Anglesey Mining Regulatory News (AYM)

Half yearly report for the six months to 30 September 2014 Chairman's Statement and Management Report The half year to end of September 2014 has been a difficult period for theresource industry and for the company. Labrador Iron Mines ("LIM") did not mineany ore in the half year and reported a very large non-cash impairment in thecarrying value of its assets. LIM has indicated that it is seeking to completea financial restructuring under a plan of arrangement. The share price of LIMcontinued to fall during the period and this is reflected in these accounts asa non-cash diminution in value on the balance sheet and as a loss on the incomestatement. On a positive note the company entered into an arrangement in late May wherebyit took an effective working control in the Swedish company Grangesberg Iron AB("GIAB") which is working towards the development of an underground iron oremine in central Sweden based around previous mining operations. Since takingover management an Indicated and Inferred resource estimate compliant with theCanadian requirements of NI 43-101 has been produced by GIAB. Furtherdevelopment work continues. At Parys Mountain in North Wales physical activities on site have been fairlylimited but progress is being made in planning for a potential mine developmentprogramme supported by the expected strength of the zinc concentrate market. The company reported an unaudited loss of £879,000 for the half year of which £693,000 related to the reduction in value of LIM. Direct operating expenses at£152,000 were almost 25% lower than for the same period in the previous year. There is undoubtedly stress in the resources industry at present with pricesfor precious metals and bulk minerals in particular suffering badly. This ishaving a negative impact on investor sentiment towards the sector in generalwhich is reflected in the capital and equity markets with almost every shareprice, Anglesey being no exception, being badly eroded. However the markets forbase metals, zinc in particular, have stood up fairly well during thisdifficult time and we have reasonable expectations in the short to medium termthat this strength will continue. We look for a longer term recovery in theprice of iron ore. Labrador Iron Since January 2014 the spot price of iron ore has fallen over 45% to aroundUS$70 per tonne today, compared to an average price of US$135 per tonne in 2013(62% Fe fines on a CFR China basis). LIM did not recommence mining operations for the 2014 operating season due tothe prevailing low price of iron ore and an assessment of the current economicsof its iron ore projects. There was a strategic shift in corporate focustowards establishing a lower cost operating framework while concurrentlyre-negotiating the commercial terms of major contracts and seeking additionalcapital investment and working capital. LIM continues to focus on thedevelopment of the Houston Mine. At period end LIM had a very significant working capital deficit and had notmet certain financial obligations. It urgently needs to secure additionalfinancing arrangements in order to fund or restructure its current workingcapital deficit and to fund its continuing operations, planned developmentprogrammes and corporate administration costs so as to continue as a goingconcern. A financial restructuring and refinancing is required. LIM is currently seeking to negotiate a potential support arrangement with RBRGGerald Metals, an existing creditor and off-take partner, that, if successfullyentered into, is expected to provide working capital financing to fund LIM'songoing activities, to provide potential future project development financingand to enable LIM to continue as a going concern. If LIM is unable to complete a potential financial restructuring and to obtainadequate additional financing on a timely basis, which may require commercialrelief on certain major contracts, then it will be required to curtail all itsoperations and development activities and may be required to liquidate itsassets under a formal process. Under such circumstances Anglesey's investmentin LIM would likely be further impaired. Grangesberg Iron In late May 2014 Anglesey entered into agreements giving it the right toacquire a controlling interest in the Grangesberg iron ore mine situated in themineral-rich Bergslagen district of central Sweden about 200 kilometresnorth-west of Stockholm. Until its closure in 1989 due to prevailing marketconditions Grangesberg had mined in excess of 150 million tonnes of iron ore. In a series of agreements Anglesey purchased for US$145,000 a direct 6%interest in GIAB, a private Swedish company founded in 2007 which, using ourinvestment and assistance, had recently completed a financial and capitalrestructuring. GIAB holds a 25 year exploitation permit covering the previouslymined Grangesberg underground mining operations granted by the Swedish MiningInspectorate in May 2013. At the same time we negotiated a 12 month option to acquire 51% of the enlargedshare capital of GIAB for the issue of new ordinary shares of Anglesey to thevalue of US$1.75 million priced at a minimum of 3.375 pence per share. We alsoentered into shareholder and cooperation agreements such that during the termof the option Anglesey holds management control and operatorship of GIAB andhas appointed three out of five directors to the board of GIAB. In late September an NI 43-101Technical Report was prepared by Roscoe PostleAssociates Inc ("RPA") showing a compliant resource estimate for theGrangesberg Mine of 115.2 million tonnes at 40.2% Fe in the indicated categoryand 33.1 million tonnes at 45.2% Fe in the inferred category. RPA concludedthat the Grängesberg iron ore deposit hosts a significant iron resource thathas excellent potential for expansion at depth. A programme is currently being progressed to look closely at geo-mechanical andhydro-geological aspects of the site which will be critical components of thepermitting regime required for the dewatering and reopening of the mine. In the coming months, under Anglesey's direction GIAB will complete a reviewand update of its previous pre-feasibility study on the project incorporatinginputs from the compliant resource estimate and from the geo-technicalinvestigations and this will be a key determinant in our decision to exercisethe option on the GIAB majority share block. Parys Mountain We are continuing to review development options at the 100% owned ParysMountain zinc-copper-lead deposit in North Wales, UK where a JORCCode-compliant resource of 2.1mt at 6.9% combined base metals in the indicatedcategory and 4.1mt at 5.0% combined in the inferred category was published inNovember 2012. A detailed review of the resource base for the entire mineproperty has been prepared by Micon International and these results are beingevaluated. The company is of the view that the market for zinc and zinc concentrates willfurther strengthen particularly in Europe in the next two years and on thatbasis believes that it is now an appropriate time to seriously consider thecommencement of production at Parys Mountain. We are actively looking atsuitable second hand processing facilities that can be readily and simplyincorporated into an on-site plant at Parys Mountain. The directors acknowledge that financing Parys Mountain at this time ofdepressed investor interest in the resources sector will not be simple. Webelieve that the strength of the resource base coupled with the project's UKlocation with its inherent political and financial stability and with thewidely held expectation of a resurgence in interest in zinc could enable afinancing package to be put together. Financial Results There was a net loss for the period of £0.88 million (2013 loss £3.21 million);approximately £0.69 million of this 2014 loss was in respect of the diminutionin the value of the investment in LIM resulting from a fall in the share priceof that company. Administration expenses at £0.15 million were significantlylower than the comparative period in 2013. The group had no revenue for theperiod. At the period end cash resources had been reduced due to activitiesrelated to the GIAB acquisition and stood at £31,000. Additional funds willneed to be raised in the immediate future. However GIAB is well funded to carryout its planned programmes. Outlook The prospects for the iron ore price in the short term are not encouraging witha continuing surplus of supply over demand resulting from the recent completionof large expansion projects by the major producers in Australia and Brazil.This is likely to keep prices pegged at low levels at least until the spring of2015. The future of LIM and the maintenance of the value of our investment inthat company will be dependent upon some resurgence in the iron ore price. In the longer term we believe that the iron ore price will recover once thecurrent expansion in production is absorbed by continuing growth in China,India and other developing countries and by production cutbacks from currentproducers, which should bring the supply-demand situation back to a balanceposition by around 2017. It can be expected that the iron ore price shouldhave recovered significantly by that time, and would then benefit GIAB whichcould be in a position to recommence initial production by around 2018. We feel that the outlook for base metals and particularly for zinc, the majorsource of initial revenue from Parys Mountain, will improve. There are a numberof major zinc mines scheduled for closure and this should lead to a shortage ofzinc concentrate for smelters outside China which will move the zinc priceupward. In this scenario smelters and metal traders will be more aggressive inthe search for new concentrate supply and will be prepared to assist withfinance for new production such as from Parys Mountain. John F KearneyChairman25 November 2014 Unaudited condensed consolidated income statement Unaudited six Unaudited six Notes months ended months ended 30 September 30 September 2014 2013 All operations are continuing £ £ Revenue - - Expenses (152,230) (196,480) Impairment of investment 10 (692,702) (2,440,187) Exchange difference on investment impairment 10 20,850 (527,771) Investment income 1,044 14,267 Finance costs (56,200) (57,149) Foreign exchange gain/(loss) 330 (1,566) Loss before tax (878,908) (3,208,886) Tax 8 - - Loss for the period (878,908) (3,208,886) Loss per share Basic - pence per share (0.5)p (2.0)p Diluted - pence per share (0.5)p (2.0)p Unaudited condensed consolidated statement of comprehensive income Loss for the period (878,908) (3,208,886) Other comprehensive income: None Total comprehensive loss (878,908) (3,208,886) for the year All attributable to equity holders of the company Unaudited condensed consolidated statement of financial position Unaudited 30 Notes September Audited 31 2014 March 2014 £ £Assets Non-current assets Mineral property exploration and evaluation 9 14,854,707 14,802,048 Property, plant and equipment 204,687 204,687 Investments 10 803,092 1,257,985 Deposit 122,806 122,596 15,985,292 16,387,316 Current assets Other receivables 20,530 17,017 Cash and cash equivalents 31,556 289,097 52,086 306,114 Total assets 16,037,378 16,693,430 Liabilities Current liabilities Trade and other payables (266,303) (99,647) (266,303) (99,647) Net current (liabilities)/assets (214,217) 206,467 Non-current liabilities Loan (2,475,073) (2,418,873) Long term provision (42,000) (42,000) (2,517,073) (2,460,873) Total liabilities (2,783,376) (2,560,520) Net assets 13,254,002 14,132,910 Equity Share capital 11 7,116,914 7,116,914 Share premium 9,848,949 9,848,949 Retained losses (3,711,861) (2,832,953) Total shareholders' equity 13,254,002 14,132,910 All attributable to equity holders of the company Unaudited condensed consolidated statement of cash flows Unaudited six Unaudited six Notes months ended months ended 30 September 30 September 2014 2013 £ £ Operating activities Loss for the period (878,908) (3,208,886) Adjustments for: Investment income (1,044) (14,267) Finance costs 56,200 57,149 Impairment of investment 10 692,702 2,440,187 Exchange difference on investment impairment 10 (20,850) 527,771 Foreign exchange movement (330) 1,566 (152,230) (196,480) Movements in working capital (Increase)/decrease in receivables (3,513) 2,168 Increase/(decrease) in payables 13,877 (10,123) Net cash used in operating activities (141,866) (204,435) Investing activities Investment income 834 14,017 Mineral property exploration and evaluation (41,899) (46,568) Investment in Grangesberg (74,940) - Net cash used in investing activities (116,005) (32,551) Loan received Net decrease in cash (257,871) (236,986) and cash equivalents Cash and cash equivalents at start of year 289,097 670,345 Foreign exchange movement 330 (1,566) Cash and cash equivalents at end of year 31,556 431,793 All attributable to equity holders of the company Unaudited condensed consolidated statement of changes in group equity Share Share Retained capital premium earnings Total £ £ £ £ Equity at 1April 2014 - 7,116,914 9,848,949 (2,832,953) 14,132,910audited Totalcomprehensiveincome for theperiod: Loss for the - - (878,908) (878,908)period Totalcomprehensiveincome - - (878,908) (878,908)for theperiod: Equity at 30September 7,116,914 9,848,949 (3,711,861) 13,254,0022014 -unaudited Comparativeperiod Equity at 1April 2013 - 7,116,914 9,848,949 4,340,750 21,306,613audited Totalcomprehensiveincomefor theperiod: Loss for the - - (3,208,886) (3,208,886)period Totalcomprehensive income - - (3,208,886) (3,208,886)for theperiod: Equity at 30September 7,116,914 9,848,949 1,131,864 18,097,7272013 -unaudited All attributable to equity holders of the company Notes to the accounts 1. Basis of preparation This half-yearly financial report comprises the unaudited condensedconsolidated financial statements of the group for the six months ended 30September 2014. It has been prepared in accordance with the Disclosure andTransparency Rules of the UK Financial Services Authority, the requirements ofIAS 34 - Interim financial reporting (as adopted by the European Union) andusing the going concern basis and the directors are not aware of any events orcircumstances which would make this inappropriate. It was approved by the boardof directors on 25 November 2014. It does not constitute financial statementswithin the meaning of section 434 of the Companies Act 2006 and does notinclude all of the information and disclosures required for annual financialstatements. It should be read in conjunction with the annual report andfinancial statements for the year ended 31 March 2014 which is available onrequest from the company or may be viewed at www.angleseymining.co.uk. The financial information contained in this report in respect of the year ended31 March 2014 has been extracted from the report and financial statements forthat year which have been filed with the Registrar of Companies. The report ofthe auditors on those accounts did not contain a statement under section 498(2)or (3) of the Companies Act 2006 and was not qualified. The half-yearly resultsfor the current and comparative periods are unaudited. 2. Significant accounting policies The accounting policies applied in these unaudited condensed consolidatedfinancial statements are consistent with those set out in the annual report andfinancial statements for the year ended 31 March 2014. The following amendmentsto interpretations were effective in the current period and have been adopted: IFRS 10 Consolidated Financial Statements: Original issue; Issued October 2012;Effective - Annual periods beginning on or after 1 January 2014 IFRS 11 Joint Arrangements: Original issue; Issued - May 2011; Effective -Annual periods beginning on or after 1 January 2014 IFRS 12 Disclosure of Interests in Other Entities: Original issue; Issued -May 2011; Effective - Annual periods beginning on or after 1 January 2014 IAS 27 Separate Financial Statements (as amended in 2011): Original issue;Issued - May 2011; Effective - Annual periods beginning on or after 1 January2014 IAS 28 Investments in Associated and Joint Ventures: Original issue; Issued -May 2011; Effective - Annual periods beginning on or after 1 January 2014 The adoption of the following amendments and new interpretations has notresulted in a change to the accounting policies nor had a material effect onthe financial performance and position of the group. In preparing thesefinancial statements any accounting assumptions and estimates made bymanagement were consistent with those applied to the aforesaid annual reportand financial statements. IAS 32 Financial Instruments: Presentation: Amendments relating to theoffsetting of assets and liabilities; Issued - December 2011; Effective -Annual periods beginning on or after 1 January 2014 IAS 36 Impairment of Assets: Amendments arising from Recoverable AmountsDisclosure for Non-financial Assets; Issued - 2004, Amended - May 2013;Effective Annual periods beginning on or after 1 January 2014 IAS 39 Financial Instruments: Amendments for novation of derivatives; AmendedJune 2013; Effective for Annual periods beginning on or after 1 January 2014 IAS 39 Financial Instruments: Recognition and Measurement; Original issue;Issued - June 2013; Effective for Annual periods beginning on or after 1January 2014 IFRIC 21 Levies; Effective - Annual periods beginning on or after 1 January2014 3. Risks and uncertainties The principal risks and uncertainties set out in the group's annual report andfinancial statements for the year ended 31 March 2014 remain the same for thishalf-yearly financial report and can be summarised as: development risks inrespect of mineral properties, especially in respect of permitting and metalprices; liquidity risks during development; and foreign exchange risks. Moreinformation is to be found in the 2014 annual report - see note 1 above. 4. Statement of directors' responsibilities The directors confirm to the best of their knowledge that: (a) the unauditedcondensed consolidated financial statements have been prepared in accordancewith the requirements of IAS 34 Interim financial reporting (as adopted by theEuropean Union); and (b) the interim management report includes a fair reviewof the information required by the FSA's Disclosure and Transparency Rules(4.2.7 R and 4.2.8 R). This report and financial statements were approved bythe board on 25 November 2014 and authorised for issue on behalf of the boardby Bill Hooley, Chief Executive Officer and Danesh Varma, Finance Director. 5. Activities The group is engaged in mineral property development and currently has noturnover. There are no minority interests or exceptional items. 6. Earnings per share The loss per share is computed by dividing the loss attributable to ordinaryshareholders of £0.9 million (loss to 30 September 2013 £3.2m), by 160,608,051(2013 - unchanged) - the weighted average number of ordinary shares in issueduring the period. Where there are losses the effect of outstanding shareoptions is not dilutive. 7. Business and geographical segments There are no revenues. The cost of all activities charged in the incomestatement relates to exploration and development of mining properties. Thegroup's income statement and assets and liabilities are analysed as follows bygeographical segments, which is the basis on which information is reported tothe board. Income statement analysis Unaudited six months ended 30 Unaudited six months September 2014 ended 30 September 2013 UK Canada - UK Canada - investment Total investment Total £ £ £ £ £ £ Expenses (152,230) - (152,230) (196,480) - (196,480) Loss onfair value - (692,702) (692,702) - (2,440,187) (2,440,187)ofinvestment Exchangedifference - 20,850 20,850 - (527,771) (527,771)on lossabove Investmentincome 1,044 - 1,044 14,267 - 14,267 Financecosts (56,200) - (56,200) (57,149) - (57,149) Exchangerate 330 - 330 (1,566) - (1,566)movements Loss for (207,056) (671,852) (878,908) (240,928) (2,967,958) (3,208,886)the period There are no income statement items to report in respect of Grangesberg. Assets and liabilities ` Unaudited 30 September 2014 UK Sweden Canada Total investment investment £ £ £ £ Non currentassets 15,182,200 216,959 586,133 15,985,292 Current assets 52,086 - - 52,086 Liabilities (2,783,376) - - (2,783,376) Net assets 12,450,910 216,959 586,133 13,254,002 Audited 31 March 2014 UK Sweden Canada Total investment investment £ £ £ £ Non currentassets 15,129,331 - 1,257,985 16,387,316 Current assets 306,114 - - 306,114 Liabilities (2,560,520) - - (2,560,520) Net assets 12,874,925 - 1,257,985 14,132,910 8. Deferred tax There is an unrecognised deferred tax asset of £1.2 million (31 March 2014 - £1.2m) which, in view of the group's results, is not considered to berecoverable in the short term. There are also capital allowances, includingmineral extraction allowances, exceeding £11 million (unchanged from 31 March2014) unclaimed and available. No deferred tax asset is recognised in thecondensed financial statements. 9. Mineral property exploration and evaluation costs Mineral property exploration and evaluation costs incurred by the group arecarried in the unaudited condensed consolidated financial statements at cost,less an impairment provision if appropriate. The recovery of these costs isdependent upon the successful development and operation of the Parys Mountainproject which is itself conditional on finance being available to fund suchdevelopment. During the period expenditure of £53,159 was incurred (six monthsto 30 September 2013 - £34,377). There have been no indicators of impairmentduring the period. 10. Investments Labrador Grangesberg (quoted) (unquoted) Total £ £ £ At 31 March 2013 7,964,532 7,964,532 Impairment resulting fromadjustment to fair value (5,451,267) (5,451,267) Exchange difference arisingon adjustment above (1,255,280) (1,255,280) At 31 March 2014 1,257,985 1,257,985 Addition during period - 216,959 216,959 Impairment resulting fromadjustment to fair value (692,702) - (692,702) Exchange difference arisingon adjustment above 20,850 - 20,850 At 30 September 2014 586,133 216,959 803,092 Labrador: Labrador Iron Mines Holdings Limited (LIM) (TSX quoted) is the 100%owner and operator of a series of iron ore properties in Labrador and Quebec,many of which were formerly held and initially explored by the group. The grouptreats its 15% holding in LIM as an investment. The published fair value ofthis investment based on the quoted market price at 30 September 2014 is £0.6million (31 March 2014 - £1.3 million). The group holds this investment as astrategic non-controlling interest, not held for trading and classified as'available for sale'. Grangesberg: In May 2014 the group entered into a series of agreements inconnection with the potential acquisition of iron ore properties at Grangesbergin Sweden. Certain expenditures which have resulted in the group having a 6%holding in Grangesberg Iron AB (an unquoted Swedish company) and an option topurchase shares amounting to 51% of that company have been treated in thesestatements as an investment held at fair value through the income statement. 11. Share capital Ordinary shares Deferred shares Total of 1p of 4pIssuedand Nominal Number Nominal Number Nominalfully value £ value £ value £paid At 31March2013,2014 and 1,606,081 160,608,051 5,510,833 137,770,835 7,116,91430September2014 12. Financial instruments Available for sale Assets at fair Loans & Group assets value through receivables income statement Unaudited Unaudited 31 Unaudited 31 30 September 31 March 30 March 30 March 2014 2014 September 2014 September 2014 2014 2014 £ £ £ £ Financial assets Investments 586,133 1,257,985 216,959 - - - Deposit - - - - 122,806 122,596 Other debtors - - - - 20,530 17,017 Cash and cash equivalents - - - - 31,556 289,097 - - 586,133 1,257,985 216,959 - 174,892 428,710 Unaudited 31 30 September March 2014 2014 £ £ Financial liabilities Trade creditors (40,231) (34,863) Other creditors (142,019) - Loans due to Juno (2,475,073) (2,418,873) (2,657,323) (2,453,736) 13. Events after the reporting period None. 14. Related party transactions None. Anglesey Mining plc Directors: John Kearney Chairman Bill Hooley Chief executive Danesh Varma Finance director David Lean Non executive Howard Miller Non executive Roger Turner Non executive Parys Mountain site: Parys Mountain, Amlwch, Anglesey, LL68 9REPhone 01407 831275London office: Painter's Hall, 9 Little Trinity Lane, London, EC4V 2ADPhone 020 7653 9881Registered office: Tower Bridge House, St. Katharine's Way, London, E1W 1DD Share registrars: Capita Registrars www.capitaregistrars.comPhone 0871 664 0300 - for all change of address and shareholderadministration matters (calls cost 10p per minute plus network extras,lines open 0830 to 1730 Mon-Fri) Web site: www.angleseymining.co.ukE-mail: mail@angleseymining.co.ukShares listed on the London Stock Exchange - LSE:AYM Company registration number 1849957