Half-yearly Report
Anglesey Mining plc
Half yearly report 2011
Chairman's statement and management report - November 2011
We are very pleased to be able to report further significant progress at the
33% owned Labrador Iron Mines (LIM) operations in the period since the last
report to shareholders. Stripping and mining operations have proceeded well,
the processing plant frequently exceeded its design throughput and the first
shipment of iron ore left the port of Sept-Isles bound for China on 3 October
2011. The substantial group profit of £16.7 million for the period is largely
due to the success of the investment in LIM. Meanwhile at Parys Mountain we
plan to start a drilling and geophysical programme in the immediate future as
the first step in a fresh approach to this property.
Labrador Iron
The highlights at the Schefferville properties for the period ended 30
September 2011 were:
* 723,000 tonnes of ore mined and trucked to Silver Yards during the half
year including 212,000 tonnes of direct railable ore (DRO) at an average
grade of 65% iron
* James mining operations operated ahead of schedule
* Silver Yards processing plant throughput exceeded 8,000 tonnes per day
* A second phase processing plant expansion was completed increasing
recoveries by the production of high quality sinter fines
* A second train has increased the tonnage carried on the railway to
Sept-Iles.
Details of production to date are shown in the following table:
Quarter ended 30 Half year ended
September 2011 30 September 2011
Tonnes Grade Tonnes Grade %
% Fe Fe
Ore Mined 612,596 60.2 722,980 59.9
Including 177,863 65.3 212,069 65.1
DRO
Waste Mined 1,536,368 2,262,050
Plant Feed 310,107 57.4 328,210 57.3
Lump Ore 52,179 64.8 60,435 64.7
Sinter 112,951 63.0 119,587 63.0
Fines
Total 208,461 65.1 213,945 65.1
Railed
The first ship carrying 167,167 wet tonnes of direct railable ore at a grade of
64.8% Fe departed from the port of Sept-Iles on 3 October 2011 bound for China
and the second shipment departed on 2 November carrying 172,743 wet tonnes of
sinter fines at a grade of 64.9% Fe, also destined for China. LIM expects a
third similar sized shipment to depart at the end of November, and possibly
another smaller shipment to depart in December.
James Mine Operations
Mining at the James Mine commenced in June 2011 and is continuing to operate
well. To the end of September, a total of 723,000 tonnes of ore had been mined
and trucked to the Silver Yards area ahead of processing or transport to the
port. The grade of the James ore in the upper benches of the mine continues to
be generally in excess of expectations. Of the total production to the end of
September, some 212,000 tonnes was DRO at an average grade of around 65% iron
of which 175,000 tonnes had been railed directly to Sept-Iles without further
processing.
Ore mining operations at the James Mine will continue through the remainder of
2011 at an average rate of approximately 16,000 tonnes per day and, depending
upon the weather, it is expected that a total of about 1.6 million tonnes will
have been mined by the end of December with about 3 million tonnes of waste
mined in the same period. Ore mining operations are expected to continue during
the winter months, but at a reduced rate.
Silver Yards processing
Following commissioning and start-up in June 2011 the Silver Yards processing
plant gradually improved its performance and frequently achieved over 8,000
tonnes per day in September and October. The completion of a second phase
expansion of the Silver Yards plant during the second quarter was designed
specifically for fine material and has resulted in an improved throughput and
recovery rate.
The Silver Yards plant was shut down for the season in early November as wet
processing is not planned in winter conditions. Further plant modification and
installation of additional equipment as part of the phase three expansion is
continuing and is designed to increase Silver Yards' production capacity to
about 2 million tonnes per year. It is expected that the planned plant
expansion will be in place by mid-2012.
It is also estimated that, subject to weather conditions, approximately 600,000
tonnes of saleable product will be railed to Sept-Iles for calendar 2011 and
will all be sold to the Iron Ore Company of Canada (IOC). In addition to these
shipments, it is expected that a further 600,000 tonnes of iron ore will be
held in inventory at Silver Yards and be available for treatment and shipping
in 2012, including about 200,000 tonnes of DRO.
LIM 2011 exploration programme
The 2011 LIM exploration program has progressed successfully and is now winding
down. Three rigs were in operation and by the end of September about 8,200
metres had been drilled on a number of deposits with the Houston deposit being
the main focus. It is expected that about 11,500 metres of reverse circulation
drilling will be completed before the onset of winter. Exploration support
programs including 650 metres of trenching, 65 test pits and air-borne
geophysics will also be completed during the current season.
LIM 2012 Outlook
Mining will continue at the James North and James South deposits in the year
2012, with a planned total ore mined of between 2.0 and 2.5 million tonnes,
together with about 3.5 million tonnes of waste.
Subject to final operating plan and budget approval, it is now expected that
between 1.8 and 2.0 million tonnes of ore, including material from stockpiles,
will be treated in 2012 and this is expected to yield up to 1.5 million tonnes
of saleable product. In addition, it is expected that about 500,000 tonnes of
direct railable ore from both the 2011 stockpile and from 2012 mining
operations will also be available in 2012, for a total production target of
over 2.0 million tonnes of iron ore to be shipped and sold in 2012. A third
train will be introduced in 2012 to enable this production of iron ore to be
railed to the port of Sept-Iles.
LIM has signed a MOU with the Sept-Iles Port Authority for the use of the
Pointe-aux-Basques terminal for handling and ship loading of LIM's iron ore
however these arrangements for 2012 and future years remain subject to
evaluation and finalization.
Iron ore produced in 2011 is being sold to IOC and delivered to Asian markets
and re-sold by IOC's marketing organization on the spot market. LIM continues
to review its options for marketing its iron ore production for 2012 and
subsequent years and is evaluating the optimum route to achieve these sales,
while still maintaining maximum flexibility and independence. LIM has not yet
concluded any agreements for the sale of any iron ore beyond 2011.
Parys Mountain
Towards the end of the period a review of the Parys Mountain project commenced
and a drilling programme to expand and assist this review is planned to
commence in the immediate future; this will target areas close to the shaft
which could form part of a small mine chiefly focussed in the White Rock area.
This concept was the subject of a scoping study prepared by Micon Consultants
in June 2007. The directors believe that the outlook for zinc and lead prices
is positive over the next few years and that work to further develop the White
Rock area as an early route to the full development of the project is
justified.
Financial results
LIM's fundraising of C$121 million in April 2011 resulted in the reduction of
our stake in that company from 41% to 33%, and the operation of accounting
standards means that this dilution is treated for accounting purposes as a
`deemed disposal' or partial sale; because of the low LIM cost base we have
recorded a profit on this non-cash transaction of £19.6 million in the period
(2010 - nil). After taking into account operating expenses and other items
there was a net profit for the period of £16.7 million (2010 - loss - £0.76
million) despite a significant increase in administrative and start-up expenses
attributable to LIM. The group's UK administrative expenses excluding LIM
increased to £213,422 from £161,955 in the comparable period of 2010. There are
no seasonal effects in these results.
The group has no revenues from the operation of its properties. At the period
end the cash resources of the group were £3.4 million (31 March 2011 - £3.7
million) and LIM had in excess of C$37.9 million or £23.5 million (31 March
2011 - C$7.5 million or £4.8 million).
Outlook
After a number of years in which the group has concentrated its efforts largely
on LIM we are now expanding our review of Parys Mountain with the aim of
forming a clear view on the best way to move its development forward. Whilst
there is considerable financial uncertainty in the world, the price of copper
which represents the major potential revenue from Parys Mountain, remains firm,
and there is a continuing consensus that prices for zinc and lead, which are
likely to provide revenues in the early years of the mine, is positive over the
medium term.
LIM has taken a major step during the last six months as it has moved into
production and is planning a major increase in the sale of iron ore products in
2012 and beyond. The price of iron ore, after a very steady summer, has become
somewhat erratic as both miners and Chinese steel mills reassess their
positions. The directors remain confident that LIM will perform well in 2012
and continue to provide a fundamental basis for the continuing well-being of
the group.
John F Kearney
Chairman
28 November 2011
Condensed consolidated income statement
Notes Unaudited Unaudited
six six
months months
ended 30 ended 30
September September
2011 2010
All operations are £ £
continuing
Revenue - -
Expenses (213,422) (161,955)
Share of loss of 11 (2,635,673) (407,016)
associate
Gains on deemed 11 19,607,503 17,279
disposals in
associate
Investment income 20,566 5,394
Finance costs (56,059) (59,860)
Foreign exchange (67,700) (149,974)
loss
Profit/(loss) 16,655,215 (756,132)
before tax
Tax 9 - -
Profit/(loss) for 16,655,215 (756,132)
the period
All attributable to equity holders
of the company
Profit/(loss) per 7
share
Basic - pence per 10.5 p (0.5)p
share
Diluted - pence 9.9 p (0.5)p
per share
Consolidated statement of
comprehensive income
Profit/(loss) for 16,655,215 (756,132)
the period
Other
comprehensive
income:
Exchange (595,891) (1,213,105)
difference on
translation of
foreign holding
Total 16,059,324 (1,969,237)
comprehensive
(loss)/income
for the period
All attributable to equity holders
of the company
Condensed consolidated statement of financial position
Unaudited Unaudited
30 30
September September
2011 2010
Notes £ £
Assets
Non-current
assets
Mineral property 10 13,943,350 13,820,570
development
Property, plant 204,687 204,687
and equipment
Interest in 11 37,728,004 20,330,748
associate
Deposit 121,406 121,540
51,997,447 34,477,545
Current assets
Other receivables 20,257 17,563
Cash and cash 3,360,890 2,395,421
equivalents
3,381,147 2,412,984
Total assets 55,378,594 36,890,529
Liabilities
Current
liabilities
Trade and other (772,862) (791,780)
payables
(772,862) (791,780)
Net current 2,608,285 1,621,204
assets
Non-current
liabilities
Loan (2,133,420) (2,020,207)
Long term (42,000) (42,000)
provision
(2,175,420) (2,062,207)
Total liabilities (2,948,282) (2,853,987)
Net assets 52,430,312 34,036,542
Equity
Share capital 7,094,914 7,042,414
Share premium 9,627,971 8,097,973
Currency 3,025,106 2,768,165
translation
reserve
Retained earnings 32,682,321 16,127,990
Total 52,430,312 34,036,542
shareholders'
equity
All attributable to equity
holders of the company
Condensed consolidated statement of cash flows
Notes Unaudited Unaudited
six months six
ended 30 months
September ended 30
2011 September
2010
£ £
Operating activities
Profit/(loss) for the 16,655,215 (756,132)
period
Adjustments for
non-cash items:
Investment revenue (20,566) (5,394)
Share of loss of 11 2,635,673 407,016
associate
Gain on deemed disposal 11 (19,607,503) (17,279)
in associate
Foreign exchange loss 67,700 149,974
(213,422) (161,955)
Movements in working
capital
Decrease/(increase) in 2,212 (9,236)
receivables
(Decrease) in payables (18,286) (26,089)
Net cash used in (229,496) (197,280)
operating activities
Investing activities
Investment revenue 20,306 4,428
Mineral property (42,757) (27,827)
development
Net cash used in investing (22,451) (23,399)
activities
Financing activities
Net proceeds from issue 9,290 -
of shares
Loan received -
Net cash generated from 9,290 -
financing activities
Net decrease in cash (242,657) (220,679)
and cash equivalents
Cash and cash equivalents at 3,671,247 2,766,074
start of period
Foreign exchange (67,700) (149,974)
movement
Cash and cash 3,360,890 2,395,421
equivalents at end of
period
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 31 March 7,092,414 9,621,181 3,620,997 15,748,173 36,082,765
2011 - audited
Total comprehensive
income for the
period:
Profit for the - - - 16,655,215 16,655,215
period
Exchange movement on - - (595,891) - (595,891)
foreign holdings
Total comprehensive - - (595,891) 16,655,215 16,059,324
income for the
period:
Shares issued for 2,500 12,812 - - 15,312
cash in respect of
option exercises
Share issue costs - (6,022) - - (6,022)
Equity-settled - - - 278,933 278,933
benefits credit:
- associate
Equity at 30 7,094,914 9,627,971 3,025,106 32,682,321 52,430,312
September 2011 -
unaudited
Comparative period
Equity at 1 April 7,042,414 8,097,973 3,981,270 16,818,846 35,940,503
2010 - audited
Total comprehensive
income for the
period:
(Loss) for the - - - (756,132) (756,132)
period
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 - - - 65,276 65,276
benefits credit:
- associate
Equity at 30 7,042,414 8,097,973 2,768,165 16,127,990 34,036,542
September 2010 -
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 2011.
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 28 November 2011. 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 2011 which is available on request from the company
or may be viewed at www.angleseymining.co.uk.
The financial information contained in this report in respect of the year ended
31 March 2011 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 2011. The following amendments to
accounting standards and new interpretations were effective in the current
period: IAS 24 `Related Party Disclosure' (amendment) - Revised definition of
related parties and disclosure exemptions for government-controlled entities;
IFRIC 14 (amendment) - Prepayments of a minimum funding requirement;
Improvements to IFRS (May 2010); and IFRIC 19 'Extinguishing financial
liabilities with equity instruments'.
The adoption of these amendments and new interpretations has not resulted in a
change to the accounting policies nor had a material effect on the financial
performance and position of the group. 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 2011 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 the granting of
permissions and variations in metal prices; liquidity risks during development;
and foreign exchange risks. More information on these principal risks is to be
found in the 2011 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 28 November 2011 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 any
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
Earnings per share are computed by dividing the profit attributable to ordinary
shareholders of £16,655,215 (2010 loss £756,132), by 158,401,220 (2010 -
153,158,051) - the weighted average number of ordinary shares in issue during
the period or by 167,973,969 (2010 - 153,058,051) the weighted average number
of dilutive shares which includes those potentially issuable in respect of
share options. Where there are losses the effect of outstanding share options
is anti-dilutive.
8. Operating 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.
Unaudited six months ended 30 Unaudited six months ended
September 2011 30
September 2010
UK Canada - Total UK Canada - Total
associate associate
£ £ £ £ £ £
Expenses 213,422 - 213,422 161,955 - 161,955
Share of - 2,635,673 2,635,673 - 407,016 407,016
loss in
associate
Gain on - (19,607,503) (19,607,503) - (17,279) (17,279)
deemed
disposals
Investment (20,566) - (20,566) (5,394) - (5,394)
income
Finance 56,059 - 56,059 59,860 - 59,860
costs
Exchange 67,700 - 67,700 149,974 - 149,974
rate loss
(Profit)/ 316,615 (16,971,830) (16,655,215) 366,395 389,737 756,132
loss for the
year
Unaudited 30 September 2011 Audited 31 March 2011
UK Canada - Total UK Canada - Total
associate associate
£ £ £ £ £ £
Assets 17,650,590 37,728,004 55,378,594 17,920,142 21,073,132 38,993,274
Liabilities (2,948,282) - (2,948,282) (2,910,509) - (2,910,509)
Net 14,702,308 37,728,004 52,430,312 15,009,633 21,073,132 36,082,765
assets
9. Deferred tax
There is an unrecognised deferred tax asset of £1.5 million (31 March 2011 - £
1.5m) 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 (unchanged from 31 March
2011) 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 impairmentprovision 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. During
the period expenditure of £42,757 was incurred (six months to 30 September 2010
- £27,827). There have been no indicators of impairment during the period.
11. Interest in associate
At 30 September 2011 the group had a 32.9% (31 March 2011 - 40.0%) 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. The change in the group's
percentage holding over the period results from the issue of shares by LIM in
respect of a fund raising in April 2011 and the exercise of options and
warrants. The fully diluted interest of the group in LIM was 31.6% ( 2010 -
39%). At 21 November 2011 the published fair value of the group's investment in
LIM was £62 million based on a share price of C$5.62 per LIM common share at
that date. At 30 September 2011 the share price was C$5.79 .
The changes in the group's interest in LIM are:
Unaudited Unaudited Audited 31
30 30 March 2011
September September
2011 2010
£ £ £
Values in group
financial statements:
Value brought 21,073,132 21,868,314 21,868,314
forward from
previous period
Group's share of (2,635,673) (407,016) (1,104,453)
(losses), adjusted
to
eliminate any fair
value uplift and
related
taxation in
associate's accounts
Group's share of 278,933 65,276 374,984
equity-settled
benefits
included in (losses)
above and now added
back
Profit on deemed 19,607,503 17,279 294,560
disposals following
LIM share issues
Exchange rate (595,891) (1,213,105) (360,273)
movement
Amount carried in 37,728,004 20,330,748 21,073,132
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
12. Events after the reporting period
None.
13. Related party transactions
None.
For further information, please contact:
Bill Hooley, Chief Executive +44 (0) 1492 541981;
Ian Cuthbertson, Finance Director +44 (0) 1248 361333;
Samantha Harrison / Shaun Whyte, Ambrian Partners Limited +44 (0) 2076 344700;
Emily Fenton / Jos Simson,
Tavistock Communications +44 (0) 20 7920 3155 / +44 (0) 7788 554035.
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