Last checked at 26 Nov 2010 07:00
Anglesey Mining plc LSE:AYM
25 November 2010
Report for the half year ended 30 September 2010
Chairman's statement and management report - November 2010
We are pleased to report that during the half year ended 30 September 2010 andup to date, excellent progress has been made with the ongoing development ofLabrador Iron Mines' (LIM's) iron ore projects in Western Labrador and Quebec,currently the group's main activity. Since on-site construction commenced inearly September 2010, the rate of advance indicates that the plant andaccommodation camp for the first phase of Stage 1 are on track to besubstantially completed by the end of calendar 2010; mining and productionactivities are planned to commence in April 2011.
Labrador Iron Ore
Labrador Iron Mines, the group's 41% owned Toronto Stock Exchange listedassociate, is advancing its Schefferville direct shipping iron ore projecttowards production. LIM had respected and did not try to cross the barrier thathad been erected in June 2010 which had restricted normal access from the townof Schefferville to LIM's properties in Western Labrador and caused delays inthe exploration and development of the projects. Following an agreement inearly September with the Innu Matimekush-Lac John to remove the barriers,construction and installation work is being carried out on site.Mine site preparation at the James Mine has commenced with the development ofthe haul road, clearing and grubbing of the entire mining site and exposing theore body. Development of the first production bench in the mine will follow.Some small ore stock piles have been moved to Silver Yards and, together withthe first ore mined from the bench development, will be stockpiled ahead of theprimary crusher ready for feed to the processing plant at the commencement ofproduction.Construction of the beneficiation plant and associated facilities hasprogressed well since early September. All the piers for the conveyors havebeen installed, including those for the radial stackers and the secondarycrusher, and most of the conveyor structures are in place. The steel structurefor the secondary screens tower has been completed and the chutes, stairs andflooring for the transfer tower are all installed. All the major items ofprocessing equipment have been installed, and the dome roof structure is beingassembled at site and is expected to be installed shortly. This will enableinstallation of the piping, electrical and other work to be carried out duringperiods of poor winter weather.
The accommodation camp at Bean Lake has also progressed rapidly, is currently almost complete and should be available for use over the winter.
In September 2010 LIM entered into an Impact Benefits Agreement (IBA) with theNaskapi Nation of Kawawachikamach. Discussions continue with the InnuMatimekush-Lac John and with the Innu Takuaikan Uashat Mak Mani-Utenam towardsconcluding Impact Benefits Agreements. LIM has committed to negotiate in goodfaith and to respect the rights of the Innu, however, it should be emphasizedthat no formal IBA or other agreements have yet been signed between LIM andeither Innu Uashat or Innu Matimekush and several outstanding issues remain tobe resolved.In the six months ended 30 September 2010 LIM made significant progress in itspermitting activities with the Government of Newfoundland and Labrador and hasnow received from the Government of Newfoundland and Labrador all major permitsthat are required to advance the first phase of Stage 1 of its ScheffervilleProjects in Labrador through construction and into mining operations.The 2010 summer exploration programme has been completed with 4,500 metres ofdrilling and 1,400 metres of trenching achieved at the Denault, Ruth 8, andHouston properties. Drilling at Houston has indicated some extensions to theresource and these, together with Denault results, will be incorporated intorevised resource estimates when assay results are received.As a result of recent progress, LIM believes it is on track to substantiallycomplete construction of the processing plant and accommodation camp by the endof December and to commence production activities in April 2011. The target isproduction of about 2 million tonnes of iron ore in 2011, which assumescompletion of construction, plant commissioning and a satisfactory start-up ofmining operations in the second quarter of calendar 2011.
Parys Mountain
We continue to believe that there is a significant value in the group's 100% owned Parys Mountain zinc/copper/lead property and although the current management focus is on Labrador we are continuing to talk with interested parties in our efforts to realise that value for shareholders.
Financial
The loss for the six month period was £756,132 (2009 - £368,100), whichincluded an exchange rate loss on cash held in Canadian dollars of £149,974(2009 - nil) and the group's share of the loss in Labrador, largely comprisingadministration expenses, of £407,016 (2009 - £226,880). Development expensescapitalised in respect of Parys Mountain amounted to £27,827 (2009 - £52,245).The group has no revenues from the operation of its properties. At the periodend the group had cash in treasury of £2.4 million and LIM had in excess ofCanadian $35 million (£21 million).
Outlook
Recently there has been a strengthening in the price of iron ore, with pricesreaching over US$160 per tonne (62% iron sinter fines CFR Chinese ports).Shipping rates from eastern North America to China in cape-size vessels iscurrently around $40 per tonne giving an indicated effective FOB price ofaround US$120 per tonne. The traditional annual benchmark pricing mechanism foriron ore has now been more or less abandoned with more and more iron ore beingtraded against a prior one month spot average determination.The level of demand in China for all commodities, and in particular iron oreremains strong. Analysts' consensus seems to suggest price forecasts at orabove current levels well into 2011, although some weakening in prices ispossible. Worldwide iron ore demand is expected to continue to grow through2012, continuously driven by China, while demand in Europe for iron and steelappears to be flat, but with some small increase forecast for 2011. Theseforecasts should work positively for LIM with first sales of lump ore andsinter fines expected towards the end of the second calendar quarter of 2011into what appears will be a positive iron ore market.The investment in Labrador Iron is the company's major asset. We believe thatthe commencement of production and ore sales by LIM will be a major milestoneand that it will bring to the attention of the market the significant undervaluation of Anglesey's shares.John F KearneyChairman25 November 2010 Anglesey Mining plc - Group
Condensed consolidated income statement
Unaudited Unaudited six Six months months ended ended 30 Audited Year 30 September September ended 31 March Notes 2010 2009 2010 All operations are continuing £ £ £ Revenue - - - Expenses (161,955) (85,419) (253,684) Equity-settled employee benefits 6 - (14,298)
(28,127)
Share of (loss) of associate 11 (407,016) (226,880)
(203,173)
Gains on deemed disposals in associate 11 17,279 -
7,054,967
Profit on sale of shares in associate - - 1,733,096 Investment income 5,394 1,352 1,076 Finance costs (59,860) (42,855) (99,818) Foreign exchange loss (149,974) - - (Loss)/profit before tax (756,132) (368,100) 8,204,337 Tax 9 - - -
(Loss)/profit for the period (756,132) (368,100)
8,204,337
All attributable to equity holders of the company (Loss)/profit per share 7 Basic - pence per share (0.5)p (0.2)p 5.4 p Diluted - pence per share (0.5)p (0.2)p 5.3 p
Condensed consolidated statement of comprehensive income (Loss)/profit for the period (756,132) (368,100)
8,204,337
Other comprehensive income: Exchange movement on foreign holdings (1,213,105) 374,123
2,148,426
Total comprehensive (loss)/income (1,969,237) 6,023
10,352,763 for the period All attributable to equity holders of the company
Condensed consolidated statement of financial position
Unaudited 30 Unaudited 30 September Audited September 2010 2009 31 March 2010 Notes £ £ £ Assets Non-current assets
Mineral property development 10 13,820,570 13,668,994 13,792,743
Property, plant and equipment 204,687 204,687 204,687 Interest in associate 11 20,330,748 13,970,113 21,868,314 Deposit 121,540 120,849 120,574 34,477,545 27,964,643 35,986,318 Current assets Other receivables 17,563 2,933 8,327 Cash and cash equivalents 2,395,421 148,460 2,766,074 2,412,984 151,393 2,774,401 Total assets 36,890,529 28,116,036 38,760,719 Liabilities Current liabilities Trade and other payables (791,780) (638,566) (817,869) (791,780) (638,566) (817,869) Net current assets/(liabilities) 1,621,204 (487,173) 1,956,532 Non-current liabilities Loan (2,020,207) (1,903,384) (1,960,347) Long term provision (42,000) (42,000) (42,000) (2,062,207) (1,945,384) (2,002,347) Total liabilities (2,853,987) (2,583,950) (2,820,216) Net assets 34,036,542 25,532,086 35,940,503 Equity Share capital 7,042,414 7,039,414 7,042,414 Share premium 8,097,973 8,095,198 8,097,973 Currency translation reserve 2,768,165 2,206,967 3,981,270 Retained earnings 16,127,990 8,190,507 16,818,846 Total shareholders' equity 34,036,542 25,532,086 35,940,503
Condensed consolidated statement of cash flows
Unaudited Unaudited six Six months months ended ended 30 Audited Year 30 September September ended 31 March Notes 2010 2009 2010 £ £ £ Operating activities (Loss)/profit for the year (756,132) (368,100) 8,204,337 Adjustments for non-cash items: Investment revenue (5,394) (1,352) (1,076) Finance costs 59,860 42,855 99,818 Equity-settled employee benefits 6 -
14,298 28,127
Share of loss of associate 11 407,016
226,880 203,173
Gain on deemed disposal in associate 11 (17,279) - (7,054,967) Profit on sale of shares in associate - - (1,733,096) Foreign exchange loss 149,974 - - (161,955) (85,419) (253,684) Movements in working capital (Increase) in receivables (9,236) (18) (5,412) (Decrease)/increase in payables (26,089) 29,884 209,187 Cash utilised by operations (197,280) (55,553) (49,909) Interest paid - - - Net cash used in operating activities (197,280) (55,553) (49,909) Investing activities Interest received 4,428 52 51 Net proceeds from sale of shares in associate - - 2,729,945 Mineral property development (27,827)
(52,245) (175,994) Net cash (used)/received in (23,399) (52,193) 2,554,002 investing activities Financing activities Proceeds from issue of shares - 5,775 11,550 Loans - 100,000 100,000 Net cash generated from financing activities 105,775 111,550 Net (decrease)/increase in cash (220,679) (1,971) 2,615,643 and cash equivalents Cash and cash equivalents at start of period 2,766,074 150,431 150,431 Foreign exchange movement (149,974) - -
Cash and cash equivalents at end of period 2,395,421
148,460 2,766,074
Condensed consolidated statement of changes in group equity
All attributable to equity holders of the company
Share Share Currency Retained Total capital premium translation earnings £ £ £ reserve £ £ Equity at 1 April 2009 7,036,414 8,092,423 1,832,844 8,542,452 25,504,133 - audited Total comprehensive income for the year: Profit for the year - - - 8,204,337 8,204,337 Exchange movement on - - 2,148,426 - 2,148,426 foreign holdings Total comprehensive - - 2,148,426 8,204,337 10,352,763 income for 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 - audited Total comprehensive income for the period: (Loss) for the period - - - (756,132) (756,132) Exchange movement on - - (1,213,105) - (1,213,105) foreign holdings Total comprehensive - - (1,213,105) (756,132) (1,969,237) income for the period: Equity-settled benefits credit: - associate - - - 65,276 65,276 - company - - - - - Equity at 30 September 7,042,414 8,097,973 2,768,165 16,127,990 34,036,542 2010 - unaudited Comparative period Equity at 1 April 2009 7,036,414 8,092,423 1,832,844 8,542,452 25,504,133 - audited Total comprehensive income for the period: (Loss) for the period - - - (368,100) (368,100) Exchange movement on - - 374,123 - 374,123 foreign holdings Total comprehensive - - 374,123 (368,100) 6,023 income for the period: Shares issued for cash 3,000 3,000 - - 6,000 Share issue costs - (225) - - (225) Equity-settled benefits credit: - associate - - - 1,857 1,857 - company - - - 14,298 14,298 Equity at 30 September 7,039,414 8,095,198 2,206,967 8,190,507 25,532,086 2009 - unaudited Notes to the accounts1. Basis of preparationThis half-yearly financial report comprises the condensed consolidatedfinancial statements of the group for the six months ended 30 September 2010.It has been prepared in accordance with the Disclosure and Transparency Rulesof the UK Financial Services Authority; the requirements of IAS 34 - Interimfinancial reporting (as adopted by the European Union) and using the goingconcern basis (and the directors are not aware of any events or circumstanceswhich would make this inappropriate). It was approved by the board of directorson 25 November 2010. It does not constitute financial statements within themeaning of section 434 of the Companies Act 2006 and does not include all ofthe information and disclosures required for annual financial statements. Itshould be read in conjunction with the annual report and financial statementsfor the year ended 31 March 2010 which is available on request from the companyor at www.angleseymining.co.uk.The financial information contained in this report in respect of the year ended31 March 2010 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. It included a referencein respect of the valuation of the Parys Mountain property to which theauditors drew attention by way of emphasis of matter. The half-yearly resultsfor the current and comparative periods are unaudited.
2. Significant accounting policies
The accounting policies applied in these condensed consolidated financial statements are consistent with those set out in the annual report and financial statements for the year ended 31 March 2010. In preparing these financial statements any accounting assumptions and estimates made by management were consistent with those applied to the aforesaid annual report and financial statements.
3. Risks and uncertainties
The principal risks and uncertainties set out in the group's annual report andfinancial statements for the year ended 31 March 2010 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 on these principal risks is to be found on pages 8 and 9 of the2010 annual report which may viewed at www.anglesey mining.co.uk.
4. Statement of directors' responsibilities
The directors confirm to the best of their knowledge that:
a) the condensed consolidated financial statements have been prepared in accordance with lAS 34 as adopted by the European Union; and
b) the interim management report includes a fair review of the information required by the FSA's Disclosure and Transparency Rules (4.2.7 R and 4.2.8 R).
This report and financial statements were approved by the board on 25 November 2010 and authorised for issue on behalf of the board by Bill Hooley, Chief Executive Officer and Ian Cuthbertson, Finance Director.
5. Activities
The group is engaged in mineral property development and has no turnover. There are no minority interests or exceptional items.
6. Equity settled employee benefits
IFRS 2 "Share-based Payment" requires the recognition of equity settled share-based payments at fair value at the date of grant. The fair value of options expensed in these statements, where applicable, is determined by a Black-Scholes option pricing model using a volatility factor of 71% and an option life of 3 years as the significant assumptions.
7. Earnings per share
The calculation and reporting of basic and diluted earnings per share are inaccordance with IAS 33. These earnings per share are computed by dividing theloss attributable to ordinary shareholders of £756,132 (2009 £368,100) by153,158,051 (2009 - 152,858,051) - the weighted average number of ordinaryshares in issue during the period. Where there are losses the effect ofoutstanding share options is anti-dilutive.
8. 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 which isthe group's principal activity . The group's assets and liabilities and incomestatement are analysed as follows by geographical location, which is the basisof internal management reporting.Assets and liabilities Unaudited 30 September 2010 Audited 31 March 2010 UK Canada - Total UK Canada - Total associate associate £ £ £ £ £ £ Assets 16,559,781 20,330,748 36,890,529 16,892,405 21,868,314 38,760,719 Liabilities (2,853,987) - (2,853,987) (2,820,216) - (2,820,216) Net assets 13,705,794 20,330,748 34,036,542 14,072,189 21,868,314 35,940,503 Unaudited six months ended 30 Audited year ended 31 March September 2010 2010 UK Canada - UK Canada Total assoc Total associate £ £ £ £ £ £ Expenses 161,955 - 161,955 253,684 - 253,684 Equity-settled emp benefits - - - 28,127 - 28,127 Share of loss in associate - 407,016 407,016 - 203,173 203,173 Gain on deemed disposals - (17,279) (17,279) - (7,054,967) (7,054,967) Profit on shares in assoc - - - - (1,733,096) (1,733,096) Investment income (5,394) - (5,394) (1,076) - (1,076) Finance costs 59,860 - 59,860 99,818 - 99,818 Exchange rate loss 149,974 - 149,974 - - - Loss/(profit) for the year 366,395 389,737 756,132 380,553 (8,584,890) (8,204,337) 9. Deferred tax
There is an unrecognised deferred tax asset of £1.5 million which, in view ofthe group's trading results, is not considered to be recoverable in the shortterm. There are also capital allowances, including mineral extractionallowances, exceeding £11 million unclaimed and available. Because therecoverability of any taxation relative to these amounts from future operationsis uncertain, no deferred tax asset is reflected in the condensed financialstatements.
10. Development expenditure
Mineral development expenditure incurred by the group is carried in thecondensed consolidated financial statements at cost, less an impairmentprovision if appropriate. The recovery of this expenditure is dependent uponthe successful development and operation of the Parys Mountain project which isitself conditional on finance being available to fund such development.
11. Interest in associate
At 30 September 2010 the group had a 40.84% interest in Labrador Iron MinesHoldings Limited (LIM), a company registered in Ontario, Canada, which isindependently managed and is accounted for in these financial statements as anassociate company. LIM is the 100% owner and operator of a series of iron oreproperties in Labrador and Quebec, some of which were formerly held andinitially explored by the group. At 31 March 2010 the group's interest in LIMwas 41.01%, The change in the group's percentage holding over the periodresults from the issue of shares by LIM in respect of the exercise of optionsand warrants. The fully diluted interest of the group in LIM was 39% (31 March2010 - 39%). The changes in the group's interest in LIM are: Unaudited Unaudited 30 30 September September Audited 31 2010 2009 March 2010 £ £ £ Values in group financial statements: Value brought forward from previous period 21,868,314 13,821,013 13,821,013 Group's share of (losses), adjusted to eliminate any fair value uplift and related taxation in associate's accounts (407,016) (226,880) (203,173) Group's share of equity-settled benefits included in (losses) above and now added back 65,276 1,857 43,930 Profit on deemed disposals following LIM share issues 17,279 - 7,054,967 Less: carrying value of LIM shares sold - - (996,849) Exchange rate movement (1,213,105) 374,123 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 20,330,748 13,970,113 21,868,314
12. Events after the reporting period
None.
13. Related party transactions
None. Directors John Kearney Chairman Bill Hooley Chief executive Ian Cuthbertson Finance director David Lean Non executive Howard Miller Non executive Roger Turner Non executive Danesh Varma Non executive
Corporate office: 01248 361333
London office Painter's Hall Chambers8 Little Trinity Lane, London, EC4V 2ANPhone 020 7653 9881Parys Mountain site Parys Mountain, Amlwch, Anglesey, LL68 9REPhone 01407 831275Registered office Tower Bridge House, St. Katharine's Way,London, E1W 1DD
Share registrars Capita Registrars
www.capitaregistrars.com 0871 664 0300 - for all change of addressand shareholder administration matters(calls cost 10p per minute plus network extras,lines open 0830 to 1730 Mon-Fri)
Web site www.angleseymining.co.uk
E-mail mail@angleseymining.co.uk
Shares listed The London Stock Exchange - LSE:AYM
Company registration number 1849957
For further information, please contact:
Bill Hooley, Chief Executive +44 (0) 1492 541981
Ian Cuthbertson, Finance Director +44 (0) 1248 361333
Emily Fenton/Charlie Geller, Conduit PR +44 (0) 20 7429 6608 / +44 (0) 7788 554035
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