Interim Results for the six months to 30 September 2005
Highlights
- Acquisition of the Labrador Iron Ore Project in Canada
- Success with drilling programme at Parys Mountain
- Completion of �464,000 financing in April 2005
Commenting on the results, John F. Kearney, chairman of Anglesey
Mining, said:
"The past six months has been certainly the most encouraging period for
the company in the last ten years. We have made considerable progress:
the drilling program at Parys Mountain has yielded very encouraging
results; simultaneously we have embarked on a new major initiative to
develop an iron ore mine in Labrador, Canada.
Meanwhile the zinc price finally burst into life and the company's
share price improved strongly. The outlook for all of the company's
metals: zinc, copper, lead, silver and gold at Parys Mountain and iron
ore In Labrador is extremely positive. We look forward to the further
development of the company's two mining projects in 2006."
For further information please contact:
Ian Cuthbertson, Finance Director + (44) 1248 361333
John F. Kearney, Chairman + (1) 416 362 6686
Cathy Malins / Annabel Leather, Parkgreen Communications + (44) 20 7493 3713
Chairman's statement
This has been the most encouraging period for the company in the past
ten years.
The past six months has been a very active, productive and successful
period which has seen the company steadily moving forward on a number
of fronts. Heightened investor interest in the mining sector, buoyed by
strong metal prices particularly for copper and zinc, the major metals
at Parys Mountain, saw the company's share price increase strongly from
4p per share in April to a high of almost 17p in September, before
settling back to the 9p to 12p range recently. Importantly, the trading
volume in the company's shares has been strong, reflecting renewed
investor interest in the company.
However, recently, the market capitalization of the company has been
only �12 million compared with a market capitalization of more than �40
million way back in 1990 - the last time the zinc price was over �850
or $1,500 per tonne. Note, of course, that in 1990 the company had
essentially the same Parys Mountain assets, but with the geology less
well understood and did not have its new Labrador Iron ore project.
Activity
During the six months the company was very active on many fronts. Most
importantly, we embarked on a major new initiative to establish an iron
ore producing mine in Labrador, Canada. This is a very exciting
development for which we have high hopes.
A financing of �464,000 was successfully completed in April, and a
drilling program was launched at the Parys Mountain property, the first
two holes yielding very successful results. A review of the Parys
Mountain feasibility study was initiated.
As a result of the geological reassessments at Parys Mountain carried
out since 1995 the geology is better understood and it is clear that
the opportunity for the discovery of more resources is very good. The
funding enabled the company to launch its long planned exploration
drilling programme at Parys Mountain which commenced in June and
continued throughout the year with very encouraging results.
Hole AMC15 intersected 2.5 meters of massive sulphides at the Engine
Zone horizon with values of 22.2% zinc, 11.9% lead and 6.3% copper,
together with 886 grams of silver and 0.46 grams of gold per tonne,
whilst a narrow intersection at the Central Zone horizon returned
grades of 11.2% zinc, 8.5% lead and 8.4% copper. These high grade
intersections in AMC 15 contained metal grades which are amongst the
highest recorded at Parys Mountain.
AMC16 was drilled to a depth of 640 meters and was intensely altered
throughout most of its depth. The hole successfully intersected the
three target horizons and a further mineralized interval. A third hole,
AMC17, located approximately 100 meters west of AMC16 had reached a
depth of 530 meters by 17 December 2005.
Parys Feasibility Study re-examined
We have commenced the re-examination of the existing 1990 feasibility
study for placing the Parys Mountain property into production. The
study is based on a mining operation of 1,000 tonnes per day producing
copper, lead and zinc concentrates. The existing resource at Parys
Mountain comprises 6.5 million tonnes at a grade of 5.3% zinc, 2.3%
copper and 3.4% lead with silver and gold that lie within reach of the
existing Morris shaft which has been sunk to a depth of 300 meters and
provides access to the minerals by 930 meters of underground
development. The first stage mineable reserve was forecast by the study
to be mined over 6 years while the inferred resources increase the
projected mine life to 18 years.
A preliminary review has been made by consulting engineers of a staged
production scenario which would involve initial mining from a decline
without further deepening of the shaft. Work is continuing on improving
metallurgical recoveries in line with what can be achieved with new
advances in technology.
A review of the planning and permitting required for the operation of
the Parys Mountain mine indicates that the planning consents are in
place and only minor permits are required. A preliminary study by
Golder Associates on the underground deposition of tailings has been
initiated and we are encouraged by the results to date. A review of the
capital costs is still to be carried out as are further economic
assessments of the project.
New Labrador Iron Ore Project
We have launched a major new initiative in Canada. The company has
entered into an agreement to acquire an interest in the Labrador Iron
ore project in Labrador, Canada. This project is partially developed
and has near term production prospects. The agreement gives the company
a unique opportunity to re-establish major iron ore mines previously
operated by the Iron Ore Company of Canada ("IOCC") with estimated
remaining resources of over 100,000,000 tonnes of hematite iron ore.
The company has an option to earn a 70% interest in most of the
identified former IOCC deposits in Labrador, which comprise eight areas
within twenty two mining licences covering 92 mining claims, all
subject to a 3% royalty. The agreement gives Anglesey the exclusive
right to evaluate the project for a period of one year, following which
a 70% interest can be earned by putting the project into production at
a minimum rate of 2,000,000 tonnes per year by 2007 or 2008. More
details are in our 10 October press release, available on the website.
The company has initiated a prefeasibility study of the technical and
economic viability of a direct shipping iron ore project. Unlike the
historic IOCC operations, it is planned to upgrade the ore by screening
and washing, which will result in the production of two iron ore
products - a premium grade lump ore with 67% Fe (iron) content and a
sinter ore with a 63% Fe content. The company expects to increase the
initial production rate to between 3 and 5 million tones per year after
three years, resulting in a potential mine life of about 20 years.
In a very short period over the past few months considerable progress
has been made. An initial field work programme comprised bulk sampling
from surface trenches for metallurgical test work and the checking of
resource grades previously established by the IOCC for the various
deposits. Results of the sampling programme largely confirm the
resource grades for the James, Knob Lake, and Redmond deposits. In some
cases iron grades were significantly higher than previously indicated.
Geological work at Astray Lake indicates that the deposit may extend
along strike from the known deposit, which could have a very
significant positive impact on resource potential. Initial studies
suggest that the higher grade Astray Lake and Sawyer Lake deposits will
produce an above-average premium lump ore. Ground magnetometer surveys
were completed over the Howse deposit and a geological re-assessment
was carried out.
An in-house scoping study for the development of the James, Knob Lake
and Redmond deposits at an initial rate of 2 million tonnes of direct
shipping lump and sinter fine ore products per year was initiated with
a view to bringing it to the feasibility stage during the first half of
2006. Met-Chem Inc. of Montreal was retained to conduct a preliminary
assessment of the transportation and shipping alternatives and Earth
Tech, a major environmental firm, has been retained to advise on the
environmental and permitting aspects. Base line environmental data has
been collected and applications for permits are being made.
Financial Results
For the six months ended 30 September 2005 the company incurred a loss
of �125,175 (2004 - �31,063). The increase in this loss is due to
administrative costs associated with increased activities and a non-
cash charge for the period in accordance with International Financial
Reporting Standards (IFRS) of �70,852 in respect of share based
payments arising on the grant of share options to management, which is
unusually high because a batch of options issued in October 2004 were
largely carry-overs from previous years.
Outlook
The focus of the company now is the development of its two mining
projects. The short term objective is to complete the feasibility
studies of the Labrador Iron ore project and the Parys Mountain copper-
zinc project in parallel. This will take place over the next several
months. We have made excellent progress and now need to gear up do
more.
Current prices of base metals and iron ore are, of course, at record
levels. More importantly, there is a consensus among forecasters that
they will remain relatively strong over the next few years. Continued
strong demand indicates no significant downturn is anywhere on the
horizon.
In order to undertake these ambitious programs further funding will be
required however the timing of any fund-raisings will be carefully
judged. The company is evaluating alternatives with its advisors.
Anglesey may be unique among mining juniors in having two exciting
projects with established resources at the feasibility study stage,
both of which have the potential to be near-term cash producers. We
look forward to turning that potential into reality.
On behalf of the board of directors
John F Kearney
Chairman
19 December 2005
GROUP INCOME STATEMENT - unaudited
for the six months ended All in �
30 September 2005
All operations are continuing
6 6 Year
Notes months months ended 31
ended ended Mar 05
30 Sep 05 30 Sep 04
Revenue - - -
Operating expenses (125,175) (31,063) (118,612)
Operating loss (125,175) (31,063) (118,612)
Interest receivable 9,356 57 2,434
Interest payable (35,283) (35,458) (70,591)
Loss before tax (151,102) (66,464) (186,769)
Taxation - - -
Loss (151,102) (66,464) (186,76)
Basic loss per share 2 (0.1)p (0.1)p (0.2)p
Diluted loss per share 2 (0.1)p (0.1)p (0.2)p
GROUP BALANCE SHEET - unaudited
as at 30 September 2005 All in �
Assets Notes 30 Sep 05 30 Sep 04 31 Mar 05
Non-current assets
Deferred development 3 5,441,743 5,245,393 5,274,601
expenditure
Property, plant and 185,352 185,852 185,602
equipment
Total non-current assets 5,627,095 5,431,245 5,460,203
Current assets
Trade and other 117,200 108,845 110,610
receivables
Cash and cash equivalents 303,720 3,449 44,070
Total current assets 420,920 112,294 154,680
Liabilities
Current liabilities
Trade and other payables 4 (441,448) (1,553,799) (1,683,501)
Total current liabilities (441,448) (1,553,799) (1,683,501)
Net current liabilities (20,528) (1,441,505) (1,528,821)
Non-current liabilities
Financial liabilities -
borrowings 4 (1,295,650) - -
Net assets 4,310,917 3,989,740 3,931,382
Equity
Share capital 6,789,247 6,673,247 6,673,247
Share premium account 6,080,931 5,737,146 5,737,146
Share options reserve 5 132,799 - 61,947
Retained earnings (8,692,060) (8,420,653) (8,540,958)
Total shareholders' equity 4,310,917 3,989,740 3,931,382
GROUP CASH FLOW STATEMENT - unaudited
For the six months ended All in �
30 September 2005
6 6
Notes months months Year
ended ended ended
30 Sep 05 30 Sep 04 31 Mar 05
Operating activities
Operating loss (125,175) (31,064) (132,880)
Adjust: Depreciation 250 250 500
Adjust: Share based 5 70,852 - 61,947
payment charge
Interest paid (283) - (12)
Operating cashflow before
movements in working capital (54,356) (30,814) (70,445)
(Decrease)/increase in
net current liabilities (13,002) 5,852 44,932
(Increase)/decrease in
net current assets (4,721) 474 578
Net cash from operating
activities (72,079) (24,488) (24,935)
Investing activities
Development costs (135,543) (3,387) (7,094)
Interest received 7,487 57 565
Net cash used in investing
activities (128,056) (3,330) (6,529)
Financing activities
Issue of ordinary shares 459,785 - -
net of costs
Increase in loans - 30,000 60,000
Net cash from financing 459,785 30,000 60,000
activities
Net increase in cash 259,650 2,182 28,536
Cash and cash equivalents 44,070 1,267 1,266
at beginning of period
Cash and cash equivalents 303,720 3,449 44,070
at end of period
RECONCILIATION OF CHANGES IN EQUITY - unaudited
For the six months ended All in �
30 September 2005
6 6
Notes months months Year
ended ended ended 31
30 Sep 05 30 Sep 04 Mar 05
Opening shareholders funds 3,931,382 4,056,204 4,056,204
Nominal value of ordinary 116,000 - -
shares issued
Premium on shares issued, 343,785 - -
less expenses
Share based payment 5 70,852 - 61,947
charges
Loss (151,102) (66,464) (186,769)
Closing shareholders' funds 4,310,917 3,989,740 3,931,382
Significant accounting policies and notes to accounts
1. BASIS OF ACCOUNTING: The group has adopted the new and revised
Standards and Interpretations issued by the International Accounting
Standards Board (IASB) and the International Financial Reporting
Interpretations Committee (IFRIC) of the IASB that are relevant to its
operations and effective for accounting periods beginning after 1
January 2005. In respect of share-based payments (IFRS 2) this change
in the group's accounting policies has resulted in the restatement of
the reported comparative period results.
The financial statements have been prepared under the historical cost
convention, and on a going concern basis. There are no minority
interests or extraordinary items.
2. EARNINGS PER SHARE: The calculation and reporting of basic and
diluted earnings per share (EPS) are in accordance with FRS 14. Basic
earnings per share is computed by dividing the loss of �151,102
available to ordinary shareholders by 121,358,096 - the weighted
average number of ordinary shares in issue during the period. Since
there is a loss for the year, basic and diluted EPS are the same.
3. DEVELOPMENT EXPENDITURE: Mineral development expenditure incurred
by the group is carried in the financial statements at cost less an
impairment provision. The recovery of this expenditure is dependent
upon the successful development of the Parys Mountain project which is
itself conditional on finance being available to fund that development.
4. LIABILITIES: Agreement has been reached with Juno Limited, the
ultimate parent company, that will extend the notice period for
repayment of the company's loans from Juno to more than one year.
Accordingly the loan outstanding of �1,295,650 (2004 �1,195,528) due to
Juno has been reclassified to non-current liabilities.
5. SHARE-BASED PAYMENTS: IFRS 2 "Share-based Payment" requires the
recognition of share-based payments (which in the case of the group
during the period are share options only) at fair value at the date of
grant. Prior to the adoption of IFRS 2, the group did not recognise the
financial effect of share-based payments. In accordance with the
transitional provisions of IFRS 2, the standard has been applied
retrospectively to all grants of share options after 7 November 2002
which had not vested by 1 April 2005. The fair value of the options to
be expensed has been determined by a Black-Scholes option pricing model
using a volatility factor of 70% and an option life of 3 years as the
significant assumptions.
For the six months ended 30 September 2005, the change in accounting
policy has resulted in a charge of �70,852 (2004 - originally nil,
61,947 when restated) to the profit and loss account. The balance
sheet at 31 March 2005 has been restated to reflect share-based
payments prior to 1 April 2005 of �61,947, resulting in a cumulative
adjustment of �132,799. A further �8,518 will be charged in the next
financial period.
6. DEFERRED TAX: The group has accumulated losses for taxation
purposes of �3.2 million up to 30 September 2005. There are also
capital allowances, including mineral extraction allowances, exceeding
�9 million unclaimed and available at 30 September 2005. Because the
recoverability of any taxation relative to these amounts from future
operations is uncertain, no deferred tax asset is reflected in the
financial statements.
7. FINANCIAL INFORMATION: This financial information does not
constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985. Statutory accounts for the year ended 31 March 2005
which were prepared under the applicable accounting standards generally
accepted in the UK, have been delivered to the Registrar of Companies.
The report of the auditors on those accounts did not contain a
statement under Section 237 of the Companies Act 1985 and was not
qualified, but did contain a reference to fundamental uncertainties.
8. BOARD APPROVAL: These interim results were approved by the board
on 19 December 2005.
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