RE: Director ups stake27 Jan 2010 23:23
Perhaps a re-look real soon - from T1ps
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Anglesey Mining - Racing Ahead, More to Come
5 Days ago (2010-01-22 13:00:55)
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Anglesey Mining - Racing Ahead, More to Come
I have been requested to comment on Anglesey Mining (AYM) as a result of its share price having risen from an 11.75p t1p price at the end of October to currently sit at 29p; a gain of more than 146% in less than 3 months. I always endeavour to alert readers where a significant share price movement results in a change of stance – since as Benjamin Graham reminds “basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies”.
Although shares in Anglesey have advanced strongly a focus on the fundamentals suggests to me the current share price does not represent a ‘wise’ selling level and although I don’t typically comment on companies when the stance is unchanged and there is no news to update on, there are perhaps a couple of points of some value worth noting in respect of Anglesey Mining;
As per the t1p, Anglesey’s main asset remains its 18.6 million shares in (50% of) Canada-listed Labrador Iron Mines Holdings. Labrador shares have spiked from CAN$1.89 at the time of the t1p to a current C$6.88 which values Anglesey’s holding at C$127.97 million or 49p per each of Anglesey’s 152,858,051 shares in issue (at the current C$1:£0.589 exchange rate). Anglesey also had 15.1 million share options outstanding at 31st March 2009 at an average exercise price of 9.75p. Subsequently 300,000 have been exercised but even diluting for the rest and taking no account of the cash that would be received gives 45p per Anglesey share.
Despite Labrador’s share price performance its shares still look to have further to run. Using an iron ore price of $62/t per 65%Fe for fines, with a 12% premium for lump, a Net Present Value, using a 10% discount rate, of C$449 million can be derived for Labrador. This equates to C$12.09 per share and 79p per diluted Anglesey share. Although there are downside risks – various regulatory permits are still required before the targeted commencement of production for example – there is also potential upside (e.g. economic recovery helping sale price achieved higher, potential of the mineral claims Labrador announced it had acquired last month). It should additionally be noted that the Schefferville area from which Labrador is looking to produce has a prolific mining history and that Canada can safely be considered mining-friendly – which should reassure in terms of permitting
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