign holdings (1,213,105) 374,123 2,148,426
Total comprehensive (loss)/income (1,969,237) 6,023 10,352,763
for the period
All attributable to equity holders of the company
Condensed consolidated statement of financial position
Unaudited 30
Unaudited 30 September Audited
September 2010 2009 31 March 2010
Notes £ £ £
Assets
Non-current assets
Mineral property development 10 13,820,570 13,668,994 13,792,743
Property, plant and equipment 204,687 204,687 204,687
Interest in associate 11 20,330,748 13,970,113 21,868,314
Deposit 121,540 120,849 120,574
34,477,545 27,964,643 35,986,318
Current assets
Other receivables 17,563 2,933 8,327
Cash and cash equivalents 2,395,421 148,460 2,766,074
2,412,984 151,393 2,774,401
Total assets 36,890,529 28,116,036 38,760,719
Liabilities
Current liabilities
Trade and other payables (791,780) (638,566) (817,869)
(791,780) (638,566) (817,869)
Net current assets/(liabilities) 1,621,204 (487,173) 1,956,532
Non-current liabilities
Loan (2,020,207) (1,903,384) (1,960,347)
Long term provision (42,000) (42,000) (42,000)
(2,062,207) (1,945,384) (2,002,347)
Total liabilities (2,853,987) (2,583,950) (2,820,216)
Net assets 34,036,542 25,532,086 35,940,503
Equity
Share capital 7,042,414 7,039,414 7,042,414
Share premium 8,097,973 8,095,198 8,097,973
Currency translation reserve 2,768,165 2,206,967 3,981,270
Retained earnings 16,127,990 8,190,507 16,818,846
Total shareholders' equity 34,036,542 25,532,086 35,940,503
Condensed consolidated statement of cash flows
Unaudited
Unaudited six Six months
months ended ended 30 Audited Year
30 September September ended 31 March
Notes 2010 2009 2010
£ £ £
Operating activities
(Loss)/profit for the year (756,132) (368,100) 8,204,337
Adjustments for non-cash items:
Investment revenue (5,394) (1,352) (1,076)
Finance costs 59,860 42,855 99,818
Equity-settled employee benefits 6 - 14,298 28,127
Share of loss of associate 11 407,016 226,880 203,173
Gain on deemed disposal in associate 11 (17,279) - (7,054,967)
Profit on sale of shares in associate - - (1,733,096)
Foreign exchange loss 149,974 - -
(161,955) (85,419) (253,684)
Movements in working capital
(Increase) in receivables (9,236) (18) (5,412)
(Decrease)/increase in payables (26,089) 29,884 209,187
Cash utilised by operations (197,280) (55,553) (49,909)
Interest paid - - -
Net cash used in operating activities (197,280) (55,553) (49,909)
Investing activities
Interest received 4,428 52 51
Net proceeds from sale of shares in associate - - 2,729,945
Mineral property development (27,827) (52,245) (175,994)
Net cash (used)/received in (23,399) (52,193) 2,554,002
investing activities
Financing activities
Proceeds from issue of shares - 5,775 11,550
Loans - 100,000 100,000
Net cash generated from financing activities 105,775 111,550
Net (decrease)/increase in cash (220,679) (1,971) 2,615,643
and cash equivalents
Cash and cash equivalents at start of period 2,766,074 150,431 150,431
Foreign exchange movement (149,974) - -
Cash and cash equivalents at end of period 2,395,421 148,460 2,766,074
Condensed consolidated statement of changes in group equity
All attributable to equity holders of the company
Share Share Currency Retained Total
capital premium translation earnings £
£ £ reserve £ £
Equity at 1 April 2009 - 7,036,414 8,092,423 1,832,844 8,542,452 25,504,133
audited
Total comprehensive
income for the year:
Profit for the year - - - 8,204,337 8,204,337
Exchange movement on - - 2,148,426 - 2,148,426
foreign holdings
Total comprehensive - - 2,148,426 8,204,337 10,352,763
income for the year
Shares issued for cash 6,000 6,000 - - 12,000
Share issue costs - (450) - - (450)
Equity-settled benefits
credit:
- associate - - - 43,930 43,930
- company - - - 28,127 28,127
Equity at 31 March 2010 7,042,414 8,097,973 3,981,270 16,818,846 35,940,503
- audited
Total comprehensive
income for the period:
(Loss) for the period - - - (756,132) (756,132)
Exchange movement on - - (1,213,105) - (1,213,105)
foreign holdings
Total comprehensive - - (1,213,105) (756,132) (1,969,237)
income for the period:
Equity-settled benefits
credit:
- associate - - - 65,276 65,276
- company - - - - -
Equity at 30 September 7,042,414 8,097,973 2,768,165 16,127,990 34,036,542
2010 - unaudited
Comparative period
Equity at 1 April 2009 - 7,036,414 8,092,423 1,832,844 8,542,452 25,504,133
audited
Total comprehensive
income for the period:
(Loss) for the period - - - (368,100) (368,100)
Exchange movement on - - 374,123 - 374,123
foreign holdings
Total comprehensive - - 374,123 (368,100) 6,023
income for the period:
Shares issued for cash 3,000 3,000 - - 6,000
Share issue costs - (225) - - (225)
Equity-settled benefits
credit:
- associate - - - 1,857 1,857
- company - - - 14,298 14,298
Equity at 30 September 7,039,414 8,095,198 2,206,967 8,190,507 25,532,086
2009 - unaudited
Notes to the accounts
1. Basis of preparation
This half-yearly financial report comprises the condensed consolidated
financial statements of the group for the six months ended 30 September 2010.
It has been prepared in accordance with the Disclosure and Transparency Rules
of the UK Financial Services Authority; the requirements of IAS 34 - Interim
financial reporting (as adopted by the European Union) and using the going
concern basis (and the directors are not aware of any events or circumstances
which would make this inappropriate). It was approved by the board of directors
on 25 November 2010. It does not constitute financial statements within the
meaning of section 434 of the Companies Act 2006 and does not include all of
the information and disclosures required for annual financial statements. It
should be read in conjunction with the annual report and financial statements
for the year ended 31 March 2010 which is available on request from the company
or at www.angleseymining.co.uk.
The financial information contained in this report in respect of the year ended
31 March 2010 has been extracted from the report and financial statements for
that year which have been filed with the Registrar of Companies. The report of
the auditors on those accounts did not contain a statement under section 498(2)
or (3) of the Companies Act 2006 and was not qualified. It included a reference
in respect of the valuation of the Parys Mountain property to which the
auditors drew attention by way of emphasis of matter. The half-yearly results
for the current and comparative periods are unaudited.
2. Significant accounting policies
The accounting policies applied in these condensed consolidated financial
statements are consistent with those set out in the annual report and financial
statements for the year ended 31 March 2010. In preparing these financial
statements any accounting assumptions and estimates made by management were
consistent with those applied to the aforesaid annual report and financial
statements.
3. Risks and uncertainties
The principal risks and uncertainties set out in the group's annual report and
financial statements for the year ended 31 March 2010 remain the same for this
half-yearly financial report and can be summarised as: development risks in
respect of mineral properties, especially in respect of permitting and metal
prices; liquidity risks during development; and foreign exchange risks. More
information on these principal risks is to be found on pages 8 and 9 of the
2010 annual report which may viewed at www.anglesey mining.co.uk.
4. Statement of directors' responsibilities
The directors confirm to the best of their knowledge that:
a) the condensed consolidated financial statements have been prepared in
accordance with lAS 34 as adopted by the European Union; and
b) the interim management report includes a fair review of the information
required by the FSA's Disclosure and Transparency Rules (4.2.7 R and 4.2.8 R).
This report and financial statements were approved by the board on 25 November
2010 and authorised for issue on behalf of the board by Bill Hooley, Chief
Executive Officer and Ian Cuthbertson, Finance Director.
5. Activities
The group is engaged in mineral property development and has no turnover. There
are no minority interests or exceptional items.
6. Equity settled employee benefits
IFRS 2 "Share-based Payment" requires the recognition of equity settled
share-based payments at fair value at the date of grant. The fair value of
options expensed in these statements, where applicable, is determined by a
Black-Scholes option pricing model using a volatility factor of 71% and an
option life of 3 years as the significant assumptions.
7. Earnings per share
The calculation and reporting of basic and diluted earnings per share are in
accordance with IAS 33. These earnings per share are computed by dividing the
loss attributable to ordinary shareholders of £756,132 (2009 £368,100) by
153,158,051 (2009 - 152,858,051) - the weighted average number of ordinary
shares in issue during the period. Where there are losses the effect of
outstanding share options is anti-dilutive.
8. Business and geographical segments
There are no revenues. The cost of all activities charged in the income
statement relates to exploration and development of mining properties which is
the group's principal activity . The group's assets and liabilities and income
statement are analysed as follows by geographical location, which is the basis
of internal management reporting.
Assets and liabilities
Unaudited 30 September 2010 Audited 31 March 2010
UK Canada - Total UK Canada - Total
associate associate
£ £
£ £ £ £
Assets 16,559,781 20,330,748 36,890,529 16,892,405 21,868,314 38,760,719
Liabilities (2,853,987) - (2,853,987) (2,820,216) - (2,820,216)
Net assets 13,705,794 20,330,748 34,036,542 14,072,189 21,868,314 35,940,503
Unaudited six months ended 30 Audited year ended 31 March
September 2010 2010
UK Canada - UK Canada Total
assoc Total associate
£ £ £ £ £ £
Expenses 161,955 - 161,955 253,684 - 253,684
Equity-settled emp benefits - - - 28,127 - 28,127
Share of loss in associate - 407,016 407,016 - 203,173 203,173
Gain on deemed disposals - (17,279) (17,279) - (7,054,967) (7,054,967)
Profit on shares in assoc - - - - (1,733,096) (1,733,096)
Investment income (5,394) - (5,394) (1,076) - (1,076)
Finance costs 59,860 - 59,860 99,818 - 99,818
Exchange rate loss 149,974 - 149,974 - - -
Loss/(profit) for the year 366,395 389,737 756,132 380,553 (8,584,890) (8,204,337)
9. Deferred tax
There is an unrecognised deferred tax asset of £1.5 million which, in view of
the group's trading results, is not considered to be recoverable in the short
term. There are also capital allowances, including mineral extraction
allowances, exceeding £11 million unclaimed and available. Because the
recoverability of any taxation relative to these amounts from future operations
is uncertain, no deferred tax asset is reflected in the condensed financial
statements.
10. Development expenditure
Mineral development expenditure incurred by the group is carried in the
condensed consolidated financial statements at cost, less an impairment
provision if appropriate. The recovery of this expenditure is dependent upon
the successful development and operation of the Parys Mountain project which is
itself conditional on finance being available to fund such development.
11. Interest in associate
At 30 September 2010 the group had a 40.84% interest in Labrador Iron Mines
Holdings Limited (LIM), a company registered in Ontario, Canada, which is
independently managed and is accounted for in these financial statements as an
associate company. LIM is the 100% owner and operator of a series of iron ore
properties in Labrador and Quebec, some of which were formerly held and
initially explored by the group. At 31 March 2010 the group's interest in LIM
was 41.01%, The change in the group's percentage holding over the period
results from the issue of shares by LIM in respect of the exercise of options
and warrants. The fully diluted interest of the group in LIM was 39% (31 March
2010 - 39%). The changes in the group's interest in LIM are:
Unaudited
Unaudited 30 30
September September Audited 31
2010 2009 March 2010
£ £ £
Values in group financial statements:
Value brought forward from
previous period 21,868,314 13,821,013 13,821,013
Group's share of (losses),
adjusted to eliminate any fair
value uplift and related taxation
in associate's accounts (407,016) (226,880) (203,173)
Group's share of equity-settled
benefits included in (losses)
above and now added back 65,276 1,857 43,930
Profit on deemed disposals
following LIM share issues 17,279 - 7,054,967
Less: carrying value of LIM shares
sold - - (996,849)
Exchange rate movement (1,213,105) 374,123 2,148,426
Amount carried in the group
accounts - being the value of
group's share of net assets of the
associate without any fair value
adjustment in respect of mineral
properties 20,330,748 13,970,113 21,868,314
12. Events after the reporting period
None.
13. Related party transactions
None.
Directors John Kearney Chairman
Bill Hooley Chief executive
Ian Cuthbertson Finance director
David Lean Non executive
Howard Miller Non executive
Roger Turner Non executive
Danesh Varma Non executive
Corporate office: 01248 361333
London office
Painter's Hall Chambers
8 Little Trinity Lane, London, EC4V 2AN
Phone 020 7653 9881
Parys Mountain site
Parys Mountain, Amlwch, Anglesey, LL68 9RE
Phone 01407 831275
Registered office
Tower Bridge House, St. Katharine's Way,
London, E1W 1DD
Share registrars Capita Registrars
www.capitaregistrars.com
0871 664 0300 - for all change of address
and shareholder administration matters
(calls cost 10p per minute plus network extras,
lines open 0830 to 1730 Mon-Fri)
Web site www.angleseymining.co.uk
E-mail mail@angleseymining.co.uk
Shares listed The London Stock Exchange - LSE:AYM
Company registration number 1849957
For further information, please 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
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