1 May 2014 08:00
MINCO PLC - ANNUAL REPORT & ACCOUNTS
Dublin, 30 April 2014 - Minco Plc (AIM-"MIO") (the Company), is pleased to announce that its Annual Report and Accounts for the year ended 31 December 2013 have been published today and are being posted to shareholders.
Copies of these documents are available on the Company's website www.minco.ie and will also be available on request for one month from May 3, 2014, free of charge, from the Company's registered office at 27 Lower Hatch Street, Dublin 2, Ireland.
In his Chairman's Letter to Shareholders,John F. Kearney Chairman & Chief Executive, said:
"The year 2013 was a very active and successful year for Minco plc on many fronts.
In July 2013, Minco acquired Buchans Minerals Corporation in exchange for ordinary shares of Minco by way of a statutory scheme of arrangement and we welcomed the former shareholders of Buchans as shareholders of Minco. We were also pleased that Dennis MacLeod and Warren MacLeod, former directors of Buchans, joined the board of Minco.
Consolidating the ownership of Buchans' advanced exploration assets, including the Lundberg zinc/lead/copper project in central Newfoundland and the Woodstock manganese project in New Brunswick, was a major step towards achieving Minco's strategy of creating a strong base metals exploration and development company with advanced projects in established mining jurisdictions in eastern Canada.
Woodstock Manganese Project
Minco is evaluating the Plymouth manganese deposit at Woodstock, New Brunswick for the production of electrolytic manganese metal ("EMM"), EMM that is primarily used in the production of stainless steel, specialty steels and high-purity alloys.
In May 2013, Minco announced a new resource estimate for the Plymouth Manganese Deposit, totaling 43.7 million tonnes grading 9.98% Mn at a 5% Mn cut-off, completed by Mercator Geological Services of Dartmouth, Nova Scotia. Completion of this resource estimate was a significant positive development as it allowed the Company to undertake a Preliminary Economic Assessment to assess the project's potential for development as an open-pit mine and using hydrometallurgical leaching and electrowinning techniques to produce high-purity >99.7% manganese metal.
Thibault & Associates Inc. has been working under contract to Minco to develop and design a hydrometallurgical process to produce EMM from the Plymouth deposit. Several bench scale test programme phases have been completed to assess alternative technologies and to optimize each stage of the process. A batch mini-pilot test programme was also completed to simulate the purification of manganese sulfate electrolyte for confirmation of EMM product quality. The completion of the bench scale programme has identified a technically viable process technology for development of the Plymouth deposit and will be utilized in completion of the PEA. Minco is now in the process of completing the preliminary economic assessment on the Plymouth deposit that is anticipated to be completed during the second quarter of 2014.
BUCHANS BASE METAL PROJECTS
Minco has four advanced base metal properties in the Buchans area of central Newfoundland that contain numerous exploration prospects. At the core of these base metal properties is the Lundberg copper-zinc-lead deposit. In March 2013, Minco announced a new resource estimate, completed by Mercator Geological Services Limited that successfully upgraded categorization of the resource, as well as increased the overall tonnage of the Lundberg deposit to an indicated resource of 23.44 million tonnes grading 1.41% Zn, 0.60% Pb, 0.35% Cu, 5.31g/t Ag and 0.07g/t Au.
Since the successful upgrading of the Lundberg Resource, Minco has focused on completing a comprehensive programme of metallurgical testwork, focused on flotation testing to produce saleable zinc, copper and lead concentrates. The testwork to date has demonstrated that saleable concentrates can be produced for all three primary metals.
The concept of treating the smaller but higher grade deposits more distal from Lundberg, such as the Daniels Pond, Bobbys Pond and Tulks Hill high-grade satellite deposits, by using crushing and pre-concentration, prior to trucking the pre-concentrate to a central mill facility to be located at Buchans adjacent to the Lundberg deposit, is being examined by the Company.
MINERAL EXPLORATION AT NORTHERN PENNINES, ENGLAND
Throughout 2013, Minco commenced its new exploration initiative in the North Pennines Orefield located in the northern English counties of Cumbria, Northumberland and Durham. Minco's ongoing exploration drilling is currently centred on a five square kilometre area in the vicinity of the village of Nenthead.
Minco has identified three types of targets in the area: (1) the basal limestone succession; (2) the horizons immediately above and below the Whin Sill formation; and, (3) the historic mining horizon within the Great Limestone. The majority of the drilling during 2013 and 2014 to date has been focused around the historic mine horizons.
Minco has identified disseminated zinc mineralisation at multiple elevations in eight of 22 holes drilled to date, with seven of the holes delineating zinc within the prolific Great Limestone horizon. Minco's drilling to date totals 5,467 metres in Cumbria and Northumberland counties.
The picture is beginning to develop of flat lying, stratiform lenses of disseminated, replacement mineralisation locally extending for over 20 to 60 metres laterally from historic mine workings. The average thickness to date of this mineralization is seven metres with a combined lead plus zinc grade of about nine-percent for the holes for which assay results are available. Previous miners identified a total of 10.5 kilometres of mineralised vein structure, all of which is considered by Minco to have potential for mineralisation similar to that outlined by initial drilling.
Minco considers the results from its first 22-drillholes encouraging given the fact that these are the first exploration drill holes to be drilled within this 10 square-kilometre area. These results to date confirm the potential of the Northern Pennine Orefield for the discovery of new mineralization both extending laterally around and at depth below historic workings and with the potential to host an economic zinc-lead deposit.
Widespread, generally low grade, disseminated zinc-lead-pyrite mineralisation was consistently encountered in all four holes at depth below the historic mining level approximately 400 metres below surface, in close proximity to and apparently associated with geological units both above and below the Whin Sill intrusive. It is in this deeper stratigraphy located approximately 400 metres below previous, adit-accessed workings in the Great Limestone formation, that the Company believes there is significant untested potential for zinc lead mineralisation and such new deposits could be significantly larger than any previously discovered.
Some 3,000 metres of drilling is planned to be carried-out through the remainder of 2014. The objective of this drilling is to assess the possibility for major zones of replacement-style, stratiform mineralization in the Carboniferous stratigraphy both, at the level of historic mine workings, and below the Great Limestone, which may warrant more detailed drilling to establish estimates of potential resources.
XTIERRA INC.
Minco holds approximately 30 million shares in Xtierra Inc. ("Xtierra"), a company listed on the TSX Venture Exchange under the symbol "XAG", representing an approximate 26% interest. Xtierra holds mineral properties located in the in the State of Zacatecas in the Central Mineral Belt of Mexico.
In April 2014, Xtierra announced an updated resource estimate and a Preliminary Economic Assessment (PEA) on the Bilbao Project, both completed by RungePincockMinarco (Canada) Limited (RPM).
The potentially mineable underground resource at Bilbao is estimated by RPM to be 5.2M tonnes at grades of 2.10 % Zn, 1.40 % Pb and 63.96 grams Ag per tonne. The proposed mine production schedule is based on a production rate of 2,000 tpd or 720,000 tonnes per year. This provides for a mine life of approximately 8 years. Project Capital Costs, as of April 2014, are estimated by RPM to be $99.5 million. The average total unit cost for the operational activities is $66.90/t of ore.
Pre-tax earnings total $59.9 million over the eight year designated mine life. Economic results of the project cash flow model indicate an Internal Rate of Return (IRR) of 13.2% and a Net Present Value (NPV) of $18.7 million at an 8% discount rate. The Bilbao Project was found to be most sensitive to changes in operating costs where a 15% reduction in operating costs would result in pre-tax NPV of $45 million at a 10% discount rate and a pre-tax IRR of 22.00%.
RPM have made numerous recommendations throughout the PEA identifying various opportunities to increase the mineable resource and reduce operating costs through additional exploration and engineering, improving the overall economics of the Bilbao project.
Xtierra's focus going forward is to maximize the value of Bilbao by seeking to develop Bilbao either alone or in joint venture with a partner.
FINANCIAL RESULTS
For the year ended December 31, 2013, Minco reported a consolidated net loss of $4,422,000. The loss included $1,840,000 share of loss of associate (Xtierra), $366,000 foreign exchange loss, $271,000 expense arising on the decrease in fair value of financial assets, and $454,000 professional fees paid by the Group in connection with the acquisition of Buchans.
For the year ended December 31, 2012, the Company recorded a loss of US$2,364,000. The loss included a foreign exchange loss of $250,000, a change in fair value of financial assets of $308,000, an impairment charge on receivables of $865,000 and an income tax under provision from the prior year of $314,000.
During the year ended December 31, 2013, Minco invested $3,175,000 in exploration and development expenditures, and $4,393,000 in acquisitions.
At December 31, 2013, Minco held $10,363,000 in cash and cash equivalents and had a working capital surplus of $9,739,000, compared to a working capital surplus of $14,636,000 at December 31, 2012. At December 31, 2013, Minco also held mineral properties with a book value of $11,410,000 and investments with a book value of $2,179,000.
Minco is in a strong cash position and is adequately financed to meet its planned 2014 programs and business objectives, enabling Minco to pursue investment and acquisition opportunities, at a time when the financing market for junior resource companies is closed tight.
Minco also holds a 20% interest in an Irish prospecting license in joint venture with Tara-Boliden, adjacent to Boliden's large Tara zinc lead mine at Navan, Ireland, and a 2% net smelter royalty in the Curraghinalt gold deposit in Co. Tyrone, Northern Ireland, currently being explored by Dalradian Gold.
Stock Exchange Listing
Following the acquisition of Buchans and with Minco thereby becoming a reporting issuer in various provinces of Canada, we are pursuing a listing for Minco's shares on the Toronto Stock Exchange. This proposal has encountered a delay because of a problem relating the payment of Irish Stamp Duty tax on the transfer on any shares in the Company. It appears to be necessary to obtain an exemption from the Irish Revenue from the payment of such stamp duty tax on any shares traded in Canada.
We would like to thank all Minco shareholders for their continued confidence and support."
ABOUT MINCO
Minco Plc, registered in the Republic of Ireland and listed on the AIM Market of the London Stock Exchange ("MIO"), is an exploration and development company, currently engaged in zinc-lead exploration in Canada, the United Kingdom and Ireland and in evaluating a manganese project in New Brunswick, Canada and with investments in zinc‐silver projects in Mexico through holding 30 million shares (approximately 26%) in Xtierra Inc. listed on the TSX Venture Exchange (TSX.V-"XAG").
Minco also holds a 2% NSR royalty on the Curraghinalt gold property in Northern Ireland which is being explored by Dalradian Resources Inc. (TSX-"DNA").
For further information of Minco refer to Minco's website at www.minco.ie.
For further information, www.minco.ie or contact:
John Kearney: Chairman and Chief Executive +1 416 362 6686
Danesh Varma: CFO & Company Secretary +44 (0) 8452 606 034
Peter McParland: Director - Ireland +353 (0)46 907-3709
Warren MacLeod: Director,- President Buchans +1 902 472 3520
John Frain/Fergal Meegan: (NOMAD) Davy +353 (0)1 6796363
Saif Janjua: (Corporate Advisor| Broker)
Beaufort International, London +44(0)20 7382 8300