Final Results
Anglesey Mining plc LSE:AYM
Announcement of final results for the year ended 31 March 2008
A UK based mining company listed on the London Stock Exchange with -
A 50% ownership interest in a newly listed TSX quoted
Canadian company holding the Labrador iron ore properties
- market value attributable to the group of
approx. £36 million at 22 July 2008
The Parys Mountain copper-lead-zinc project under negotiation
for sale to Western Metals Limited for approx. £14 million
Highlights
Shareholders' funds £23 million - profit for 2008 £10 million
Labrador Iron Ore
A very successful flotation in Canada raising C$53 million
before expenses for the development of the Labrador
iron ore properties in December 2007
Historic resource of 91 million tons of partially developed
iron ore near Schefferville
First iron ore production scheduled for 2009
Impact Benefits Agreement signed with Innu Nation in July 2008
Parys Mountain Mine
Encouraging evaluation report and drilling in White Rock zone
Under negotiation for sale to Western Metals of Perth,
Western Australia
Chairman's Statement
This past year has been a most exciting and momentous period in the development
of the Company.
The highlight clearly was the flotation of Labrador Iron Mines Holdings Limited
(LIMH) on the Toronto Stock Exchange in December 2007. As part of the flotation
and the accompanying restructuring, the Company exchanged its 77.5% joint
venture interest in the Labrador Iron Project into a 50% interest in the new
company. The flotation, which was approved by Anglesey shareholders at an EGM on
30 November 2007, was very successful and raised C$52.7 million before expenses
for the development of the properties. LIMH now has sufficient funds to bring
the project into production and first production is targeted for 2009.
Following the flotation the group has a holding of TSX-quoted shares in LIMH
with a current market value of £36 million, although under equity accounting
rules the carrying value in the balance sheet is only £12.1 million. A gain of
£11.4 million has been recorded in connection with the flotation.
After the year end we also announced that we had signed a Term Sheet with
Western Metals Limited of Perth Western Australia giving them exclusive rights
for a period of 120 days to carry out due diligence and to negotiate a
definitive agreement for the sale of the Parys Mountain mine. The total
consideration for the sale is expected to be approximately £14.2 million. As at
the date of this report no formal sale and purchase agreement has yet been
signed. Shareholder approval will be required for this transaction.
Labrador Iron Project
Significant progress has been made with the development of the Labrador iron
project and its move towards first production of direct shipping lump and sinter
fines iron ore scheduled for 2009.
Following the flotation, LIMH began to recruit a dedicated team to drive the
project forward. LIMH is now carrying out a number of programmes on site
including a 30,000 metre drilling programme, an 8,000 tonne bulk sampling
programme, a comprehensive environmental baseline study, detailed resource
estimates, design and engineering of the mining, beneficiation and
infrastructure requirements, and reviews and engineering of train and port
facilities required to ship the iron ore product. The Permit Applications have
been submitted to the provincial and federal governments. An Impact Benefit
Agreement was signed with the Innu Nation of Labrador. We continue to enjoy
strong support from the provincial and federal authorities and from all of the
First Nations associated with the project.
We are extremely pleased at the speed with which Labrador Iron Mines has begun
its independent life and encouraged by the progress the Company is making to
bring first production to the market during 2009.
Parys Mountain Mine
At the Parys Mountain base metals project in North Wales we continued work on
the evaluation and planning for mining the White Rock zone. During the year we
commissioned a detailed metallurgical review on this zone from Wardell Armstrong
together with the final version of a Scoping Study from Micon International. As
a result of the recommendations from these reports we commissioned a further
short drilling programme at White Rock, including a large diameter hole for
further metallurgical testing purposes. These holes further confirmed the
continuity of the zone.
In mid-2007 we had commenced preparatory work for the White Rock decline,
however a reduction in the zinc price, on which the profitability of White Rock
as a stand alone operation is closely based, coupled with the onset of the
worldwide liquidity issues, suggested that funding the White Rock project on
acceptable terms would not be a simple matter and, other than the drilling
programme, the planned development of the White Rock was placed on hold.
After the year end we received a proposal from Western Metals Limited of Perth
Western Australia to purchase the Parys Mountain properties. Subsequently we
entered into a term sheet giving Western Metals a 120 day exclusive due
diligence period. The term sheet contemplated that during that due diligence
period both parties would negotiate a binding sale and purchase agreement based
on the principal commercial terms detailed in the term sheet. That process is
still under way and no formal purchase and sale agreement has been signed.
The key components of the proposed transaction are an initial payment by Western
Metals of A$7.3 million in cash or cash and shares to be followed by a period of
up to 36 months during which Western Metals would carry out a detailed
feasibility study including significant work on site with staged minimum
expenditure commitments. At the end of the period Western Metals would either
make further payments totalling A$21.5 million or return the property to
Anglesey. The total proposed consideration, at current exchange rate, would be
equivalent to approximately £14.2 million.
For some time the Company has been seeking the finance to develop the Parys
Mountain mine in a manner that would not be overly dilutive to Anglesey
shareholders. We believe that the prospective transaction with Western Metals
represents a good opportunity for the Company to realize value from the Parys
Mountain mine in the near term.
Financial Results
Anglesey reported an increased profit for the year ended March 30, 2008 of £10.2
million up from £6.8 million in the previous year. Almost all of this year's
profit has arisen as a result of the successful flotation of the Labrador Iron
project. Even so this profit does not tell the whole story as we have been able
to recognise in our accounts only part of the gain which accrues to the group
following the flotation.
Anglesey's balance sheet has been significantly strengthened by the Labrador
flotation and shareholders' equity has increased to £23.4 million from £12.0
million in 2007 and £5.1 million in 2006. The company now has a major liquid
asset and this liquidity will be further enhanced if the proposed transaction
with Western Metals for the sale of the Parys Mountain mine takes place. In
accordance with the requirements of the IFRS, the relevant accounting standards,
the carrying value of Parys Mountain has been classified as held for sale in the
balance sheet as a result of the proposed transaction with Western Metals.
Outlook
Unlike the last three years when all commodities were very buoyant there is now
a very mixed picture developing. Base metals including zinc and lead have
weakened considerably although copper remains strong. Precious metals remain at
relatively high levels although below their peaks. However many mining companies
are experiencing high capital and operating cost inflation and finding it
difficult to maintain production levels.
We are of the opinion that much of the softening in metal prices could be due to
an unrealistic expectation of new production coming on stream in the next 18
months. However this softening in prices, coupled with significantly higher
forecasts for both capital and operating costs at many of the newly planned
operations, has now made this expectation less likely. We would therefore expect
to see a modest recovery in prices ahead of some stability in the market.
Despite this mixed picture in base and precious metals, the bulk commodities
including iron ore and coal continue to be strong. The 85% year on year increase
in the sale price of iron ore recently negotiated by the Australian iron ore
producers, which generally translates to the world-wide market, is a good
indication. The result of these negotiations has been to effectively raise the
price of iron ore fines from around $42 per tonne FOB in 2005 to almost $95 per
tonne FOB in 2008. These commodities continue to be driven by Chinese and south-
east Asian demand which at the present time shows no sign of decreasing.
Nonetheless continuing elevated prices for oil and related commodities could
eventually dampen demand.
We believe that corporate developments this year have positioned Anglesey to
participate in the strong iron ore market and take advantage of other
opportunities within our business area as they become available. We will
continue to closely monitor these developments and will actively pursue the best
of these opportunities.
John F. Kearney
Chairman
30 July 2008
Directors' report
The directors have pleasure in submitting their report and the audited accounts
for the year ended 31 March 2008.
Principal activities and business review
The development of the Labrador iron project near Schefferville, eastern Canada,
is now the principal activity of the group. Since its formation in 1984 the
principal business of the company was the development of the zinc-copper-lead
deposits at Parys Mountain in North Wales, a property which is now proposed to
be sold. The group continues its search for other mineral exploration and
development opportunities.
In December 2007 the group's development of a series of iron ore deposits around
Schefferville in the province of Newfoundland and Labrador was financed in
Canada by an initial public offering which raised C$52.7 million before expenses
on the Toronto Stock Exchange, following which the group's ownership holding in
Labrador Iron Mines Holdings Limited, which owns 100% of the Schefferville
project, became 50.01%. The group recorded a profit of £11.4 million on the
deemed disposal of part of the Labrador properties, which are now carried in the
accounts as an associated company at a value of £12.1 million and have a
published fair value at 22 July 2008 of £35.8 million. This transaction has lead
to a significant strengthening of the balance sheet.
After the end of the financial year, on 10 April 2008, a term sheet with Western
Metals Limited of Perth Western Australia (WMT) was signed giving WMT exclusive
rights for a period of 120 days to carry out due diligence and to negotiate a
definitive agreement for the sale of the Parys Mountain mine. The total
consideration for the sale is expected to be approximately £14.2 million. As at
the date of this report no formal sale and purchase agreement has yet been
signed. Shareholder approval will be required for this transaction.
The aim of the group is to continue its support for the Labrador project and to
actively engage in other mineral ventures using the group's own resources
together with such external investment and finance as may be required.
Parys Mountain Mine
The Parys Mountain property is the largest known base metal deposit in the
United Kingdom. A feasibility study in 1991, based on an identified resource of
6.5 million tonnes with a combined grade of over 10% zinc, copper and lead with
small amounts of silver and gold, demonstrated the technical and economic
viability of bringing the property into production at a rate of 350,000 tonnes
per annum, producing zinc, copper and lead concentrates. However development has
been limited since then: over the period from 1991 to 2003 this was chiefly due
to poor metal prices.
During the year the group continued with its exploration and development
programmes, drilling 632 metres in 4 diamond core holes all of them in the White
Rock area near the existing Morris shaft.
On 10 April 2008 the group agreed and signed a term sheet with ASX-listed
Western Metals Limited (WMT) of Perth, Western Australia under which it is
expected that both parties will enter into a formal agreement for the sale to
WMT of the Parys Mountain poly-metallic base metal project in North Wales. The
total consideration for the sale is anticipated to be Australian dollars (A$)
29.136 million, equivalent to approximately £14.2 million at A$2.047/£1.00, the
rate of exchange on 22 July 2008 which is used where appropriate in the sterling
equivalents below. WMT has paid the company a non-refundable deposit of
A$270,000 (£124,984). The agreement will be subject to satisfactory completion
of due diligence by WMT and approval by the company's shareholders.
The main terms of the proposed agreement include a period of up to 36 months in
which WMT will complete a bankable feasibility study on the project and an
obligation to expend a minimum of A$3.25 million during the first 15 months of
this period and an aggregate of A$6.5 million during the first 24 months of the
period. Should WMT withdraw from the project then it will return 100% of the
project to Anglesey in good standing and free of any additional liabilities. All
new data generated by WMT and all payments made to the company by WMT will be
retained by the company. There is an initial consideration of AS7.6 million and
the balance of the consideration (A$21.5 million equivalent to £10.5 million at
current exchange rates) is due not later than 36 months after the initial
payment or on the earlier completion of the feasibility study or certain other
events.
Although the total consideration exceeds the carrying value of the Parys
Mountain properties which are being sold, for the purposes of these accounts the
consideration has been discounted to a net present value, which is less than the
carrying value. A Parys Properties fair value adjustment of £698,321 has been
made to reduce the carrying value to the net present value. This adjustment will
be written back to the income statement over the next two years. In accordance
with the requirements of the IFRS, the relevant accounting standards, the
carrying value of Parys Mountain has been classified as held for sale in the
balance sheet as a result of the proposed transaction with Western Metals.
Labrador Iron
Since October 2005 the group has been working on a series of iron ore deposits
near the town of Schefferville in Labrador, Canada. Schefferville was the
location of the Iron Ore Company of Canada's (IOCC) original mining operations
between 1954 and 1984, where IOCC left behind a number of partially developed
open-pit iron ore deposits as well as other identified and drilled development
sites and a substantial infrastructure, in particular the railway from
Schefferville to the port of Sept-Iles on the St. Lawrence River.
In September 2006 an initial feasibility study confirmed that an economic
operation may be viable at the Labrador properties and in October 2007 a
technical report was received from Canadian consultants SNC-Lavalin. Following a
re-evaluation of potential alternatives for financing this project, Canaccord
Capital Corporation was appointed as an agent to carry out an initial public
offering in Canada in respect of the Schefferville project which was completed
on 3 December 2007 with a related over-allotment provision exercised on 2
January 2008 resulting in total gross proceeds from the IPO of $C52.8 million -
approximately £26.9 million at those dates.
Following the IPO, Labrador Iron Mines Limited (LIM), the operating company for
the Schefferville project, commenced plans to complete a programme of
verification drilling and bulk sampling on certain of the properties and the
calculation of a compliant mineral resource. A detailed engineering study of
mining these hematite deposits to produce "direct shipping" lump and sinter fine
ore, requiring minimal processing, for sale to European and Far Eastern
steelmakers will also undertaken.
During the ensuing months, LIM expanded its management and operating team with a
number of senior appointments, initiated further activities to advance the
development stages of the Project and awarded various contracts, including
environmental baseline studies, detailed exploration drilling, bulk sampling,
resource estimation, metallurgical process testing, rail and port studies and
engineering design, all directed to move the Schefferville Project forward
towards initial production targeted for 2009.
SNC-Lavalin, in conjunction with Geostat and with participation by the Labrador
Innu Development Limited Partnership, has been awarded a contract for a Resource
and Engineering Study, including detailed engineering design and specifications
for major items of plant and infrastructure. This will include metallurgical
test-work aimed at the design of a process circuit required to meet market
specifications for the particular types of iron ore.
A major reverse circulation drilling contract has been let to Cabo Drilling
Corp. to provide data for a compliant resource estimate on the various deposits,
including a reserve estimate on the Phase One Properties, and to assist with
both short term mine planning and with longer term operational planning. It is
expected that this program will start in July 2008 and will be supplemented by
an exploration trenching program.
RSM Mining Services Inc. from Labrador City has commenced a summer program to
excavate an 8,000 tonnes ore bulk sample from the Phase One deposits closest to
Schefferville and to treat this material by crushing, screening and washing to
replicate the expected final product. Some of this material will be used in the
metallurgical testing program and the remainder will be available for bulk
samples and market testing by potential iron ore buyers.
LIM has submitted the Project Registration Application for the first phase of
development of the Schefferville Project to the Department of Environment and
Conservation in the Province of Newfoundland and Labrador and to the Canadian
Environmental Assessment Agency. The Project Registration Documentation
addresses production from the first phase of the Schefferville Project, being
the James North, James South and Redmond properties. The development plan calls
for the initial production of about 500,000 tonnes of iron ore in 2009, building
up to three million tonnes in 2011.
Following from an earlier Memorandum of Understanding (MOU) LIM has signed an
Impact Benefit Agreement with the Innu Nation of Labrador committing to an
ongoing relationship between the Innu Nation and LIM with respect to the
development of the project. The Impact Benefit Agreement covers the life of the
mine and establishes the processes and sharing of benefits that will ensure an
ongoing positive relationship between LIM and the Innu Nation.
LIM plans the commencement of commercial production of iron ore from the
deposits located on the Schefferville Property at the earliest opportunity and,
subject to receipt of permits, is working to bring Phase One of the Project into
production in 2009.
Dolaucothi
In addition to its other, larger, mineral assets, the group has the small
Dolaucothi property in South Wales. It is not the company's current intention to
focus on this property, however this situation will be kept under review.
Other activities
Following the flotation of the Labrador properties in December 2007 and the
agreement for sale of Parys Mountain in April 2008, management has engaged in
the search for new properties. In general terms this search activity will be
concentrated on mineral properties that have the capability of being brought
into production in a relatively short time frame and within the financing
capability likely to be available to the group.
Performance
So far as the directors are aware, there are no standardised indicators which
can usefully be employed to gauge the performance of any group at this stage of
its development other than the performance of the company's shares. The
directors expect to be judged by their success in creating value for
shareholders. The group has reported profits for the past two years of £10.2
million and £6.8 million.
The chief external factors affecting the ability of the group to move forward
are the levels of metal prices and exchange rates; these and other factors are
dealt with in the risks and uncertainties section below.
Dividend
The group has no revenues and the directors are unable to recommend a dividend
(2007 - nil). Since the date of the accounts the activities of the group have
continued in accordance with the directors' expectations.
Financial position
The group's financial position has been significantly changed this year by the
restructuring and flotation of its interests in the Labrador iron project in
Schefferville, Eastern Canada. This has resulted in a significant increase in
the value of the Labrador operations in the financial statements, as a result of
the group's 50.01% ownership share in the cash raised in the flotation. Because
there are outstanding exercisable warrants and options which potentially reduce
the group's voting control, the investment in the Labrador operations is not
consolidated but is equity-accounted whereby the equity investment is initially
recorded at cost to the group.
The fair value, as indicated by the value ascribed to the Labrador companies in
the Canadian flotation, and shown in the accounts of Labrador Iron Mines
Holdings Limited, the Toronto Stock Exchange quoted company which now owns the
Labrador properties, is very significantly higher than the cost to the group.
The market value of the group's investment in Labrador Iron Mines Holdings
Limited was £43.3 million at 31 March 2008 and £35.8 million at 22 July 2008.
The carrying value in the consolidated financial statements at 31 March 2008 is
£12,068,276.
The group has no revenues from the operation of its properties. The profit for
the year after taxation was £10,152,448 (2007 - £6,762,751). Of this profit,
£11,427,730 resulted from the disposal of part of the group's interests in the
Labrador properties when they were floated in Canada, as described above.
£7,200,000 of last year's profit comprised a reversal of all the impairment
provisions made against the carrying value of the Parys Mountain development
expenditure, an intangible asset; these impairment provisions were made over the
period from 2000 to 2003 during which low metal prices reduced the estimated net
present value of the Parys project.
During the year £19,585 (2007 - nil) was added to fixed assets, £312,617 (2007 -
£431,309) was capitalised in respect of the development of the Parys Mountain
property and £216,895 (2007 - £453,357) was capitalised in respect of the
Labrador Iron property, in respect of the period up to 3 December 2007, the date
of the Canadian flotation.
The cash position at 31 March 2008 was £217,968 compared to £34,003 in 2007.
There were net current assets of £158,668 at 31 March 2008 compared to net
current liabilities of £530,178 at 31 March 2007; most of this change is due to
the reclassification of the Parys Mountain activities as held for sale.
Following a placing for cash on 19 July 2007, £1,040,564, net of expenses, was
added to the group's cash resources.
At 31 March 2008 the company had 152,558,051 (2007 - 138,808,051) ordinary
shares in issue.
In strong contrast to the position in previous years in the company's history,
there are no funding requirements for the group's current mineral property
holdings, Parys Mountain being in the process of sale and Labrador being fully
funded for the foreseeable future. Further finance may be required for any new
mineral properties which may be evaluated, engaged in or acquired; however such
outlays are at the discretion of the directors and would not be made unless
finance was available.
Risks and uncertainties
In conducting its business the group faces a number of risks and uncertainties
some of which have been described above in regard to particular projects.
However, there are also risks and uncertainties of a nature common to all
mineral projects and these are summarised below.
General mining risks
Actual results relating to, amongst other things, mineral reserves, mineral
resources, results of exploration, capital costs, mining production costs and
reclamation and post closure costs, could differ materially from those currently
anticipated by reason of factors such as changes in general economic conditions
and conditions in the financial markets, changes in demand and prices for
minerals that the group expects to produce, legislative, environmental and other
judicial, regulatory, political and competitive developments in areas in which
the group operates, technological and operational difficulties encountered in
connection with the group's activities, labour relations matters, costs and
changing foreign exchange rates and other matters.
The mining industry is competitive in all of its phases. There is aggressive
competition within the mining industry for the discovery and acquisition of
properties considered to have commercial potential. The group faces strong
competition from other mining companies in connection with the acquisition and
retention of properties, mineral claims, leases and other mineral interests as
well as for the recruitment and retention of qualified employees and other
personnel.
Liquidity risk
In order to maintain liquidity and to ensure that sufficient funds are available
for operations and developments the company has relied upon share issues and on
loans from its major shareholder Juno Limited. Provided the sale of the Parys
project to Western Metals Limited completes as planned, the group will receive a
minimum of approximately £1.3m in cash, as well as further cash or marketable
stock as described above in connection with the proposed sale of the Parys
Mountain properties. Following the Labrador flotation, the group's shareholding
in Labrador Iron Mines Holdings Limited has a market value of approximately
£36million, at prices current on 22 July 2008. All of this marketable holding is
subject to lock in arrangements, which reduce progressively after December 2008.
Exploration and development
Exploration for minerals and development of mining operations involve many
risks, many of which are outside the group's control. The group currently
operates in politically very stable environments and hence is unlikely to be
subject to expropriation of its properties but exploration by its nature is
looking into the unknown or little known and unforeseen or unwanted results are
always possible.
Metal prices
Business conditions are expected to be reasonably positive as continuing demand
for primary metals from developing countries should help to sustain metal prices
which in turn should encourage investor interest in mining and exploration
companies. Provided the sale of the Parys project to Western Metals Limited
completes as planned, the group's primary exposure will be to the price of iron
ore.
The prices of metals fluctuate widely and are affected by many factors outside
the group's control. The relative prices of metals and future expectations for
such prices have a significant impact on the market sentiment for investment in
mining and mineral exploration companies. Metal price fluctuations may be either
exacerbated or mitigated by international currency fluctuations which affect the
actual amount which might be received by the group in sterling.
Foreign exchange
The activities of Labrador Iron Mines Holdings Limited (LIMH) are carried out in
Canada and any dividends will be subject to an exchange rate risk, however the
group's interest in LIMH is carried in the group accounts on an equity basis and
otherwise than in respect of the group's share of any annual profits or losses
will not be affected by an exchange rate risk. If the proposed sale of Parys
Mountain proceeds the group will be exposed to an exchange rate risk in respect
of the consideration due of A$28.9 million, equivalent to £14.1 million at
current exchange rates.
Permitting, environment and social
Labrador Iron Mines Holdings Limited currently does not have the benefit of any
operating permits for the Labrador Iron project. The Schefferville area in
particular has a long history of mining in a manner almost identical to that
which is proposed, however there is no assurance that the necessary permits will
be granted promptly. LIM has signed an Impact Benefits Agreement with the Innu
Nation of Labrador, which is an important part of the permitting process, and is
in the process of obtaining operational and environmental permits.
The group holds a planning permission for the development of the Parys Mountain
property but further consents will be required to carry out proposed activities
and these permits may be subject to various reclamation and operational
conditions.
Employees and personnel
The group is dependent on the services of a small number of key executives
including the chairman, chief executive and finance director and a few other
skilled and experienced personnel. Due to the relatively small size of the
group, the loss of these persons or the group's inability to attract and retain
additional highly skilled and experienced employees may adversely affect its
business or future operations.
Financial instruments
The company's use of financial instruments is described in note 10.
Directors
In accordance with the company's practice, Bill Hooley and Roger Turner retire
by rotation and, being eligible, offer themselves for re-election. Since Danesh
Varma has served for more than nine years as a non-executive, current corporate
governance practice requires that he be re-elected annually, and, being
eligible, he is also proposed for re-election.
The company maintains a directors' and officers' liability policy on normal
commercial terms.
Unless otherwise determined by ordinary resolution, the number of directors,
other than alternate directors, shall not be subject to any maximum, but shall
not be less than two. The powers of the directors are described in the Corporate
Governance Report.
With regard to the appointment and replacement of directors, the company is
governed by its Articles, the Combined Code, the Companies Acts and related
legislation. The Articles themselves may be amended by special resolution of the
shareholders. Under the Articles, any director appointed by the board during the
year must retire at the Annual General Meeting following his appointment. In
addition, the Articles require that one-third of the remaining directors retire
by rotation at each general meeting and seek re-appointment.
Directors' interests in material contracts
Juno Limited (Juno), which is registered in Bermuda, holds 38.0% of the
company's ordinary share capital. The company has a controlling shareholder
agreement and working capital agreement with Juno. Advances made under the
working capital agreement are shown in note 21. Apart from interest charges
there were no transactions between the group and Juno or its group during the
year. An independent committee reviews and approves any transactions and
potential transactions with Juno. Danesh Varma is a director and, through his
family interests, a significant shareholder of Juno.
Upon the flotation in Canada in December 2007 of the group's interests in its
Labrador iron ore project at Schefferville, John Kearney became chairman of the
newly formed Labrador Iron Mines Holdings Limited (LIMH), Bill Hooley became
chief operations officer and Danesh Varma chief financial officer. All three are
shareholders and directors of LIMH, receive salaries from LIMH and have been
granted options over the shares of LIMH. There are no transactions between LIMH
and the group which have not been disclosed.
There are no other contracts of significance in which any director has or had
during the year a material interest.
Directors' shareholdings
The interests of the directors in the share capital of the company, all of which
are beneficial, are set out below:
22 July 2008 31 March 2008 31 March 2007
Director Number of Number Number of Number Number of Number
options of options of options of
ordinary ordinary ordinary
shares shares shares
John Kearney 5,200,000 - 5,200,000 - 5,000,000 -
Bill Hooley 2,500,000 100,000 2,500,000 100,000 1,000,000 100,000
Ian Cuthbertson 2,100,000 727,300 2,100,000 727,300 1,500,000 727,300
David Lean 500,000 - 500,000 - 100,000 -
Howard Miller 1,000,000 - 1,000,000 - 600,000 -
Roger Turner 900,000 - 900,000 - 500,000 -
Danesh Varma 1,200,000 - 1,200,000 - 700,000 -
Substantial shareholders
At 22 July 2008 the following shareholders had advised the company of an
interest in the issued ordinary share capital of the company:
Name Number of Percentage
shares of share
capital
Juno Limited 57,924,248 37.97%
Ambrian Capital plc 13,550,000 8.88%
Range Capital 12,500,000 8.19%
Morgan Stanley Securities Limited 10,652,000 6.98%
Authority to allot shares
Under the Articles of Association, the company has authority to allot the
unissued shares of the company. The directors would usually wish to allot any
new share capital on a pre-emptive basis, however in the light of the group's
potential requirement to raise further funds for the acquisition of new mineral
ventures, they believe that it is appropriate to have a larger amount available
for issue at their discretion without pre-emption than is normal for listed
companies. Accordingly a resolution will be put to the AGM to renew the
directors' authority to allot equity securities for cash without pre-emption. In
the case of allotments other than for rights or other pre-emptive issues, it is
proposed that such authority will be for up to £381,000 being 38,100,000
ordinary shares, which is equivalent to 25% of the issued ordinary share capital
at 22 July 2008. Whilst such authority is significantly in excess of the 5% of
existing issued ordinary share capital which is commonly accepted for listed
companies, it will provide additional flexibility which the directors believe is
in the best interests of the group in its present circumstances.
Rights and obligations attaching to shares
The rights and obligations attaching to the ordinary and deferred shares are set
out in the Articles of Association. Details of the authorised and issued share
capital together with movements in the company's issued share capital during the
year are shown in note 9.
Each ordinary share carries the right to one vote at general meetings of the
company. Holders of deferred shares are not entitled to attend, speak or vote at
any general meeting of the company, nor are they entitled to receive notice of
general meetings.
Subject to the provisions of the Companies Acts, the rights attached to any
class may be varied with the consent of the holders of three-quarters in nominal
value of the issued shares of the class or with the sanction of an extraordinary
resolution passed at a separate general meeting of the holders of the shares of
the class.
There are no restrictions on the transfer of the company's shares.
Voting rights
Votes may be exercised at general meetings in relation to the business being
transacted either in person, by proxy or, in relation to corporate members, by
corporate representative. The Articles provide that forms of proxy shall be
submitted not less than 48 hours before the time appointed for holding the
meeting or adjourned meeting.
No member shall be entitled to vote at a general meeting or at a separate
meeting of the holders of any class of shares in the capital of the company,
either in person or by proxy, in respect of any share held by him unless all
monies presently payable by him in respect of that share have been paid.
Furthermore, no shareholder shall be entitled to attend or vote either
personally or by proxy at a general meeting or at a separate meeting of the
holders of that class of shares or on a poll if he has been served with a notice
after failing to provide the company with information concerning interests in
his shares required to be provided under the Companies Acts.
Shares held in uncertificated form
Subject to the provisions of the Uncertificated Securities Regulations 2001, the
Board may permit the holding of shares in any class of shares in uncertificated
form and the transfer of title to shares in that class by means of a relevant
system and may determine that any class of shares shall cease to be a
participating security.
Significant agreements and change of control
The company's share plans contain provisions relating to a change of control.
Outstanding awards and options would normally vest and become exercisable on a
change of control, subject to the satisfaction of any performance conditions.
There are no agreements between the company and its directors or employees that
provide for compensation for loss of office or employment that occurs because of
a takeover bid.
Creditor payment policy
The group conducts its business on the normal trade credit terms of each of its
suppliers and tries to ensure that suppliers are paid in accordance with those
terms. The group's average creditor payment period at 31 March 2008 was 60 days
(2007 - 74 days).
Going concern
After making due and careful enquiry, the directors consider that the group has
adequate resources to continue in operational existence for the foreseeable
future. For this reason, the going concern basis has been adopted in the
preparation of the financial statements.
Charitable and political contributions
The group made no contributions during the year (2007 - nil).
Employment
The group is an equal opportunity employer in all respects.
Directors' responsibilities for the financial statements
The directors are responsible for preparing the annual report and the financial
statements. The directors are required to prepare the financial statements for
the group in accordance with International Financial Reporting Standards (IFRS)
and have also elected to prepare financial statements for the company in
accordance with IFRS. Company law requires the directors to prepare such
financial statements in accordance with IFRS, the Companies Act 1985 and Article
4 of the IAS Regulation.
International Accounting Standard 1 requires that financial statements present
fairly for each financial year the group's financial position, financial
performance and cash flows. This requires the faithful representation of the
effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, income and
expenses set out in the International Accounting Standards Board's `Framework
for the Preparation and Presentation of Financial Statements'. In virtually all
circumstances, a fair presentation will be achieved by compliance with all
applicable International Financial Reporting Standards.
Directors are also required to:
properly select and apply accounting policies;
present information, including accounting policies, in a
manner that provides relevant, reliable comparable and
understandable information; and
provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable users
to understand the impact of particular transactions, other
events and conditions on the entity's financial position
and financial performance.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
group, for safeguarding the assets, for taking reasonable steps for the
prevention and detection of fraud and other irregularities and for the
preparation of a directors' report and directors' remuneration report which
comply with the requirements of the Companies Act 1985.
The directors are responsible for the maintenance and integrity of the group
website.
Auditors
Each of the directors in office at the date of the annual report confirms that
so far as they are aware there is no relevant audit information of which the
group's auditors are unaware and that each director has taken all of the steps
which they ought to have taken as directors in order to make themselves aware of
that information. This confirmation is given and should be interpreted in
accordance with the provisions of s234ZA of the Companies Act 1985.
Deloitte & Touche have been the company's auditors since 1998; in March 2008 the
audit committee felt that although an excellent relationship had always existed
between the company and Deloittes, there were several reasons, including auditor
rotation, why it would be desirable to appoint new auditors. Mazars LLP were
selected by the audit committee from a small short-list and engaged by the board
to carry out the 2008 audit. A resolution to appoint Mazars LLP and to authorise
the directors to fix their remuneration will be proposed at the annual general
meeting.
By order of the board
Ian Cuthbertson
Company Secretary
30 July 2008
Consolidated income statement
for the year ended 31 March 2008
Notes Year ended 31 Year ended 31
March 2008 March 2007
Continuing operations £ £
Revenue - -
Administration expenses (409,788) (320,054)
Equity-settled employee benefits (142,723) (68,840)
Impairment reversal - 7,200,000
Share of profits in associate 6 10,449 -
Investment income 18,959 24,520
Finance costs (67,326) (72,875)
Profit on deemed disposal 6 11,427,730 -
Parys properties fair value adjustment (698,321) -
Profit before tax 10,138,980 6,762,751
Tax - -
Profit for the year from continuing operations 3 10,138,980 6,762,751
Operations to be discontinued
Profit for the year from 4 13,468 -
operations to be discontinued
Profit for the year 10,152,448 6,762,751
Earnings per share from continuing and discontinued operations
Basic - pence per share 7 6.8 4.9
Diluted - pence per share 7 6.7 4.7
Earnings per share from continuing operations
Basic - pence per share 7 6.8 4.9
Diluted - pence per share 7 6.7 4.7
Consolidated balance sheet
31 March 2008 31 March 2007
Notes £ £
Assets
Non-current assets
Mineral property development - 13,655,700
Property, plant and equipment - 185,102
Interest in associate 8 12,068,276 -
Deposit - 114,076
12,068,276 13,954,878
Current assets
Other receivables 4,519 19,103
Cash and cash equivalents 217,968 34,003
222,487 53,106
Assets classified as held for sale 5 13,069,019 -
Total assets 25,359,782 14,007,984
Liabilities
Current liabilities
Trade and other payables (63,819) (583,284)
(63,819) (583,284)
Net current assets/(liabilities) 158,668 (530,178)
Non-current liabilities
Loan (1,475,993) (1,408,667)
Long term provision - (42,000)
(1,475,993) (1,450,667)
Liabilities directly associated with 5 (464,741) -
assets classified as held for sale
Total liabilities (2,004,553) (2,033,951)
Net assets 23,355,229 11,974,033
Equity
Share capital 9 7,036,414 6,898,914
Share premium 8,092,423 7,189,359
Equity-settled employee benefits reserve 372,272 229,549
Currency translation reserve (2,718) (48,179)
Retained profits/(losses) 7,856,838 (2,295,610)
Total shareholders' equity 23,355,229 11,974,033
The financial statements were approved by the board of directors and authorised
for
issue on 30 July 2008 and were signed on its behalf by:
John F. Kearney, Chairman
Ian Cuthbertson, Finance Director
Statements of changes in equity
for the year ended 31 March 2008
Share Share Equity- Currency Retained Total
capital premium settled translation losses
benefits reserve
reserve
£ £ £ £ £ £
At 1 April 2006 6,885,914 7,090,049 160,709 (4,652) 5,073,659
(9,058,361)
Equity-settled employee - - 68,840 - 68,840
benefits
Shares issued for cash 13,000 99,760 - - - 112,760
Share issue expenses - (450) - - - (450)
Exchange differences on - - - (43,527) - (43,527)
translation of foreign
operations
Profit for the year - - - - 6,762,751 6,762,751
At 31 March 2007 6,898,914 7,189,359 229,549 (48,179) 11,974,033
(2,295,610)
Equity-settled employee - - 142,723 - - 142,723
benefits
Shares issued for cash 137,500 962,500 - - - 1,100,000
Share issue expenses - (59,436) - - - (59,436)
Exchange differences on - - - 45,461 - 45,461
translation of foreign
operations
Profit for the year - - - - 10,152,448 10,152,448
At 31 March 2008 7,036,414 8,092,423 372,272 (2,718) 7,856,838 23,355,229
Consolidated cash flow statement
for the year ended 31 March 2008
Notes Year ended 31 Year ended 31
March 2008 March 2007 as
restated
£ £
Operating activities
Profit for the year 10,152,448 6,762,751
Adjustments:
Finance costs recognised in profit or loss 67,326 72,875
Investment revenue recognised in (18,959) (24,520)
profit or loss
Investment revenue recognised (3,011) -
in discontinued operations
Impairment reversal - (7,200,000)
Equity-settled employee benefits 3 142,723 68,840
Share of profit retained in associate (10,449) -
Profit on deemed disposal (11,427,730) -
Parys properties fair value adjustment 698,321 -
(399,331) (320,054)
Movements in working capital
(Decrease) in payables (203) (31,099)
(Increase) in receivables (12,168) (2,397)
Cash utilised by operations (411,702) (353,550)
Interest paid - (600)
Net cash used in operating activities (411,702) (354,150)
Investing activities
Interest received 19,121 22,123
Mineral property development (445,763) (947,661)
Payments for land and buildings (19,585) -
Net cash used in investing activities (446,227) (925,538)
Financing activities
Proceeds from issue of shares 9 1,040,564 112,310
Net cash from financing activities 1,040,564 112,310
Net increase/(decrease) in cash 182,635 (1,167,378)
Cash and cash equivalents at start of year 34,003 1,201,381
Exchange rate changes on 1,330 -
foreign currency balances
Cash and cash equivalents at end of year 217,968 34,003
Notes to the accounts
1 General information
Anglesey Mining plc is incorporated in the United Kingdom under the Companies
Act 1985. The nature of the group's operations and its principal activities are
set out in note 3 and in the business review section of the directors' report.
These financial statements are presented in pounds sterling because that is the
currency of the primary economic environment in which the group has been
operating. Foreign operations are included in accordance with the policies set
out in note 2.
The financial information set out in this announcement does not constitute the
company's statutory financial statements for the period ended 31 March 2008, but
is derived from those financial statements. The auditors have reported on the
statutory financial statements for the period ended 31 March 2008; their report
was unqualified.
This announcement was approved by the board of directors on 30 July 2008.
2 Significant accounting policies
Basis of Accounting
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union and
therefore the group financial statements comply with Article 4 of the EU IAS
Regulation.
The financial statements have been prepared on the historical cost basis. The
principal accounting policies adopted are set out below.
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 group's projects 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.
Non-current assets and disposal groups
Discontinued operations represent cash generating units or groups of cash
generating units that have either been disposed of or classified as held for
sale, and represent a separate major line of business or are part of a single co-
ordinated plan to dispose of a separate major line of business. Cash generating
units forming part of a single co-ordinated plan to dispose of a separate major
line of business are classified within continuing operations until they meet the
criteria to be held for sale.
Discontinued operations
The post-tax profit or loss of the discontinued operation is classified as a
single line on the face of the consolidated income statement, together with any
post-tax gain or loss recognised on the remeasurement to fair value less costs
to sell or on the disposal of the assets or disposal group constituting the
discontinued operation.
On changes to the composition of groups of units comprising discontinued
operations, the presentation of discontinued operations within prior periods is
restated to reflect consistent classification of discontinued operations across
all periods presented.
Investment in associates
An associate is an entity over which the group exercises, or is in a position to
exercise, significant influence, but not control or joint control, through
participation in the financial or operating policy of the investee. In
considering the degree of control, any options or warrants over ordinary shares
which are capable of being exercised at the period end are taken into
consideration.
Where material, the results and assets and liabilities of associates are
incorporated in the financial statements using the equity method of accounting,
except when these associates are classified as held for sale. Investments in
associates are carried in the balance sheet at cost adjusted by any material
post-acquisition changes of the net assets of the associates, less any
impairment of value in the individual investments.
Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their
carrying amount will be recovered principally through a sale transaction rather
than continuing use. This condition is regarded as met only when a sale is
highly probable and the asset (or disposal group) is available for immediate
sale in its present condition. Management must be committed to the sale which
should be expected to qualify for recognition as a completed sale within one
year from the date of classification. Disposal groups are groups of assets, and
liabilities directly associated with those assets, that are to be disposed of
together as a group in a single transaction.
Non-current assets (and disposal groups) classified as held for sale are
initially measured at the lower of carrying value and fair value less costs to
sell. At subsequent reporting dates non-current assets (and disposal groups) are
remeasured to the latest estimate of fair value less costs to sell. As a result
of this remeasurement any impairment is recognised by charging to the
consolidated income statement, any increase in fair value is applied to reverse
previous impairment charges on the non-current assets (or disposal groups) to a
maximum of the original amortised cost.
Judgements made in applying accounting policies and key sources of estimation
uncertainty
The following critical judgements have been made in the process of applying the
group's accounting policies:
(a) the directors' believe, after careful consideration, that the group does
not, as a matter of fact, control the activities and operations of Labrador Iron
Mines Holdings Limited (LIMH), and that the correct accounting treatment of this
interest is to account for it on an equity basis as an associate company. In any
event, although the group currently has a 50.01% ownership share in LIMH, there
are outstanding exercisable warrants and options which if exercised would reduce
the group's voting control to approximately 40% and under these circumstances
the use of equity accounting is mandated by accounting standards.
(b) the directors' have reviewed the qualitative judgements from IFRS 5 in
respect of the classification of assets as held for sale.
In determining the discounted value of the proposed deferred consideration
receivable in respect of the intended sale of the Parys Mountain project, the
directors have assumed that the deferred consideration will (i) be settled
within two years of the sale, (ii) should be discounted at a rate of 8.25%,
approximately 1% above Australian bank overnight lending rate and (iii) will be
settled at A$2.047/£1.00, the rate of exchange on 22 July 2008.
3 Business and geographical segments
All activities relate to the group's principal activity which is the exploration
and development of mining properties. The geographical and operational segments
in which these activities are carried out coincide and are shown below. The
direct property expenses in the UK are in respect of the Parys Mountain base
metal project and in Canada they are in respect of the Labrador Iron project
prior to its flotation in Toronto on 3 December 2007, after which it became an
associated company investment.
Parys Labrador Total Parys Labrador Total
Mountain Iron Mines Mountain Iron
Mines
2008 2008 2008 2007 2007 2007
£ £ £ £
£ £
Site labour and support 72,778 - 72,778 53,350 - 53,350
Geology & drilling 106,006 58,471 164,477 254,447 298,923 553,370
Feasibility reports 55,650 75,004 130,654 63,340 161,180 224,520
Property rentals and charges 78,183 - 78,183 60,172 - 60,172
Travel - 24,366 24,366 - - -
Currency translation difference - 59,054 59,054 - - -
Total capitalised 312,617 216,895 529,512 431,309 460,103 891,412
Income statement analysis United Canada Total United Canada Total
Kingdom Kingdom
Continuing operations
Corporate salaries 185,994 - 185,994 122,276 - 122,276
Other corporate costs 200,213 - 200,213 172,655 - 172,655
386,207 - 386,207 294,931 - 294,931
Discontinued operations
Investment income (3,011) - (3,011) - - -
Rentals less administrative (10,457) - (10,457) - - -
costs
Other corporate costs - 23,581 23,581 - 25,123 25,123
(13,468) 23,581 10,113 - 25,123 25,123
Unallocated items
Equity-settled employee 142,723 68,840
benefits
Impairment reversal -
(7,200,000)
Share of profits in associate (10,449) -
Investment income (18,959) (24,520)
Finance costs 67,326 72,875
Profit on deemed disposal -
(11,427,730)
Parys properties fair value adjustment 698,321 -
Profit for the year
(10,152,448) (6,762,751)
Assets and liabilities
Assets 13,291,506 12,068,276 25,359,782 13,464,227 543,757 14,007,984
Liabilities - (2,004,553)
(2,004,553) (1,937,430) (96,521) (2,033,951)
Net assets 11,286,953 12,068,276 23,355,229 11,526,797 447,236 11,974,033
The group does not have any revenues. A proportion of the salary and corporate
costs in the UK are in respect of investigating other mineral development
opportunities.
In accordance with the group's accounting policy, mineral property development
expenses are capitalised. All other expenses are expensed in the income
statement.
4 Discontinued operations - Parys Mountain
On 10 April 2008 the company agreed and signed a term sheet with ASX-listed
Western Metals Limited (WMT) of Perth, Western Australia under which it is
expected that both parties will enter into a formal agreement for the sale to
WMT of the Parys Mountain poly-metallic base metal project in North Wales. The
total consideration for the sale would be Australian dollars 29.136 million,
equivalent to approximately £14.2 million at the exchange rate current on 22
July 2008. The results of the operations which are intended to be sold are as
set out below. Note that no income statement was prepared for these operations
in 2007.
Profit for the year from operations to be discontinued
2008 2007
£ £
Revenues - -
Other income 11,667 -
Administrative expenses (1,210)
Investment income 3,011 -
13,468 -
Taxation - -
Profit for the year from 13,468 -
operations to be discontinued
Cash flows from operations to be discontinued
2008 2007
£ £
Net cash flows from operating activities 10,457 -
Net cash flows from investing activities
(229,091) (462,732)
Net cash flows from financing activities - -
Net cash flows
(218,634) (462,732)
5 Assets classified as held for sale - Parys Mountain
As described in note 9, the Parys Mountain project is expected to be sold
shortly after the date of these accounts. The values of the assets and
liabilities which are included in the sale are:
Parys Mountain assets and liabilities held for sale
2008 2007
£ £
Mineral development expenses 13,424,560 -
Freehold property 204,687 -
Deposit 116,923
Receivables 21,170 -
Less: Parys properties (698,321)
fair value adjustment
Assets classified as held for sale 13,069,019 -
Trade payables (58,697)
Accruals (364,044) -
Provision for reinstatement (42,000) -
Liabilities directly associated (464,741) -
with assets classified as
held for sale
The Parys properties fair value adjustment arises in respect of the deferred
element of the proposed consideration receivable for the intended sale of the
Parys Mountain project to Western Metals Limited,
which IFRS 5 requires to be discounted to its present value. This adjustment
will be written back to
the income statement over the next two years.
6 Asset disposals - Labrador properties
As described in the directors' report, the group's 100% owned subsidiary
Labrador Iron Mines Limited was restructured during the year and its
Schefferville operations were floated on the Toronto stock exchange on 3
December 2007 when £25.9 million before expenses was raised. The dilution of the
group's interest in the Schefferville properties has given rise to a profit on
the deemed disposal of part of the properties, which are now held in Labrador
Iron Mines Holdings Limited (LIMH). The company's interest in LIMH is classified
as an associate company in the group accounts.
2008 2007
£ £
Cash and cash equivalents 1,413 -
Amounts receivable 5,586 -
Mineral property expenditures 760,652 -
Amounts payable (137,554) -
Net assets disposed of, 630,097 -
representing historic cost of
interest in associated company
Profit on deemed disposal 11,427,730 -
Carrying value at 3 December 12,057,827 -
2007
7 Earnings per ordinary share
2008 2007
£ £
Earnings
Profit for the year from 10,138,980 6,762,751
continuing operations
Profit for the year from 13,468 -
discontinued operations
Profit for the year 10,152,448 6,762,751
Number of shares
Weighted average number of 148,387,969 138,563,941
ordinary shares for the
purposes of basic earnings per
share
Shares deemed to be issued for 2,529,054 4,839,894
no consideration in respect of
employee options
Weighted average number of 150,917,023 143,403,835
ordinary shares for the
purposes of diluted earnings
per share
Basic earnings per share
From continuing operations 6.8 pence 4.9 pence
From discontinued operations 0.0 pence 0.0 pence
Total basic earnings per share 6.8 pence 4.9 pence
Diluted earnings per share
From continuing operations 6.7 pence 4.7 pence
From discontinued operations 0.0 pence 0.0 pence
Total diluted earnings per 6.7 pence 4.7 pence
share
8 Investment in associate
Labrador Iron Mines Holdings Limited (LIMH), a company registered in Ontario,
Canada, became the holder of the group's interests in the Labrador properties at
Schefferville, formerly held by the 100% owned subsidiary Labrador Iron Mines
Limited, following a restructuring and flotation on the Toronto stock exchange
effective on 3 December 2007.
At 31 March 2008 the group had a 50.01% ownership interest in LIMH, however
since there are warrants and options outstanding and exercisable at that date,
the group's diluted interest is less than 50% and consequently LIMH is treated
as an associate for the purposes of these group financial statements.
31 March 31 March
2008 2007
£ £
Values in group financial statements:
Historic cost of interest in associate at disposal 630,097 -
date
Profit on deemed disposal 11,427,730 -
Group's share of profits of associate, adjusted to 10,449 -
eliminate fair value uplift, for the period from
disposal date to year end
Value of group's share of net assets of the associate 12,068,276 -
as carried in the group accounts without any fair
value adjustment in respect of mineral properties
Fair value of group's interest based on market price 43,344,944 -
of associate's quoted shares at 31 March 2008
Values as shown in the published accounts of the
associate including a fair value adjustment in
respect of mineral properties, after conversion into
sterling:
Total assets 86,210,124 -
Total liabilities -
(17,787,265)
Total net assets 68,422,859 -
2008 2007
Total profit of associate for the period from 977,758 -
incorporation to 31 March 2008
The group's interest in LIMH is held in these financial statements at original
cost to the group, adjusted for the group's share of changes in net assets of
the associate since acquisition.
In the financial statements of LIMH for the period to 31 March 2008, the
Labrador mineral properties are recognised at fair value as indicated by the
value ascribed to the Labrador companies in the Canadian flotation. This fair
value is very significantly higher than the adjusted cost to the group. It
follows that the carrying value of the group's share of net assets of its
associate shown above is not 50.01% of the associate's net assets.
The published fair value of the group's investment in LIMH of £43.3 million is
derived by valuing the group's shareholding in LIMH at the LIMH share price
quoted in Toronto on 31 March 2008 of Canadian $4.75 per common share.
The associated undertakings of the company at 31 March 2008 were as follows:
Name of company Country Percenta Principal
of ge owned activity
incorpora
tion
Labrador Iron Mines Ontario, 50.01% Holding company
Holdings Limited, an Canada for Labrador Iron
associated company Mines Limited
(from 3 December 2007) (100%)
Labrador Iron Mines Ontario, 50.01% Development of
Limited, an associated Canada Labrador Iron
company (restructured property
during the year), a
subsidiary of LIMH
The group holds its interest in these associated companies through Labrador Iron
plc, a 100% owned subsidiary.
9 Share capital
Ordinary shares Deferred shares Total
of 1p of 4p
Nominal Number Nominal Number Nominal
value £ value £ value £
Authorised share
capital
At 1 April 2006 1,840,000 184,000,000 7,320,000 183,000,000 9,160,000
& 31 March 2007
Created 30 400,000 40,000,000 - - 400,000
November 2007
At 31 March 2008 2,240,000 224,000,000 7,320,000 183,000,000 9,560,000
Issued and fully
paid
At 1 April 2006 1,375,081 137,508,051 5,510,833 137,770,835 6,885,914
Issued 3 May 6,000 600,000 - - 6,000
2006
Issued 8 July 7,000 700,000 - - 7,000
2006
At 31 March 1,388,081 138,808,051 5,510,833 137,770,835 6,898,914
2007
Issued 20 July 137,500 13,750,000 - - 137,500
2007
At 31 March 1,525,581 152,558,051 5,510,833 137,770,835 7,036,414
2008
The deferred shares are non-voting, have no entitlement to dividends and have
negligible rights to return of capital on a winding up.
On 20 July 2007, 13,750,000 ordinary shares were issued in respect of a placing
at 8 pence per share to five institutional investors.
10 Financial instruments
Capital risk management
The group manages its capital to ensure that entities in the group will be able
to continue as going concerns while optimising the debt and equity balance. The
capital structure of the group consists of debt, which includes the borrowings
disclosed in note 21, the cash and cash equivalents and equity comprising issued
capital, reserves and retained earnings.
The group does not enter into derivative or hedging transactions and it is the
group's policy that no trading in financial instruments be undertaken.
The main risks arising from the group's financial instruments are currency risk
and interest rate risk. The board reviews and agrees policies for managing each
of these risks and these are summarised below.
Interest rate risk
The group finances its operations through a mixture of equity, and loans from
Juno Limited. These loans are at a fixed rate of interest of 10% per annum and
as a result the group is not exposed to interest rate fluctuations.
Liquidity risk
The group's policy has been to ensure continuity of funding through a mixture of
fresh issues of shares and the working capital agreement with Juno Limited.
Since the flotation of Labrador Iron Mines Holdings Limited (LIMH) on 3 December
2007, the group had a significant shareholding in LIMH which is quoted on the
Toronto stock exchange (see note 17). This holding is subject to lock-up
arrangements, the major part of which are removed on 3 December 2008.
Currency risk
The functional currency of the group is pounds sterling and the loan from Juno
Limited is denominated in pounds sterling. As a result, the group has no
currency exposure in respect of this loan. The company has no other foreign
currency denominated balances at the year end.
If the sale of the Parys Mountain properties to Western Metals Limited described
in the directors' report goes ahead as envisaged, the group will be exposed to a
currency risk in respect of the consideration to be received which is proposed
to be denominated in Australian dollars.
Credit risk
The directors consider that the entity has limited exposure to credit risk as
the entity has immaterial receivable balances at the year end on which a third
party may default on its contractual obligations. The carrying amount of the
group's financial assets represents its maximum exposure to credit risk.
The financial instruments of the group at 31 March 2008 are:
Cash, Liabilities
loans &
receivables
£ £
Financial assets
Other debtors 4,519
Cash and cash 217,968
equivalents
Financial liabilities
Trade creditors (40,325)
222,487 (40,325)
All financial assets and liabilities are initially stated at fair value and
measured at amortised cost, and all carrying values approximate to fair values.
11 Post balance sheet events
On 10 April 2008 the company announced that it had agreed and signed a term
sheet with ASX-listed Western Metals Limited (WMT) of Perth, Western Australia
under which it is expected that both parties will enter into a formal agreement
for the sale to WMT of the company's Parys Mountain poly-metallic base metal
project in North Wales. The total consideration for the sale would be Australian
dollars 29.136 million, equivalent to approximately £14.2 million at the
exchange rate applicable on 22 July 2008. At that date negotiations on the
formal agreement were continuing and are expected to reach a satisfactory
conclusion.
Responsibility statement
The directors confirm that the financial statements have (a) been prepared in
accordance with applicable accounting standards; (b) give a true and fair view
of the assets, liabilities, financial position and profit or loss of the group
and the parent company and (c) that the directors' report includes a fair review
of the development and performance of the business and the position of the group
and the parent company together with a description of the principal risks and
uncertainties that they face.
Registered office
Tower Bridge House,
St. Katharine's Way, London,
E1W 1DD
Corporate office telephone 01248 361333 fax 01248 361419
E-mail mail@angleseymining.co.uk
www.angleseymining.co.uk
www.labradorironmines.ca
Tuesday, 1st October 2024
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