Last checked at 28 Jul 2011 07:00
27 July 2011Anglesey Mining plcAnnual report and accounts
A UK mining company listed on the London Stock Exchange
33% interest in Labrador Iron Mines Holdings Limited, a TSX quoted Canadiancompany with 39 million tonnes of compliant direct shipping hematite iron oreand 125 million tonnes of historical resources near Schefferville in Canada,where production and processing of iron ore is now underway.The market value of the group's investment in LIM at 31 March 2011 was £156million compared with £75 million at the same date in 2010. At 19 July 2011this value was £129 million, equivalent to 81 pence per Anglesey share. The first of LIM's iron ore deposits has now been brought into production and LIM is moving towards becoming a significant producer.100% of the Parys Mountain copper-lead-zinc project in North Wales with a totalhistorical resource of 7.76 million tonnes at 9.3% combined copper, lead andzinc, held awaiting development.
Chairman's Statement
This has been the most successful year that Anglesey Mining has everexperienced with the Schefferville iron ore mining operations of Labrador IronMines ("LIM"), in which the group holds 33% of the equity, moving intoproduction. The first rail shipment of iron ore to the port of Sept-Iles wasdespatched in June 2011 and LIM is now on track to produce over one milliontonnes of iron ore this year, with plans for expansion to enable production of2.5 million tonnes in 2012.
The key developments and progress since the last Annual Report were:
LIM's steady progress towards production saw the price of LIM shares continueto increase and at 19 July 2011 the market value of the group's holding in LIMwas C$199 million (£129 million) equivalent to 81 pence per Anglesey share.
LIM completed a share placement in April 2011 in which it raised C$121 million (£78.5 million). It is now well financed to carry through its expansion plans.
The price of iron ore has remained strong and currently stands at around US$175per tonne (CFR China) and the consensus of forecasts by respected marketanalysts is for trading in the range of $150 - $200 per tonne for a number ofyears. This should be very positive for the future of LIM.
In January 2011 Anglesey raised £1.6 million through the exercise of share options with a concurrent private placing and now has a total of around £3.5 million in cash.
Parys MountainAt Parys Mountain, the group holds 100% of the largest known base metal depositin the United Kingdom. Resources of zinc, copper and lead with small butsignificant amounts of silver and gold total 7.76 million tonnes, most of whichare historic resources, but which include 1.75 million tonnes of JORC compliantresource in the indicated category.The prices for copper, zinc, lead, gold andsilver, which are the major metals to be mined at Parys Mountain have remainedstrong. We believe that the Parys project has the potential to become a verysignificant base metal producer with by-products of gold and silver which wouldgenerate a substantial value for shareholders.It is intended to undertake a detailed review of the resources and thedevelopment options for Parys Mountain during the remainder of 2011. Thisreview will include the reappraisal of the previously proposed White Rock minewhich would target near surface resources as a first stage development option,which would lead to the subsequent development of the deeper lying resources.The review will also include the identification of drilling targets close tothe White Rock with the objective of increasing the near surface resources.
Financial
The results of Anglesey are dominated by those of its associate LIM, which during the financial year was a development company with no revenues and significant expenses in respect of its administrative costs. Primarily as a result of the losses reported by LIM, Anglesey recorded an overall loss of £ 1.44 million for the year ended 31 March 2011.
With a total of around £3.5 million in cash and administrative cash costs ofless than £0.4 million per year the group is well placed to finance the reviewand the first stages of any subsequent development of Parys Mountain.
I look forward to the on-going success of Anglesey in what are truly exciting times.
John F. KearneyChairman27 July 2011 Directors' Report
The directors have pleasure in submitting their report and the audited accounts for the year ended 31 March 2011.
Principal activities and business review
The group's principal activities are the development and operation of the Labrador iron project in eastern Canada in which the group now has a 33% interest, and the Parys Mountain project in North Wales which is wholly owned.
Development of the Labrador properties is proceeding rapidly and the Jamesdeposit, the first to go into production, dispatched the first train carryingiron ore on 29 June 2011. Output is expected to build up during the remainderof the operating season.
The group continues its search for other mineral exploration and development opportunities.
The aim of the group is to continue to develop and operate the Labrador projects, to create value in the Parys Mountain property, including by co-operative arrangements, 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.
Labrador Iron
Anglesey Mining now holds a 33% interest in Toronto-listed LIM which is developing and operating direct shipping iron ore deposits in western Labrador and north-eastern Quebec near Schefferville in Canada. At 31 March 2011 the group's interest was 40% (2010 - 41%); this was diluted after the year end following a major fund raising by LIM in April 2011.
The Schefferville Projects are located in the west-central part of the LabradorTrough iron range, one of the major iron ore producing regions in the world,and are divided into two separate portions, one within the Province ofNewfoundland and Labrador, and the other within the Province of Quebec, bothlocated near the town of Schefferville, Quebec.
The iron ore deposits forming the Schefferville Projects are predominantly hematite ore and were part of the original Iron Ore Company of Canada direct-shipping Schefferville operations conducted from 1954 to 1982.
A total of 39.6 million tonnes of measured and indicated resources have nowbeen estimated in the James, Redmond, Houston and Denault deposits (NI43-101compliant). The remaining deposits have a historical resource estimated atapproximately 125 million tons of direct shipping iron ore, based on workcarried out by IOC prior to the closure of its Schefferville operations in1984. The historical estimate was prepared according to the standards used byIOC and, while still considered relevant, is not compliant with NI 43-101.
The plans for the Schefferville Projects envision the mining of the deposits in stages. Stage 1 comprises the James deposit which is closest to existing infrastructure.
Development progress during the year has been rapid and substantial, such thatthe project is now, post year end, operational and is mining, processing andshipping iron ore. C$13/£8 million was capitalised in respect of mineralproperty development and exploration costs (2010 - C$7/£4 million) and C$29/£18million (2010 - C$7/£4 million) was capitalised in respect of property, plantand equipment.MiningOre mining at the James deposit commenced in April 2011 and is planned to becarried out for seven to eight months per year from April to November(depending on weather conditions) at a mining rate of approximately 15,000tonnes of ore per day, using conventional open-pit mining methods and wherenecessary employing standard drilling and blasting practices. Overburden andwaste mining, and some ore mining, will continue through the winter period. Oremined will be classed into three products for direct shipping, plant feed, andstockpiling for later treatment.
Silver Yards processing plant
The beneficiation plant, where Stage 1 ore will be crushed, washed andscreened, is situated within an area called the Silver Yards approximately 1 kmnortheast of the James mine. The first phase of the Silver Yards plant has beenconstructed and commissioned including the primary and secondary crushers,screens, scrubbers, stackers and conveyers. Residual material from the plant isbeing pumped to the old Ruth Pit.The Silver Yards plant has a planned initial processing rate of 6,000 tonnesper day, increasing to 10,000 tonnes per day. It is expected that the plantwill continue to operate through to November. In future years the plannedannual seasonal processing schedule will cover a period of seven to eightmonths, or approximately 210 to 240 days per year, from April to November orDecember, depending on weather conditions.
The ore which contains higher levels of silica will not be processed in the first year of operations but will be stockpiled for treatment later when the plant is expanded with the addition of a third processing line together a number of refinements to the plant.
Rail transportation
The 560 km main rail line between Schefferville and Sept-Iles was originallyconstructed for the shipment of iron ore from the Schefferville area and hasbeen in continuous operation for over fifty years. LIM has constructed a fivemile spur line which connects Silver Yards to the main rail line.LIM has agreements covering access to all of the track required for iron oretransportation and for the rental of five locomotives to haul its trains. Inaddition LIM has purchased a fleet of 400 previously used rail cars of whichthe first consignment of rail cars has been delivered to Sept-Iles wheremodifications are being carried out.LIM's first ore train, loaded with direct shipping ore, departed Silver Yardsfor Sept-Iles on 29 June 2011. This train represents the first commercial ironore train movement from the Schefferville area in almost 30 years.
Port
LIM has an arrangement with the Sept-Iles Port Authority for the use of thePointe aux Basques terminal for handling and ship loading of LIM's iron ore forthe 2011 season and potentially beyond. Use of the Pointe aux Basquesfacilities requires train shunting and unloading in the adjacent rail yard andloading the iron ore onto barges or lakers and transhipping to larger vesselswithin the deeper waters of the bay or at another port. The port handlingarrangements are currently being finalised. It is expected that the firstshipment of iron ore will be loaded at the Port of Sept Iles in August 2011.
Exploration program
LIM has commenced a large exploration program on its Schefferville Areaprojects. A total of 17,500 metres of drilling is planned for the 2011 season,using four drill rigs, and a further 4,000 metres of exploration trenching
willbe carried out.First NationsThe Schefferville Projects are located in an area over which claims fortraditional aboriginal rights are asserted by four First Nations groups. LIMhas signed impact benefits agreements ("IBAs") with three of these groups andan Agreement in Principle with the fourth group.
Marketing
It is expected that iron ore products produced in 2011 will be sold into thespot market on a "FOB Sept- Iles" basis. LIM has had detailed discussions witha number of internationally recognised companies with specialist knowledge ofthe iron and steel industry and expects to finalise marketing arrangements withone of these companies for the sale of its initial 2011 ore production.
Iron Ore Price
The viability and profitability of LIM's Schefferville Projects is dependent on the sale price of iron ore.
The world-wide iron-ore market remains positive though spot prices for 62% Fesinter fines have fallen from highs of around US$190 per tonne (CFR China)during the first quarter of calendar 2011 to around US$170 per tonne in recentweeks. High demand for iron ore in recent years has been driven primarily byChina. Current efforts by the Chinese government to slow down some aspects ofgrowth of the Chinese economy, including restricting credit and raising baseinterest rates, has likely been the reason for some slowing in Chinesepurchases and hence the recent reduction in spot prices. These reducedpurchases have reportedly resulted in some levels of destocking. There aresigns that this destocking is now being reversed which should lead to strongerprices in months to come.The recent medium term increases in iron ore costs will inevitably lead tocontinuing increases in steel prices, which under normal circumstances wouldlead to reduced levels in steel demand in subsequent periods. Demand for steeland therefore for iron ore appears likely to remain strong, and is likely tocontinue to grow in the coming years. In the short to medium term, with demandremaining strong, prices are forecast to only retract marginally. In the longerterm as major new production capacity comes on line in Brazil and Australia,the balance between supply and the continuing increasing demand is likely toremain close. The extent to which demand continues to exceed supply will beinfluenced by new and increased growth from other markets, including south-eastAsia, and renewed growth in Europe led by Germany, and particularly by thelevel at which new iron ore supply from West Africa may emerge. There are nowsigns that some of this new African production will take longer to come onstream than previously forecast thereby extending the period during whichdemand is expected to equal or exceed supply. The latest consensus of currentforecasts indicate that iron ore supply and demand will remain generally inbalance until around 2015 to 2016, with prices only dropping 10-15% in thatperiod, possibly followed by a supply surplus, with prices declining somewhatthereafter.
Full details of LIM's operations and financial position are available in LIM's financial statements, management's discussion and analysis and annual information form, all of which cover the period to 31 March 2011 and are published on LIM's website at http://www.labradorironmines.ca/ invest_financials.php.
Parys Mountain
The Parys Mountain property is the largest known base metal deposit in theUnited Kingdom. A feasibility study carried out in 1991 identified a resourceof 6.5 million tonnes containing zinc, copper and lead with small amounts of silver andgold. The 1991 feasibility study demonstrated the technical and economicviability of bringing the property into production at a rate of 350,000 tonnesper annum, producing zinc, copper and lead concentrates. However there waslimited development over the period from 1991 to 2003 chiefly due to poor metalprices. This historic resource together with the White Rock JORC compliantresource identified more recently amounts in aggregate to 7.8 million tonnes at9.3% combined metals.The prices for copper, zinc, lead, gold andsilver, which are the major metals to be mined at Parys Mountain have remainedstrong. It is intended to undertake a detailed review of the resources and thedevelopment options for Parys Mountain during the remainder of 2011. Thisreview will include the reappraisal of the previously proposed White Rock minewhich would target near surface resources as a first stage development option,which would lead to the subsequent development of the deeper lying resources.The review will also include the identification of drilling targets close tothe White Rock with the objective of increasing the near surface resources.The directors considered the carrying value of the Parys Mountain property andcarried out an impairment review the detail of which is set out in note 10. Thereview indicated that no impairment provision was required or justified.Operation of the mine and the receipt of cashflows from it are dependent onfinance being available to fund the development of the property.
Dolaucothi
In addition to its other mineral assets, the group holds the Dolaucothi goldproperty in South Wales. It is not the company's current intention to incursignificant expenditures on this property, however this situation will be keptunder review.Other activities
Management continues to search for new properties suitable for development within 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 whichcan usefully be employed to gauge the performance of the group at this stage ofits development other than the performance of the parent company's listedshares. The directors expect to be judged by their success in creating valuefor shareholders.The chief external factors affecting the ability of the group to move forwardare the availability of finance, levels of metal prices and exchange rates;these and other factors are dealt with in the risks and uncertainties sectionbelow.Dividend
The group has no revenues and the directors are unable to recommend a dividend (2010 - nil).
Financial positionThe group has no revenues from the operation of its properties. The loss forthe year after tax was £1,445,657 compared to a profit of £8,204,337 in 2010.Of the 2010 profit, £8,788,063 was attributable to the effects of the LIMfinancing and to Anglesey's sale of part of its LIM shareholding in March 2010;the only comparable transactions in 2011 resulted in a profit of £294,560.After excluding the effects of these transactions the comparable figures werelosses of £1,740,217 in 2011 and £583,726 in 2010. The increased loss in theLabrador associate was due to higher administration and corporate expensesincurred there as activities increased during the project's movement towardsproduction. The company's own expenses were increased by national insurancecharges connected with the exercise of share options by directors and higherinvestor relations costs.
During the year there were no additions to fixed assets (2010 - nil) and £107,850 (2010 - £175,994) was capitalised in respect of the development of the Parys Mountain property. The Labrador properties are held in an associated company.
The group's cash position at 31 March 2011 was £3,671,247 (2010 - £2,766,074),this increase from last year being due to the receipt of proceeds from theplacing of shares in January 2011. The foreign exchange loss of £61,919 (2010 -nil) shown in the income statement arises for the first time this year on thecash balances held in Canadian dollars. There were no cash balances held inCanadian dollars until 31 March 2010.At 31 March 2011 the company had 158,158,051 ordinary shares in issue,5,000,000 more than in 2010 as a result of a cash placing of 2,500,000 sharesand the exercise of share options over a further 2,500,000 shares. Followingthe year end a further 250,000 shares were issued in respect of the exercise ofa director's share options.
The directors believe that the group has adequate funding for its current and proposed operations.
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, mineralresources, results of exploration, capital costs, mining production costs andreclamation and post closure costs, could differ materially from thosecurrently anticipated by reason of factors such as changes in general economicconditions and conditions in the financial markets, changes in demand andprices for minerals that the group expects to produce, legislative,environmental and other judicial, regulatory, political and competitivedevelopments in areas in which the group operates, technological andoperational difficulties encountered in connection with the group's activities,labour relations matters, costs and changing foreign exchange rates and othermatters.The mining industry is competitive in all of its phases. There is aggressivecompetition within the mining industry for the discovery and acquisition ofproperties considered to have commercial potential. The group faces strongcompetition from other mining companies in connection with the acquisition andretention of properties, mineral claims, leases and other mineral interests aswell as for the recruitment and retention of qualified employees and otherpersonnel.
Development and liquidity risk
The company has adequate funds for its current and planned operations which donot at present include the development to production of the Parys Mountainproperty. Labrador Iron Mines Holdings Limited is believed to be fully fundedfor the foreseeable future.
Exploration and development
Exploration for minerals and development of mining operations involve risks,many of which are outside the group's control. The group currently operates inpolitically stable environments and hence is unlikely to be subject toexpropriation of its properties but exploration by its nature is looking intothe unknown or little known and unforeseen or unwanted results are alwayspossible.
Metal prices
The prices of metals fluctuate widely and are affected by many factors outsidethe group's control. The relative prices of metals and future expectations forsuch prices have a significant impact on the market sentiment for investment inmining and mineral exploration companies. Metal price fluctuations may beeither exacerbated or mitigated by international currency fluctuations whichaffect the actual amount which might be received by the group in sterling.
Foreign exchange
The activities of LIM are carried out in Canada; the group's interest in LIM iscarried in the group accounts on an equity basis and is affected by an exchangerate risk. Operations at Parys Mountain are in the UK and exchange rate risksare minor. The majority of the cash balance at the year end was held inCanadian dollars - see notes 17 and 24.
Permitting, environment and social
LIM has the governmental, operating, environmental and other permissions necessary for its current operations. Other permissions will be required as other deposits are brought into production.
LIM conducts its operations in Labrador and Quebec, in areas which are subjectto conflicting First Nations land claims. There are a number of First Nationspeoples living in the Quebec-Labrador peninsula with overlapping claims toasserted aboriginal land rights. Aboriginal claims to lands, and theconflicting claims to traditional rights between aboriginal groups, which alsooverlap the Quebec-Labrador provincial border, may have an impact on LIM'sability to develop the Schefferville deposits.The group holds planning permission for the development of the Parys Mountainproperty but further consents will be required to carry out proposed activitiesand these permits may be subject to various reclamation and operationalconditions.
Employees and personnel
The group is dependent on the services of a small number of key executivesincluding the chairman, chief executive and finance director. The loss of thesepersons or the group's inability to attract and retain additional highlyskilled and experienced employees for the operations of LIM or any other areasin which the group might engage may adversely affect its business or futureoperations.
Financial instruments
The group's use of financial instruments is not significant and is described in note 24.
DirectorsThe names of the directors with biographical details are shown on the insiderear cover. In accordance with the company's practice, Bill Hooley and RogerTurner retire by rotation and, being eligible, offer themselves forre-election. Since Danesh Varma, Howard Miller and David Lean have served formore than nine years as non-executive directors, the Corporate Governance Coderequires that they be re-elected annually, and, being eligible, they are alsoproposed for re-election.
The company maintains a directors' and officers' liability policy on normal commercial termswhich includes third party indemnity provisions. 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 isgoverned by its Articles, the Corporate Governance Code, the Companies Act andrelated legislation. The Articles themselves may be amended by specialresolution of the shareholders and were in fact so amended at the AGM held inSeptember 2010. Under the Articles, any director appointed by the board duringthe year must retire at the Annual General Meeting following his appointment.In addition, the Articles require that one-third of the remaining directorsretire by rotation at each general meeting and seek re-appointment.
Directors' interests in material contracts
Juno Limited (Juno), which is registered in Bermuda, holds 36.6% of thecompany's ordinary share capital. The company has a controlling shareholderagreement and working capital agreement with Juno. Advances made under theworking capital agreement are shown in note 19. Apart from interest chargesthere were no transactions between the group and Juno or its group during theyear. An independent committee reviews and approves any transactions andpotential transactions with Juno. Danesh Varma is a director and, through hisfamily interests, a significant shareholder of Juno.John Kearney is chairman and chief executive of Labrador Iron Mines HoldingsLimited (LIM), Bill Hooley is a director and chief operations officer andDanesh Varma is chief financial officer. All three are shareholders of LIM, areentitled to remuneration from LIM and have been granted options over the sharesof LIM. There are no transactions between LIM, the group and the company whichare required to be 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:
19 July 2011 31 March 2011 31 March 2010 Number of Number of Number ofDirector Number of ordinary Number of ordinary Number of ordinary options shares options shares options shares John Kearney 5,000,000 - 5,000,000 - 5,400,000 - Bill Hooley 2,500,000 100,000 2,500,000 100,000 2,900,000 100,000
Ian Cuthbertson 1,700,000 1,027,300 1,700,000 1,027,300 2,100,000 1,027,300
David Lean 450,000 - 700,000 - 700,000 - Howard Miller 600,000 - 600,000 - 900,000 - Roger Turner 500,000 - 500,000 - 1,100,000 - Danesh Varma 1,000,000 - 1,000,000 - 1,400,000 -
Further details of directors' options are provided in the Directors' Remuneration Report.
Substantial shareholders
At 19 July 2011 the following shareholders had advised the company of interests in the issued ordinary share capital of the company:
Percentage of Number of shareName shares capital Juno Limited 57,924,248 36.6%
Passport Special Opportunities Master Fund 26,525,000 16.7%
SharesAuthority to allot sharesThe directors would usually wish to allot any new share capital on apre-emptive basis, however in the light of the group's potential requirement toraise further funds for the acquisition of new mineral ventures, otheractivities and working capital, they believe that it is appropriate to have alarger amount available for issue at their discretion without pre-emption thanis normal for larger listed companies. In the case of allotments other than forrights or other pre-emptive issues, it is proposed that such authority will befor up to £390,000 of share capital being 39,000,000 ordinary shares, which isequivalent to 25% of the issued ordinary share capital at 5H19 July 2011.Whilst such authority is in excess of the 5% of existing issued ordinary sharecapital which is commonly accepted for larger listed companies, it will provideadditional flexibility which the directors believe is in the best interests ofthe group in its present circumstances. It is the directors' present intentionto renew this power each year.
Rights and obligations attaching to shares
The rights and obligations attaching to the ordinary and deferred shares areset out in the Articles of Association. Details of the issued share capital areshown in note 21. Details of employee share schemes are set out in theDirectors Remuneration Report and in note 22.Each ordinary share carries the right to one vote at general meetings of thecompany. Holders of deferred shares, which are of negligible value, are notentitled to attend, speak or vote at any general meeting of the company, norare they entitled to receive notice of general meetings.Subject to the provisions of the Companies Act 2006, the rights attached to anyclass may be varied with the consent of the holders of three-quarters innominal value of the issued shares of the class or with the sanction of anextraordinary resolution passed at a separate general meeting of the holders ofthe 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 beingtransacted either in person, by proxy or, in relation to corporate members, bycorporate representative. The Articles provide that forms of proxy shall besubmitted not less than 48 hours before the time appointed for holding themeeting or adjourned meeting.No member shall be entitled to vote at a general meeting or at a separatemeeting 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 allmonies presently payable by him in respect of that share have been paid.Furthermore, no shareholder shall be entitled to attend or vote eitherpersonally or by proxy at a general meeting or at a separate meeting of theholders of that class of shares or on a poll if he has been served with anotice after failing to provide the company with information concerninginterests in his shares required to be provided under the Companies Act.
Significant agreements and change of control
There are no agreements between the company and its directors or employees thatprovide for compensation for loss of office or employment that may occurbecause of a takeover bid. The company's share plans contain provisionsrelating to a change of control. Outstanding awards and options would normallyvest and become exercisable on a change of control, subject to the satisfactionof any performance conditions.
Employment, community, donations and environment
The group is an equal opportunity employer in all respects and aims for highstandards from and for its employees. It also aims to be a valued andresponsible member of the communities which it affects or operates in. Sincethere are no revenues from operations, it is the group's general policy not tomake charitable or political donations and none were made during the year (2010- nil).The group, which for these purposes does not include LIM, has no operations;consequently its effect on the environment is very slight, being limited to theoperation of two small offices, where recycling and energy usage minimisationare taken seriously and encouraged. It is not practical or useful to quantifythe effects of these measures.
Creditor payment policy
The group conducts its business on the normal trade credit terms of each of itssuppliers and tries to ensure that suppliers are paid in accordance with thoseterms. The group's average creditor payment period at 31 March 2011 was 47
days(2010 - 59 days).Going concern
The directors have considered the business activities of the group as well asits principal risks and uncertainties as set out in this report. When doing sothey have carefully applied the guidance given in the Financial ReportingCouncil's document "Going concern and liquidity risk: Guidance for directorsof UK companies 2009". Based on the group's cash flow forecasts and projectionsfor a twelve month period from the date of this report, and after making dueenquiry in the light of current and anticipated economic conditions, thedirectors consider that the group and company have adequate resources tocontinue in business for the foreseeable future. For this reason, the goingconcern basis continues to be adopted in the preparation of the financialstatements.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financialstatements. The directors are required to prepare the financial statements forthe group in accordance with International Financial Reporting Standards asadopted by the European Union ("IFRS") and have also elected to preparefinancial statements for the company in accordance with IFRS. Company lawrequires the directors to prepare such financial statements in accordance withIFRS, the Companies Act 2006 and, in relation to the group financialstatements, Article 4 of the IAS Regulation.International Accounting Standard 1 requires that financial statements presentfairly for each financial year the group's financial position, financialperformance and cash flows. This requires the faithful representation of theeffects of transactions, other events and conditions in accordance with thedefinitions and recognition criteria for assets, liabilities, income andexpenses set out in the International Accounting Standards Board's 'Frameworkfor the Preparation and Presentation of Financial Statements'. In virtually allcircumstances, a fair presentation will be achieved by compliance with allapplicable International Financial Reporting Standards.
Directors are also required to:
properly select and apply accounting policies;
present information, including accounting policies, in a manner that providesrelevant, reliable comparable and understandable information; and
provide additional disclosures when compliance with the specific requirementsin IFRS is insufficient to enable users to understand the impact of particulartransactions, other events and conditions on the entity's financial positionand 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 2006.
The directors confirm that the financial statements have (a) been prepared inaccordance with applicable accounting standards; (b) give a true and fair viewof the results of the group and the assets, liabilities and financial positionof the group and the parent company; and (c) that the directors' reportincludes a fair review of the development and performance of the business andthe position of the group and the parent company together with a description ofthe principal risks and uncertainties that they face.
The directors are responsible for the maintenance and integrity of the group website.
AuditorEach of the directors in office at the date of approval of the annual reportconfirms that so far as they are aware there is no relevant audit informationof which the company's auditor is unaware and that each director has taken allof the steps which they ought to have taken as directors in order to makethemselves aware of that information. This confirmation is given and should beinterpreted in accordance with the provisions of s418 of the Companies Act2006.
A resolution to reappoint Mazars LLP as auditors and to authorise the directors to fix their remuneration will be proposed at the annual general meeting.
By order of the boardIan CuthbertsonCompany Secretary27 July 2011
Independent auditor's report to the members of Anglesey Mining plc
We have audited the financial statements of Anglesey Mining plc for the yearended 31 March 2011 which comprise the Group Income Statement, the GroupStatement of Comprehensive Income, the Group and Company Statement of FinancialPosition, the Group and Company Statement of Changes in Equity, the Group andCompany Statement of Cash Flows and the related notes. The financial reportingframework that has been applied in their preparation is applicable law andInternational Financial Reporting Standards (IFRSs) as adopted by the EuropeanUnion and, as regards the parent company financial statements, as applied inaccordance with the provisions of the Companies Act 2006.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities Statement set out inthe Directors' Report, the directors are responsible for the preparation of thefinancial statements and for being satisfied that they give a true and fairview.Our responsibility is to audit and express an opinion on the financialstatements in accordance with applicable law and International Standards onAuditing (UK and Ireland). Those standards require us to comply with theAuditing Practices Board's (APB's) Ethical Standards for Auditors. This reportis made solely to the company's members as a body in accordance with Chapter 3of Part 16 of the Companies Act 2006. Our audit work has been undertaken sothat we might state to the company's members those matters we are required tostate to them in an auditor's report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyoneother than the company and the company's members as a body for our audit work,for this report, or for the opinions we have formed.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's web-site at www.frc.org.uk/apb/scope/private.cfm.
Opinion on the financial statements
In our opinion:
the financial statements give a true and fair view of the state of the group'sand of the parent company's affairs as at 31 March 2011 and of the group's lossfor the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.
Emphasis of matter
In forming our opinion, which is not qualified, we have considered the adequacyof the disclosures in the financial statements concerning the valuation ofintangible assets (note 10) of £13,900,593 in the group financial statementsand the valuation of investment in subsidiary undertakings (note 13) of £13,630,271 in the company financial statements.
The financial statements and related noted have been prepared on the validity of the following:
The successful development of Parys Mountain mineral property; and
The raising of new finance to exploit mineral reserves.
No adjustments have been made to the statement of financial position and related notes to reflect changes to these assets' carrying value that might be necessary should the above conditions not be met.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and
the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
the information given in the Corporate Governance Statement with respect to internal control and risk management systems in relation to financial reporting processes and about share capital is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in ouropinion:• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or• the parent company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or• certain disclosures of directors' remuneration specified by law are not made;• we have not received all the information and explanations we require for our audit; or• a Corporate Governance Statement has not been prepared by the company.
Under the Listing Rules we are required to review:
• the directors' statement, set out in the Directors' Report, in relation to going concern;• the part of the Corporate Governance Statement relating to the company's compliance with the nine provisions of the June 2008 Combined Code specified for our review; and• certain elements of the report to the shareholders by the Board on directors' remuneration.Richard Metcalfe (Senior Statutory Auditor)for and on behalf of Mazars LLPChartered Accountants and Statutory AuditorTower Bridge House, St. Katharine's Way, London, E1W 1DD
27 July 2011
Group income statement
All attributable to equity holders of the company
Year Year ended ended 31 31 March Notes March 2011 2010 All operations are continuing £ £ Revenue - - Expenses (476,139) (253,684) Equity-settled employee benefits 22 - (28,127) Share of loss of associate 14 (1,104,453) (203,173)
Gains on deemed disposals in associate 14 294,560 7,054,967
Profit on sale of shares in associate 14 - 1,733,096 Investment income 6 19,308 1,076 Finance costs 7 (117,014) (99,818) Foreign exchange loss (61,919) - (Loss)/profit before tax 4 (1,445,657) 8,204,337 Tax 8 - - (Loss)/profit for the year (1,445,657) 8,204,337 (Loss)/profit per share Basic - pence per share 9 (0.9)p 5.4 p Diluted - pence per share 9 (0.9)p 5.3 p Consolidated statement of comprehensive income (Loss)/profit for the year (1,445,657) 8,204,337 Other comprehensive income: Exchange difference on 14 (360,273) 2,148,426 translation of foreign holding Total comprehensive (loss)/income (1,805,930) 10,352,763for the year
Statement of financial position of the group
31 March 2011 31 March 2010 Notes £ £ Assets Non-current assets Mineral property development 10 13,900,593 13,792,743 Property, plant and equipment 11 204,687 204,687 Interest in associate 14 21,073,132 21,868,314 Deposit 15 121,146 120,574 35,299,558 35,986,318 Current assets Other receivables 16 22,469 8,327 Cash and cash equivalents 17 3,671,247 2,766,074 3,693,716 2,774,401 Total assets 38,993,274 38,760,719 Liabilities Current liabilities Trade and other payables 18 (791,148) (817,869) (791,148) (817,869) Net current assets 2,902,568 1,956,532 Non-current liabilities Loan 19 (2,077,361) (1,960,347) Long term provision 20 (42,000) (42,000) (2,119,361) (2,002,347) Total liabilities (2,910,509) (2,820,216) Net assets 36,082,765 35,940,503 Equity Share capital 21 7,092,414 7,042,414 Share premium 9,621,181 8,097,973 Currency translation reserve 3,620,997 3,981,270 Retained earnings 15,748,173 16,818,846 Total shareholders' equity 36,082,765 35,940,503 The financial statements of Anglesey Mining plc registered number 1849957 wereapproved by the board of directors, authorised for issue on 10H27 July 2011 andsigned on its behalf by:John F. Kearney, Chairman Ian Cuthbertson, Finance Director
Statements of changes in equity
All attributable to equity holders of the company.
Currency Group Share Share translation Retained Total capital £ premium £ reserve £ earnings £ £ Equity at 1 April 2009 7,036,414 8,092,423 1,832,844 8,542,452 25,504,133
Total comprehensive income for the year:
Profit for the year - - - 8,204,337 8,204,337 Exchange difference on - - 2,148,426 - 2,148,426
translation of foreign holding
Total comprehensive income - - 2,148,426 8,204,337 10,352,763for the year Shares issued for cash 6,000 6,000 - - 12,000 Share issue costs - (450) - - (450)
Equity-settled benefits credit:
associate - - - 43,930 43,930 - company - - - 28,127 28,127 Equity at 31 March 2010 7,042,414 8,097,973 3,981,270 16,818,846 35,940,503
Total comprehensive income for
the year: (Loss) for the year - - - (1,445,657) (1,445,657) Exchange difference on - - (360,273) - (360,273)
translation of foreign holding
Total comprehensive loss for - - (360,273) (1,445,657) (1,805,930)the year Shares issued for cash 50,000 1,528,225 - - 1,578,225 Share issue costs - (5,017) - - (5,017)
Equity-settled benefits credit:
associate - - - 374,984 374,984 Equity at 31 March 2011 7,092,414 9,621,181 3,620,997 15,748,173 36,082,765 Company Share Share Retained Total capital £ premium £ losses £ £ Equity at 1 April 2009 7,036,414 8,092,423 (2,782,905) 12,345,932 Total comprehensive income for the year: Loss for the year - - (390,879) (390,879) Total comprehensive loss for - - (390,879) (390,879)the year Shares issued for cash 6,000 6,000 - 12,000 Share issue costs - (450) - (450)
Equity-settled benefits credit - -
28,127 28,127 Equity at 31 March 2010 7,042,414 8,097,973 (3,145,657) 11,994,730 Total comprehensive income for the year: Loss for the year - - (602,231) (602,231)
Total comprehensive loss for the year - -
(602,231) (602,231)
Shares issued for cash 50,000 1,528,225
- 1,578,225 Share issue costs - (5,017) - (5,017) Equity at 31 March 2011 7,092,414 9,621,181
(3,747,888) 12,965,707
Statement of cash flows of the group
Year ended Year ended 31 March 31 March Notes 2011 2010 £ £Operating activities (Loss)/profit for the year (1,445,657) 8,204,337
Adjustments for non-cash items:
Investment revenue 6 (19,308) (1,076) Finance costs 7 117,014 99,818
Equity-settled employee benefits - 28,127 Share of loss of associate 14 1,104,453 203,173 Gain on deemed disposal in associate 14 (294,560) (7,054,967) Profit on sale of shares in associate 14 - (1,733,096)
Foreign exchange loss 61,919 - (476,139) (253,684) Movements in working capital (Increase) in receivables (14,142) (5,412)
(Decrease)/increase in payables (26,721) 209,187 Net cash used in operating activities (517,002) (49,909)
Investing activities Investment revenue 6 18,736 51
Net proceeds from sale of shares in associate 14 - 2,729,945
Mineral property development 10 (107,850) (175,994)
Net cash (used in)/generated from (89,114) 2,554,002
investing activities Financing activities
Net proceeds from issue of shares 1,573,208 11,550
Loan received - 100,000
Net cash generated from financing activities 1,573,208 111,550
Net increase in cash 967,092 2,615,643and cash equivalents
Cash and cash equivalents at start of period 2,766,074 150,431
Foreign exchange movement (61,919) -
Cash and cash equivalents at end of period 17 3,671,247 2,766,074
Notes to the Accounts1 General information
Anglesey Mining plc is domiciled and incorporated in the United Kingdom under the Companies Act. 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. The registered office address is as shown on the rear cover.
These financial statements are presented in pounds sterling because that is thecurrency of the primary economic environment in which the group has beenoperating. Foreign operations are included in accordance with the policies setout in note 2.2 Significant accounting policies
Basis of Accounting
The group and company 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 ofthe going concern basis is dependent on finance being available for thecontinuing working capital requirements of the group for a period of twelvemonths from the date of approval of the accounts. For the reasons set out inthe directors' report, the directors believe that the going concern basis isappropriate for these accounts.
Basis of consolidation
The consolidated financial statements incorporate the financial statements ofthe company and entities controlled by the company (its subsidiaries) made upto 31 March each year. Control is achieved where the company has the power togovern the financial and operating policies of an investee entity so as toobtain benefits from its activities.On acquisition, the assets and liabilities and contingent liabilities of asubsidiary are measured at their fair values at the date of acquisition. Anyexcess of the cost of acquisition over the fair values of the identifiable netassets acquired is recognised as goodwill. Any deficiency of the cost ofacquisition below the fair values of the identifiable net assets acquired (i.e.discount on acquisition) is credited to the income statement in the period ofacquisition. The results of subsidiaries acquired or disposed of during theyear are included in the group income statement from the effective date ofacquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Investment in associateAn associate is an entity over which the group exercises, or is in a positionto exercise, significant influence, but not control or joint control, throughparticipation in the financial or operating policy of the investee. Inconsidering the degree of control, any options or warrants over ordinary shareswhich are capable of being exercised at the period end are taken intoconsideration.Where material, the results and assets and liabilities of associates areincorporated in the financial statements using the equity method of accounting,except when these associates are classified as held for sale. Investments inassociates are carried in the statement of financial position at cost adjustedby any material post-acquisition changes in the net assets of the associates,less any impairment of value in the individual investments.
Revenue recognition
Interest income is accrued on a time basis, by reference to the principaloutstanding and at the effective interest rate applicable, which is the ratethat exactly discounts estimated future cash receipts through the expected lifeof the financial asset to that asset's net carrying amount.
Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the ratesof exchange prevailing on the dates of the transactions. At the end of eachreporting period, monetary assets and liabilities that are denominated inforeign currencies are retranslated at the rates prevailing on the period enddate. Non-monetary assets and liabilities carried at fair value that aredenominated in foreign currencies are translated at the rates prevailing at thedate when the fair value was determined. Gains and losses arising onretranslation are included in net profit or loss for the period.On consolidation, the assets and liabilities of the group's overseas operationsare translated at exchange rates prevailing on the period end date. Exchangedifferences arising, if any, are classified as equity and transferred to thegroup's translation reserve. Such translation differences are recognised asincome or as expense in the period in which the operation is disposed.
Segmental analysis
Operating segments are identified on the basis of internal reports about components of the group that are regularly reviewed by the chief operating decision-maker.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. There are no defined benefit retirement schemes.
Equity-settled employee benefits
The group provides equity-settled benefits to certain employees. Equity-settledemployee benefits are measured at fair value at the date of grant. The fairvalue determined at the grant date is expensed on a straight-line basis overthe vesting period, based on the group's estimate of shares that willeventually vest and adjusted for the effect of non-market based vestingconditions.Fair value is measured by use of a Black-Scholes model. The expected life usedin the model has been adjusted from the longer historical average life, basedon directors' estimates of the effects of non-transferability, exerciserestrictions, market conditions, age of recipients and behaviouralconsiderations.
Taxation
Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amounts of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the period end liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporarydifferences can be utilised. Such assets and liabilities are not recognised ifthe temporary difference arises from goodwill or from the initial recognition(other than in a business combination) of other assets and liabilities in atransaction that affects neither the tax profit nor the accounting profit.Deferred tax liabilities are recognised for taxable temporary differencesarising on investments in subsidiaries and associates, and interests in jointventures, except where the group is able to control the reversal of thetemporary difference and it is probable that the temporary difference will notreverse in the foreseeable future.The carrying amount of any deferred tax assets is reviewed at each period enddate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered.Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity.Property, plant and equipment
The group's freehold land is stated in the statement of financial position at cost. The directors consider that the residual value of buildings, based on prices prevailing at the date of acquisition, is such that any depreciation would not be material. The carrying value is reviewed annually and any impairment in value would be charged immediately to the income statement.
Plant, equipment, fixtures and motor vehicles are stated in the statement offinancial position at cost, less depreciation. Depreciation is charged on astraight line basis at the following annual rates: plant and equipment 25% andmotor vehicles 25%. Residual values and the useful lives of these assets arealso reviewed annually.
Intangible assets - mineral property development costs
Intangible assets are stated in the statement of financial position at cost, less accumulated amortisation and provisions for impairment.
Costs incurred prior to obtaining the legal rights to explore a mineralproperty are expensed immediately to the income statement. Mineral propertydevelopment costs are capitalised until the results of the projects, which areusually based on geographical areas, are known. Mineral property developmentcosts include an allocation of administrative and management costs asdetermined appropriate to the project by management.Where a project is successful, the related exploration costs are amortised overthe life of the estimated mineral reserve on a unit of production basis. Wherea project is terminated, the related exploration costs are expensedimmediately. Where no internally-generated intangible asset can be recognised,development expenditure is recognised as an expense in the period in which itis incurred.
Impairment of tangible and intangible assets
Mineral properties are written down when any impairment in their value has occurred and are written off when abandoned. Where a provision is made or reversed it is dealt with in the income statement in the period in which it arises.
Investments
Investments in subsidiaries are shown at cost less provisions for impairment invalue. Income from investments in subsidiaries together with any relatedwithholding tax is recognised in the income statement in the period in which itis recoverable.ProvisionsProvisions are recognised when the group has a present obligation as a resultof a past event and it is probable that the group will be required to settlethat obligation. Provisions are measured at the directors' best estimate of theexpenditure required to settle that obligation at the end of the reportingperiod and are discounted to present value where the effect is material.
Financial instruments
Financial assets and liabilities are initially recognised and subsequently measured based on their classification as "loans and receivables" or "other financial liabilities".
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except where they mature more than 12 months after the period end date: these are classified as non-current assets.
(a) Trade and other receivables. Trade and other receivables are measured atinitial recognition at fair value and are subsequently measured at amortisedcost using the effective interest rate method. Appropriate allowances forestimated irrecoverable amounts are recognised in the income statement whenthere is objective evidence that the asset is impaired.(b) Cash and cash equivalents. The group considers all highly liquidinvestments which are readily convertible into known amounts of cash and have amaturity of three months or less when acquired to be cash equivalents. Themanagement believes that the carrying amount of cash equivalents approximatesfair value because of the short maturity of these financial instruments.(c) Trade and other payables. Trade payables are not interest bearing and areinitially recognised at fair value and subsequently measured at amortised costusing the effective interest rate method.(d) Deposits. Deposits are recognised at fair value on initial recognition andare subsequently measured at amortised cost using the effective interest ratemethod.Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Mining lease payments are recognised as an operating expense in the income statement on a straight line basis over the lease term. There are no financial leases or other operating leases.
New accounting standards
The group and company have adopted the amendments to the following standards and interpretations;
IFRS 2 Share based payments - Amendments relating to group cash-settled share based payment transactionsIFRS 3 Business Combinations - Comprehensive revision on applying the acquisition methodIAS 27 Consolidated and Separate Financial Statements - Consequential amendments arising from amendments to IFRS 3IAS 28 Investments in Associates - Consequential amendments arising from amendments to IFRS 3IAS 31 Interests in Joint Ventures - Consequential amendments arising from amendments to IFRS 3IAS 32 Financial Instruments: Presentation - Amendments relating to classification of rights issueIAS 39 Financial Instruments: Recognition and Measurement - Amendments for eligible hedged itemsIFRIC 17 Distribution of non cash assets to ownersIFRIC 18 Transfer of assets from customersThe amendments resulting from the April 2009 annual improvements projects havealso been adopted in the year. These amendments are to IFRS 5, IFRS 8 IAS 1,IAS 7, IAS 17 and IAS 36. The impact of adopting the above amendments tostandards has been purely presentational.
The group and the company have not applied the following IFRS, IAS and IFRICs that are applicable and have been issued but are not yet effective.
IFRS 7 Financial Instruments: Disclosures - Amendments enhancing disclosures
about transfers of financial assets; Issued - October 2010; Effective
- Annual periods beginning on or after 1 July 2011IFRS 9 Financial Instruments - Classification and Measurement; Original issue November 2009; Effective - Annual periods beginning on or after 1 January 2013
IFRS 10 Consolidated Financial Statements; Original issue May 2011; Effective
- Annual periods beginning on or after 1 January 2013IFRS 11 Joint Arrangements; Original issue May 2011; Effective - Annual periods beginning on or after 1 January 2013IFRS 12 Disclosure of Interests in Other Entities; Original issue May 2011; Effective - Annual periods beginning on or after 1 January 2013IFRS 13 Fair Value Measurement; Original issue May 2011; Effective - Annual periods beginning on or after 1 January 2013IAS 12 Income Taxes - Limited scope amendment (recovery of underlying
assets); Revised - December 2010; Effective - Annual periods beginning
on or after 1 January 2012
IAS 24 Related Party Disclosures - Revised definition of related parties;
Revised - November 2009; Effective - Annual periods beginning on or
after 1 January 2011
IAS 27 Consolidated and Separate Financial Statements - Reissued as IAS 27
Separate Financial Statements (as amended in 2011); Revised - May 2011;
Effective -Annual periods beginning on or after 1 January 2013
IAS 28 Investments in Associates - Reissued as IAS 28 Investments in
Associates and Joint Ventures (as amended in 2011); Revised -
May 2011; Effective - Annual periods beginning on or after 1 January 2013
IFRIC 14 Prepayments of a minimum funding requirement; Effective - Annual period beginning on or after 1 January 2011IFRIC 19 Extinguishing financial liabilities with equity instruments; Effective - Annual periods beginning on or after 1 July 2009
The directors expect that the adoption of the above pronouncements will have no material impact to the financial statements in the period of initial application other than disclosure.
The directors do not consider the adoption of the amendments resulting from May2010 Annual Improvement projects will result in a material impact on thefinancial information of the group and the company. These amendments to IFRS 7,IAS 1 and IAS 34, are effective for accounting periods beginning on or after 1January 2011, with the exception of amendments to IFRS 3 and IAS 27, which areeffective for accounting periods beginning on or after 1 July 2010.
There have been no other new or revised International Financial Reporting Standards, International Accounting Standards or Interpretations that are in effect since that last annual report that have a material impact on the financial statements.
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 doesnot control the activities and operations of Labrador Iron Mines HoldingsLimited (LIM), and that it is correctly accounted for on an equity basis as anassociate company.(b) In determining the treatment of exploration, evaluation and developmentexpenditures the directors are required to make estimates and assumptions as tofuture events and circumstances. There are uncertainties inherent in makingsuch assumptions, especially with regard to: ore resources and the life of amine; recovery rates; production costs; commodity prices and exchange rates.Assumptions that are valid at the time of estimation may change significantlyas new information becomes available and changes in these assumptions may alterthe economic status of a mining unit and result in resources or reserves beingrestated. Operation of a mine and the receipt of cashflows from it aredependent on finance being available to fund the development of the property.(c) In connection with possible impairment of assets the directors assess eachpotentially cash generating unit annually to determine whether any indicationof impairment exists. The judgements made when doing so are similar to thoseset out above and are subject to the same uncertainties.
Nature and purpose of equity reserves
The share premium reserve represents the consideration that has been received in excess of the nominal value of shares on issue of new ordinary share capital.
The currency translation reserve represents the revaluation of overseas foreign subsidiaries and associates.
The retained earnings reserve represents profits and losses retained in previous and the current period.
3 Segmental informationThe group is engaged in the business of developing the Labrador iron project ineastern Canada in which it had a 40% interest at 31 March 2011 and thewholly-owned Parys Mountain project in North Wales. Neither had any revenuegenerating operations during the year. In the opinion of the directors, thegroup's activities comprise one class of business - mine development - atpresent. As a result, the group reports geographical segments; these are thebasis on which information is reported to Bill Hooley, the chief executive andchief operating decision maker.Parys Mountain property expenses capitalised
2011 2010 £ £ Site activities 27,693 10,559 Insurance & legal 1,498 10,130 Property rentals and charges 78,659 155,305 Total capitalised 107,850 175,994 Income statement analysis 2011 2010 UK Canada - Total UK Canada - Total associate associate £ £ £ £ £ £ Expenses 476,139 - 476,139 253,684 - 253,684
Equity-settled employee benefits - - - 28,127
- 28,127 Share of loss in associate - 1,104,453 1,104,453 - 203,173 203,173 Gain on deemed disposals - (294,560) (294,560) - (7,054,967) (7,054,967) Profit on sale of shares in associate - - - - (1,733,096) (1,733,096) Investment income (19,308) - (19,308) (1,076) - (1,076) Finance costs 117,014 - 117,014 99,818 - 99,818 Exchange rate loss 61,919 - 61,919 - - - Loss/(profit) for the year 635,764 809,893 1,445,657 380,553 (8,584,890) (8,204,337) Assets and liabilities 31 March 2011 31 March 2010 UK Canada - Total UK Canada - Total associate associate £ £ £ £ £ £ Assets 17,920,142 21,073,132 38,993,274 16,892,405 21,868,314 38,760,719 Liabilities (2,910,509) - (2,910,509) (2,820,216) - (2,820,216) Net assets 15,009,633 21,073,132 36,082,765 14,072,189 21,868,314 35,940,503 4 Operating resultThe operating result for the year has been arrived at after charging: 2011 2010 £ £ Fees payable to the group's auditors:
for the audit of the annual accounts 27,795 25,370
for the audit of subsidiaries' accounts 5,000 4,500
for other services - tax services 15,000 - Directors' remuneration 92,478 93,940 Equity-settled employee benefits - 28,127 Foreign exchange loss 61,919 - 5 Staff costsThe average monthly number of persons employed (including executive directors was: 2011 2010 Administrative 3 3 3 3 Their aggregate remuneration was: £ £ Wages and salaries 53,478 54,940 Social security costs 58,308 6,044 Other pension costs 20,547 10,320 132,333 71,304
Details of directors' remuneration and share options are given in the directors' remuneration report.
Social security costs in 2011 included amounts in respect of employer's national insurance contributions on the gains on share option exercises.
6 Investment income 2011 2010 £ £ Loans and receivables Interest on bank deposits 18,736 51
Interest on site re-instatement deposit 572 1,025
19,308 1,076 7 Finance costs 2011 2010 Loans and payables £ £ Loan interest to Juno Limited 117,014 99,818 8 Taxation
Activity during the year has generated trading losses for taxation purposeswhich may be offset against investment income and other revenues. Accordinglyno provision has been made for Corporation Tax. There is an unrecogniseddeferred tax asset at 31 March 2011 of £1.5 million (2010 - £1.5 million)which, in view of the group's trading results, is not considered by thedirectors to be recoverable in the short term. There are also capitalallowances, including mineral extraction allowances, of £11.4 million unclaimedand available at 31 March 2011 (2010 - £11.2 million). No deferred tax asset isrecognised in respect of these allowances. 2011 2010 £ £ Current tax - - Deferred tax - - Total tax - - Domestic income tax is calculated at 28% (2010 - 28%) of the estimated assessed profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.
The total charge for the year can be reconciled to the accounting profit or
loss as follows: (Loss)/profit for the year (1,445,657) 8,204,337 Tax at the domestic income tax rate of 28% (404,784) 2,297,214 Tax effect of: Expenses that are not deductible in determining taxable result 271 7,955
Gains on deemed disposals in associate (82,477) (1,975,391)
Profit on sale of shares in associate - (485,267) Share of loss of associate 309,247 56,888 Tax losses for which no deferred tax asset was recognised 177,743 98,601 Total tax - - 9 Earnings per ordinary share 2011 2010 £ £ Earnings (Loss)/profit for the year (1,445,657) 8,204,337 Number of shares Weighted average number of ordinary shares for the purposes of basic earnings per share 154,199,146 152,845,722 Shares deemed to be issued for no consideration in respect of employee options - 3,111,816 Weighted average number of ordinary shares for the purposes of diluted earnings per share 154,199,146 155,957,538 Basic earnings per share (0.9)p 5.4p Diluted earnings per share (0.9)p 5.3p
As the group has a loss for the year ended 31 March 2011 and the effect of theoutstanding options is anti-dilutive, diluted earnings per share for 2011 arethe same as basic earnings per share.10 Mineral property development costs - group Parys Mountain Dolaucothi Total Cost £ £ £ At 1 April 2009 13,616,749 194,065 13,810,814 Additions 175,994 - 175,994 At 31 March 2010 13,792,743 194,065 13,986,808 Additions 107,850 - 107,850 At 31 March 2011 13,900,593 194,065 14,094,658 Impairment provision
At 1 April 2009, 2010 and 2011 - (194,065) (194,065)
Carrying amount Net book value 2011 13,900,593 - 13,900,593 Net book value 2010 13,792,743 - 13,792,743
Included in the additions are mining lease expenses of £5,925 (2010 - £5,925).
Impairment review
Accumulated development expenditure in respect of each project is carried inthe financial statements at cost, less an impairment provision where there aregrounds to believe that the discounted present value of the future cash flowsfrom the project is less than the carrying value or there are other reasons toindicate that the carrying value is unsuitable. Each project or cash generatingunit is reviewed separately in order to make a determination of whether anyimpairment of its value has occurred.
Parys Mountain
At Parys Mountain this year the directors carried out an impairment review withan effective date of 23 March 2011. As in previous years, this review was basedon an estimate of discounted future cash flows from the development andoperation of the Parys Mountain project. The directors have used pastexperience and an assessment of future conditions, together with externalsources of information, to determine the assumptions which were adopted in thepreparation of a financial model used to estimate the cashflows.
The key assumptions utilised were:
The mine will be developed largely as envisaged in the Kilborn Feasibility Study prepared in 1991, except where management has determined otherwise.
All the resources, both historical (including inferred resources) and thosemore recently estimated under JORC codes, will be developed and produced exceptthat the tonnage of those classified as inferred in the 1991 Feasibility Studywill be reduced by 20%.
Capital costs will be estimated at current costs when the expenditure is planned to be incurred; neither revenues nor operating costs will take into account any inflation.
The net present value is at 23 March 2011 and based on the assumption that mine development commences three years after that date.
Base metal prices are based on the 27 month forward prices quoted on the LondonMetal Exchange at 23 March 2011 using the midpoint between buying and sellingprices; the exchange rates used are those of the same day; gold and silverprices are spot rates on 23 March 2011; these rates and prices are tabulatedbelow.
The following principal smelter terms have been estimated by the directors: zinc $250 pt treatment with a basis price of $2,500 pt and a +9% / -6% variance; copper $100 pt treatment, $0.10 pt produced refining charge, lead $170 pt.
The discount rate of 10% applied to future cashflows is one which reflects thedirectors' current market assessment of the time value of money and any riskfactors which have not been adjusted already in the preparation of theforecast.Table of assumptions significantly affecting the discounted net present valueof Parys cashflows SensitivityParameter Value Unit Factor* Zinc price $2,473 $/tonne 27 months forward - Copper price $9,395 $/tonne 27 months forward - Lead price $2,580 $/tonne 27 months forward - Silver price $36.00 Spot - Gold price $1,440 Spot - Exchange rate £/$ 1.62 LME rate +230% Capital expenditure +560% Operating costs +290% Discount rate 10% +300% * The sensitivity factor is the percentage change in each specific assumptionwhich would, on its own, result in a net present value equal to the carryingvalue of the intangible asset in the accounts. Where no factor is shown, thereis no change possible which would produce this result. All $ figures are in
USdollars. Parys summary
The estimated net present value of the Parys Mountain project calculated by the directors and based on their estimates of all the required parameters, particularly those set out above, is US$213 million, equivalent to £131 million. The carrying value of the Parys Mountain project is £13.9 million.
Estimates of the net present value of any project, and particularly one likeParys Mountain, are always subject to many factors and wide margins of error.The directors believe that the estimates and calculations supporting theirconclusions have been carefully considered and are a fair representation of theprojected financial performance of the project.The calculations above have been repeated using the spot metal prices andexchange rates of 19 July 2011 (major factors: exchange rate £/US$ 1.61, zincprice $2,438 and copper price $9,755) and the net present value at 10% on thisbasis was US$228 million, equivalent to £141 million.Based on the review set out above the directors have determined that noimpairment provision is required in the financial statements at 31 March 2011in respect of the carrying value of the Parys property. Operation of the mineand the receipt of cashflows from it are dependent on finance being availableto fund the development of the property and if this were not the case,adjustments would have to be made to reduce the carrying value of the mineralproperty development to its realisable value.
Dolaucothi impairment
The group has no active plans to develop the Dolaucothi project in the near future and made a full impairment provision against the carrying value of the Dolaucothi expenditure in 2006.
11 Property, plant and equipment Freehold Group land and Plant & Office property equipment equipment Total Cost £ £ £ £ At 1 April 2009 204,687 17,434 5,487 227,608 At 31 March 2009, 2010 and 2011 204,687 17,434 5,487 227,608 Depreciation At 1 April 2009 - 17,434 5,487 22,921 At 31 March 2009, 2010 and 2011 - 17,434 5,487 22,921 Carrying amount At 31 March 2009, 2010 and 2011 204,687 - - 204,687 Freehold Company land and Plant & Office property equipment equipment Total Cost £ £ £ £ At 1 April 2009 - 17,434 5,487 22,921 At 31 March 2009, 2010 and 2011 - 17,434 5,487 22,921 Depreciation At 1 April 2009 - 17,434 5,487 22,921 At 31 March 2009, 2010 and 2011 - 17,434 5,487 22,921 Carrying amount At 31 March 2009, 2010 and 2011 - - - - 12 Subsidiaries - company
The subsidiaries of the company at 31 March 2010 and 2011 were as follows:
Name of company Country of Percentage Principal activity incorporation owned Labrador Iron plc Isle of Man 100% Holder of the company's investment in Labrador Iron Mines Holdings Limited, an associated company Anglo Canadian England & 100% Holder of theExploration Wales Dolaucothi property(Ace) Limited Parys Mountain Mines 100% Development of theLimited England & Parys Mountain Wales mining property Parys Mountain Land England & 100% Holder of part ofLimited Wales the Parys Mountain property Parys Mountain Heritage England & 100% Holder of part ofLimited Wales the Parys Mountain property 13 Investments - company Shares at cost Amounts due Total £ £ £ At 1 April 2009 100,103 13,981,293 14,081,396 Added in year - 28,591 28,591 At 31 March 2010 100,103 14,009,884 14,109,987 Repaid in year - (479,716) (479,716) At 31 March 2011 100,103 13,530,168 13,630,271
The realisation of investments is dependent on finance being available for development and other factors as set out in more detail in note 10.
No interest was charged in the year on inter-company balances.
14 Investment in associate
At 31 March 2011 the group had a 40% interest in Labrador Iron Mines HoldingsLimited (LIM), a company registered in Ontario Canada, which is independentlymanaged and is accounted for in these financial statements as an associatecompany. LIM is the 100% owner and operator of a series of iron ore propertiesin Labrador and Quebec, many of which were formerly held and initially exploredby the group. At 31 March 2010 the group's interest in LIM was 41%, however theissue of shares by LIM in respect of the exercise of share options has reducedthe group's interest to 40%. The fully diluted interest of the group was 38%(2010 - 38%).
Following further issues of shares by LIM in May 2011, the group's interest was reduced to 33%. The group's holding of 17,789,100 LIM shares has remained unchanged since 31 March 2010.
31 March 31 March 2011 2010 £ £ Values in group financial statements:
Value brought forward from previous period 21,868,314 13,821,013
Group's share of (losses), adjusted to eliminate any fair value uplift and related taxation in associate's accounts (1,104,453) (203,173) Group's share of equity-settled benefits
included in (losses) above and now added back 374,984 43,930
Profit on deemed disposals following LIM share issues 294,560 7,054,967 Deduct: carrying value of LIM shares sold - (996,849) Exchange rate movement (360,273) 2,148,426 Amount carried in the group accounts - being the value of group's share of net assets of the associate without any fair value adjustment in respect of mineral properties 21,073,132 21,868,314 The group's interest in LIM is held in these financial statements at originalcost to the group, adjusted by material post-acquisition changes in the netassets of the associate and any impairment of value in the individualinvestments. It is adjusted to reflect the exchange rate current at the end ofthe accounting period.The profit on deemed disposal shown above is an adjustment to the group'scarrying value of the associate arising as a result of LIM's issue of newshares. This dilutes the group's holding in LIM, however since the shares wereissued at a price per share which exceeds the group's carrying value per share,the effect on the group's investment is beneficial and is represented by anincrease in the carrying value.The published fair value of the group's investment in LIM at 31 March 2011 is £156 million (2010 - £75 million). This is derived by valuing the group'sshareholding in LIM at the LIM share price quoted in Toronto on 31 March 2011of C$13.69 (2010 - $6.50) per common share.
At 19 July 2011 the published fair value of the group's investment in LIM was £ 129 million based on a share price of C$11.20 per common share at that date.
The directors have considered whether there has been any impairment to the carrying value of the group's investment in LIM; in their opinion there is none.
Values as shown in the published
accounts of the associate (100%) including a fair value uplift in respect of mineral 31 March 31 March properties, after conversion into sterling: 2011 2010
£ £ Total assets 144,330,241 136,829,785 Total liabilities (32,512,158) (22,426,183) Total net assets 111,818,083 114,403,602 2011 2010 Revenues - - (Loss)/profit for the year (2,512,113) 668,641 Reconciliation of values shown in the associate's published accounts with the group accounts C$ C$
Shareholders' equity in associate $174,436,210 $175,609,529
Less: fair value uplift net of tax - see note below $(92,773,711) $(93,770,841) $81,662,499 $81,838,688 Group share - 40.256% (2010 - 41.017%) $32,874,088 $33,567,864 Group carrying value after conversion to sterling £21,073,132 £21,868,314 In the financial statements of LIM the Labrador mineral properties are carriedat a fair value derived from the value ascribed to the Labrador companies inthe December 2007 Canadian flotation, after subsequent adjustments. If thegroup were to use a similar basis for its accounts, its share of this fairvalue uplift, net of tax, would add approximately £24 million (2010 - £25million) to group net assets.
The associated undertakings of the group were as follows:
Name of company Country of Percentage Principal activity incorporation owned 31 31 March March 2011 2010 Labrador Iron Mines Canada 40% 41% Holding companyHoldings Limited (LIM) Labrador Iron Mines Canada 40% 41% Development of ironLimited mines in Labrador, a 100% owned subsidiary of LIM LabRail Inc, a 100% Canada 40% 41% Transport operationsowned subsidiary of LIM Centre Ferro Ltd, a Canada 40% 41% Property holding100% owned subsidiary of LIM Schefferville Mines Canada 40% 41% Development of iron minesInc, a in Quebec100% owned subsidiary of LIM
The group holds its interest in these associated companies through Labrador Iron plc, a 100% owned subsidiary.
15 Deposit Group Company 2011 2010 2011 2010 £ £ £ £ Site re-instatement deposit 121,146 120,574 - -This deposit was required and made under the terms of the group's Section 106Agreement with the Isle of Anglesey County Council which has granted planningpermissions for mining at Parys Mountain. The deposit is refundable uponrestoration of the permitted area to the satisfaction of the PlanningAuthority. The carrying value of the deposit approximates to its fair value.16 Other receivables Group Company 2011 2010 2011 2010 £ £ £ £ Other 22,469 8,327 15,031 4,254
The carrying value of the receivables approximates to their fair value.
17 Cash Group Company 2011 2010 2011 2010 £ £ £ £ Held in sterling 1,498,838 10,070 1,498,137 7,201
Held in Canadian dollars 2,172,409 2,756,004 - -
3,671,247 2,766,074 1,498,137 7,201
The carrying value of the cash approximates to its fair value.
18 Trade and other payables Group Company 2011 2010 2011 2010 £ £ £ £ Trade creditors (32,319) (42,971) (30,494) (42,443) Property royalties and rentals - note 26 d (681,398) (613,665) - - Taxes (33,881) (7,459) (33,881) (7,459) Other accruals (43,550) (153,774) (35,996) (116,463) (791,148) (817,869) (100,371) (166,365) The carrying value of the trade and other payables approximates to their fairvalue.19 Loan Group Company 2011 2010 2011 2010 £ £ £ £
Loan from Juno Limited (2,077,361) (1,960,347) (2,077,361) (1,960,347)The loan from Juno Limited is provided under a working capital agreement,denominated in sterling, unsecured and carries interest at 10% per annum. It isrepayable from any future financing undertaken by the company, or on demandsubject to 367 days notice. The terms of the facility were approved by anindependent committee of the board. The carrying value of the loan approximatesto its fair value.20 Long term provision Group Company 2011 2010 2011 2010 £ £ £ £
Provision for site reinstatement (42,000) (42,000) - -
The provision for site reinstatement covers the estimated costs ofreinstatement at the Parys Mountain site of the work done and changes made bythe group up to the date of the accounts. These costs would be payable oncompletion of mining activities (which is estimated to be in more than 20years' time) or on earlier abandonment of the site. There are significantuncertainties inherent in the assumptions made in estimating the amount of thisprovision, which include judgements of changes to the legal and regulatoryframework, magnitude of possible contamination and the timing, extent and costsof required restoration and rehabilitation activity. There has been no movementduring the year.21 Share capital Ordinary shares of 1p Deferred shares of 4p Total Nominal Nominal Nominal value £ Number value £ Number value £ Issued and fully paid
At 1 April 2009 1,525,581 152,558,051 5,510,833 137,770,835 7,036,414 Issued 23 April 2009 3,000 300,000 - - 3,000 Issued 23 March 2010 3,000 300,000 - - 3,000 At 31 March 2010 1,531,581 153,158,051 5,510,833 137,770,835 7,042,414 Issued 14 January 2011 50,000 5,000,000 - - 50,000 At 31 March 2011 1,581,581 158,158,051 5,510,833 137,770,835 7,092,414
The deferred shares are non-voting, have no entitlement to dividends and have negligible rights to return of capital on a winding up.
Of the share issues in the period, 2,500,000 were in respect of the exercise ofdirectors' share options and 2,500,000 were shares issued by the company to twoplacees. The total gross proceeds were £1,578,225 and the expenses of the issuewere £5,017.
Following the year end, on 5 April 2011, 250,000 shares were issued in respect of the exercise of a director's share option for total proceeds of £190,000.
22 Equity-settled employee benefits
Share option plan
The group plan provides for a grant price equal to or above the average quotedmarket price of the ordinary shares for the three trading days prior to thedate of grant. All options granted to date have carried a performancecriterion, namely that the company's share price performance from the date ofgrant must exceed that of the companies in the top quartile of the FTSE 100index. The vesting period for any options granted since 2004 has been one year.If the options remain unexercised after a period of 10 years from the date ofgrant, they expire. Options are forfeited if the employee leaves employmentwith the group before the options vest.
No options were granted, forfeited or expired during the year or the prior year. The options outstanding at 12H31 March 2011 had a weighted average exercise price of 10.69 pence (2010 - 10.07 pence), and a weighted average remaining contractual life of 5.0 years (2010 - 6.1 years). As all options had vested by 31 March 2010, the group recognised no expenses in respect of equity-settled employee remuneration (2010 - £28,127).
A summary of options granted and outstanding, all of which are over ordinary shares of 1 pence, is as follows:
Scheme Number Nominal Exercise Exercisable Exercisable Value £ price from until
2004 Unapproved 5,700,000 57,000 4.13p 22 October 2004 21 October 2014
2004 Unapproved 1,600,000 16,000 10.625p 15 January 2007 14 January 2016
2004 Unapproved 3,800,000 38,000 21.90p 26 November 2008 26 November 2017 2004 Unapproved 900,000 9,000 5.00p 27 March 2010 27 March 2019 Total 12,000,000 120,000 23 Results attributable to Anglesey Mining plcThe loss after taxation in the parent company amounted to £602,231 (2010 loss £390,879). The directors have taken advantage of the exemptions available undersection 408 of the Companies Act 2006 and not presented an income statement forthe company alone.
24 Financial instruments
Capital risk management
There have been no changes during the year in the group's capital risk management policy.
The group manages its capital to ensure that entities in the group will be ableto continue as going concerns while optimising the debt and equity balance. Thecapital structure of the group consists of debt, which includes the borrowingsdisclosed in note 19, the cash and cash equivalents and equity comprisingissued capital, reserves and retained earnings.The group does not enter into derivative or hedging transactions and it is thegroup's policy that no trading in financial instruments be undertaken. The mainrisks arising from the group's financial instruments are currency risk andinterest rate risk. The board reviews and agrees policies for managing each ofthese risks and these are summarised below.
Interest rate risk
The Juno loans are at a fixed rate of interest of 10% per annum and as a resultthe group is not exposed to interest rate fluctuations. Interest received oncash balances is not material to the group's operations or results.
Liquidity risk
The group has ensured continuity of funding through a mixture of issues of shares, sales of shares in the group's associate LIM and the working capital agreement with Juno Limited.
Trade creditors are payable on normal credit terms which are usually 30 days.The loans due to Juno carry a notice period of 367 days; in keeping with itspractice since drawdown commenced more than 10 years ago, Juno has indicatedthat it has no current intention of demanding repayment and no such notice hadbeen received by 19 July 2011. However the Juno loan is classified as having amaturity date between one and two years from the period end date.
Currency risk
The functional currency of the company is pounds sterling. The loan from Juno Limited is denominated in pounds sterling. As a result, the group has no currency exposure in respect of this loan.
At the year end the group held C$3,388,957 in Canadian dollars, equivalent to £2,172,409. If the rate of exchange between Canadian dollars and sterling wereto move against sterling by 10% there would be a loss to the group of £197,000and if it were to move in favour of sterling by a similar amount there would bea gain of £241,000.
The company (Anglesey Mining plc) is not exposed to interest rate risks.
Credit risk
The directors consider that the entity has limited exposure to credit risk asthe entity has immaterial receivable balances at the year end on which a thirdparty may default on its contractual obligations. The carrying amount of thegroup's financial assets represents its maximum exposure to credit risk. Cashis deposited with BBB or better rated banks.
The financial instruments of the group and the company are:
Group Company Loans & Other financial Loans & Other financial receivables liabilities receivables liabilities 31 31 31 31 31 31 31 31 March March March March March March March March 2011 2010 2011 2010 2011 2010 2011 2010 £ £ £ £ £ £ £ £ Financial assets Deposit 121,146 120,574 - - Other debtors 22,469 8,327 15,031 4,254 Cash and cash equivalents 3,671,247 2,766,074 1,498,137 7,201
Financial liabilities
Trade (32,319) (42,971) (30,494) (42,443)creditors Loans due to Juno (2,077,361) (1,960,347) (2,077,361) (1,960,347) 3,814,862 2,894,975 (2,109,680) (2,003,318) 1,513,168
11,455 (2,107,855) (2,002,790)
25 Related party transactions
Transactions between Anglesey Mining plc and its subsidiaries are summarised in note 13.
Juno LimitedJuno Limited (Juno) which is registered in Bermuda holds 36.6% of the company'sissued ordinary share capital. The group has the following agreements withJuno: (a) a controlling shareholder agreement dated September 1996 and (b) aconsolidated working capital agreement of 12 June 2002. Interest payable toJuno is shown in note 7 and the balance due to Juno is shown in note 19. Therewere no transactions between the group and Juno or its group during the yearother than the accrual of interest due to Juno. Danesh Varma is a director and,through his family interests, a significant shareholder of Juno.
Labrador Iron
Labrador Iron Mines Holdings Limited (LIM) is a related party. There are no transactions between LIM, the group and the company which are required to be disclosed.
John Kearney is chairman of Labrador Iron Mines Holdings Limited (LIM), Bill Hooley is a director and chief operations officer and Danesh Varma is chief financial officer. All three are shareholders of LIM, are entitled to remuneration from LIM and have been granted options over the shares of LIM.
Key management personnel
All key management personnel are directors and appropriate disclosure with respect to them is made in the directors' remuneration report. There are no other contracts of significance in which any director has or had during the year a material interest.
26 Mineral holdingsParys(a) Most of the mineral resources delineated to date are under the westernportion of Parys Mountain, the freehold and minerals of which are owned by thegroup. A royalty of 6% of net profits after deduction of capital allowances, asdefined for tax purposes, from production of freehold minerals is payable. Themining rights over and under this area, and the leasehold area described in (b)below, are held in the Parys Mountain Mines Limited subsidiary.(b) Under a lease from Lord Anglesey dated December 2006, the subsidiary ParysMountain Land Limited holds the eastern part of Parys Mountain, formerly knownas the Mona Mine. An annual certain rent of £5,425 is payable for the yearbeginning 23 March 2010; the base part of this rent increases to £10,000 in2012 and to £20,000 when extraction of minerals at Parys Mountain commences;all of these rental figures are index-linked. A royalty of 1.8% of net smelterreturns from mineral sales is also payable. The lease may be terminated at 12months' notice but not before 2012 and otherwise terminates in 2070.(c) Under a mining lease from the Crown dated December 1991 there is an annuallease payment of £5,000. A royalty of 4% of gross sales of gold and silver fromthe lease area is also payable. The lease may be terminated at 12 months'notice and otherwise terminates in 2020.(d) Under a royalty agreement with Intermine Limited the group is obligated tomake payments of C$50,000 (approximately £32,000) per annum until productioncommences at the Parys Mountain mine. A royalty of 4% of net profits (asdefined after various deductions) generated from production at the mine is alsopayable. There is an option to buy out the royalty and advance payments. Theagreement may be terminated at 12 months' notice on abandonment of theproperty. The group has not paid all of the amounts due under this agreementand has made settlement proposals to Intermine Limited but no understanding hasyet been reached. Intermine Limited holds a charge over the mining rights heldby Parys Mountain Mines Limited to secure the payment of royalties in respectof minerals produced in the areas described in (a) and (b) above.Lease paymentsAll the group’s leases may be terminated with 12 months’ notice. If they are not so terminated, the minimum payments due in respect of the leases are analysed as follows: within the year commencing 1 April 2011 - £47,000; between 1 April 2012 and 31 March 2016 - £205,000. Thereafter the payments
will continue at proportionate annual rates, in some cases with increases for inflation, so long as the leases are retained or extended.
Dolaucothi
Under a mining lease from the Crown dated August 1997, a subsidiary, AngloCanadian Exploration (Ace) Limited, has an obligation to make annual leasepayments of £4,200 and to pay a royalty of 4% of gross sales of gold and silverfrom production at the Dolaucothi mine. The lease may be terminated at 12months' notice and otherwise terminates in 2012. Certain financial obligationsrelating to this lease have been guaranteed by the parent company.
27 Material non cash transactions
There were no material non-cash transactions in the year.
28 Commitments
Other than commitments under leases (note 26) there is no capital expenditureauthorised or contracted which is not provided for in these accounts (2010
-nil).29 Contingent liabilities
There are no contingent liabilities (2010 - nil).
30 Events after the period end
During April 2011, 250,000 shares were issued in respect of the exercise of share options - see note 21.
During April and May 2011 the group's interest in LIM was reduced to 33% as a result of share issues forming part of a major fund raising by LIM. Further details of this dilution of interest are contained in the directors' report.
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.
XLON