Anglesey Mining plc
Half yearly report for the six months to 30 September 2013
Chairman's Statement and Management Report
The half year to the end of September 2013 has been difficult for the group and
particularly for the investment in Labrador Iron Mines ("LIM").
For the six months ended 30 September 2013, LIM sold six shipments of iron ore
totalling 980,000 dry tonnes and expects to achieve its target for the
production and sale of 1.7 million wet tonnes for the year. However the quality
of that product was below expectations, largely because of lower grade
encountered in the deeper part of the James mine, and the net revenue received
was negatively impacted, despite the improvement in iron ore prices. At the
same time LIM's operating costs continued at higher levels than anticipated.
The result was a very large loss reported by LIM. Now that LIM is treated as an
investment this loss does not directly impact the group's accounts. However the
LIM share price had declined at the period end and that fall in price is now
reflected as a loss in our income statement. The increase in value of sterling
against the Canadian dollar over the period has added further to this loss.
At the same time Parys Mountain has been maintained on a low activity level
with only a limited amount of geological review being conducted. This has
ensured that costs have been kept to a minimum and cash conserved. A number of
cost limitation matters have been completed and these should lead to a
reduction of operating expenses in future periods.
We continue to monitor the markets for the various metals that comprise the
Parys Mountain project with the expectation that we will be able to move the
project forward, with its relatively short lead time, to production once we
sense the future upturn in these metal prices is well founded. We also continue
to monitor other potential projects in suitable commodities in politically
stable environments.
Labrador Iron
LIM detailed the following highlights for the three and six month periods ended
30 September 2013:
· During the quarter, LIM sold four shipments of iron ore totalling
652,000 dry tonnes, and reported revenue of C$40.3 million. For the six months
ended September 30, 2013, LIM has completed the sale of six shipments of iron
ore totalling 980,000 dry tonnes.
· Revenues were impacted by value-in-use deductions arising primarily
from the lower grade of ore mined.
· With a number of cost reduction measures implemented and higher
production volumes achieved, operating unit costs were lower quarter over
quarter.
· For the half year ended 30 September 2013, LIM reported a net loss of
C$53.4 million, which included a non-cash depletion and depreciation charge of
C$26.3 million.
· During the period, LIM completed the Joint Venture Agreement with
Tata Steel Minerals Canada ("TSMC") for the exploration and development of
LIM's Howse Deposit and received a cash consideration of C$30 million.
Mining, Processing and Rail
During the first half of the 2013 operating season, LIM mined a total of 1.33
million tonnes of ore from the James Mine, Redmond Mine and Ferriman
stockpiles. At James, approximately 1.12 million tonnes of ore were mined
during the period. Mining activity took place deeper in the pit and the ore
exhibited a lower in-situ iron grade and contained a greater fines component
than previously experienced.
Initial mining of the Redmond Mine commenced in July 2013 and 190,000 tonnes of
ore was extracted during the period. Waste removal from Redmond was minimal,
partially offsetting the additional costs of hauling the material approximately
12 kilometres to Silver Yards. High clay content in the Redmond material caused
difficulties in the wet processing plant, resulting in poor recovery levels.
Bulk sampling of ore from the Ferriman stockpiles commenced in September 2013
and 18,500 tonnes of ore was reclaimed from Ferriman. The Ferriman material has
responded well to wet processing.
Processing activities at Silver Yards increased significantly in the second
quarter, with full operations from both the wet processing and dry screening
facilities. A total of 1.8 million tonnes of plant feed were processed and
screened during the period, producing an aggregate of 1.1 million tonnes of
lump and sinter iron ore product. Product recovery rate was low at 61%, which
was attributable to a higher amount of fines in the James plant feed extracted
from deep in the pit, the high clay content of the Redmond plant feed and
underperformance of the newly installed wet high intensity magnetic separator.
LIM railed a record of approximately 1.05 million tonnes of iron ore to the
Port of Sept-Îles. By the end of July, a fourth train set was operating and
rail operations averaged approximately five trains per week.
Iron Ore Sales
LIM completed six shipments of iron ore totalling 980,000 dry tonnes during the
period. These shipments were sold to the Iron Ore Company of Canada. LIM
recognized net revenue of C$58.2 million after netting shipping costs and IOC's
participation from the CFR China actual realized price for these shipments.
LIM's product sales during the period experienced value-in-use deductions
related to the silica, iron content and sizing specifications, which deviated
from benchmark standards.
Parys Mountain
There has been a limited amount of work carried out on the Parys Mountain
site. Geological data compilation, assessment and review have continued and
this will increase in the coming months. The group continues to monitor the
markets for its major metals and in particular the medium term prospects for
zinc on which the immediate future development of mining and treatment
operations is highly dependent. The lead time to move Parys Mountain into
production, subject to financing, is relatively short. In the meantime
expenditure will be kept to a minimum consistent with sufficient geological
review being maintained.
Financial Results
There was a net loss for the period of £3.2 million (2012 loss - £7.4 million);
almost £3 million of this loss was in respect of the holding in LIM.
Administration expenses were slightly reduced. The group has no revenues from
the operation of its properties. At the period end the cash resources of the
group were £0.4 million (31 March 2013 - £0.7 million).
Outlook
The iron ore price has firmed during the half year and has maintained some
stability for a couple of months. Recent political signals from China suggest
that infrastructure investment will continue and this should continue to
support the price around current levels. LIM has to maintain its programme of
cost reductions and couple this with detailed planning for the next stage of
development at Houston. Together all these should, subject to additional
financing, provide a solid basis for future operations.
Base metal prices, particularly of lead and zinc, have still to respond to any
Chinese stimulus and to the perceived reduction in global production levels in
the next few years. The group is of the view that sustained upward movements
will occur in the near future.
John F Kearney
Chairman
25 November 2013
Anglesey Mining plc - Group
Condensed consolidated income statement
Notes Unaudited Unaudited
six months six months
ended 30 ended 30
September September
2013 2012
All operations are continuing £ £
Revenue - -
Expenses (196,480) (201,885)
Share of loss of associate - (7,039,697)
Losses on deemed disposals - (133,913)
in associate
Loss on fair value of investment 10 (2,440,187) -
Exchange difference on loss above 10 (527,771) -
Investment income 14,267 27,075
Finance costs (57,149) (57,456)
Foreign exchange (loss)/profit (1,566) 8,887
Loss before tax (3,208,886) (7,396,989)
Tax 8 - -
Loss for the period (3,208,886) (7,396,989)
Loss per share
Basic - pence per share (2.0)p (4.6)p
Diluted - pence per share (2.0)p (4.6)p
Condensed consolidated statement of comprehensive income
Loss for the period (3,208,886) (7,396,989)
Other comprehensive income:
Exchange difference on - 42,465
translation of
foreign holding
Total comprehensive loss (3,208,886) (7,354,524)
for the period
All attributable to equity holders of the company
Condensed consolidated statement of financial position
Notes Unaudited 30
September Audited 31
2013 March 2013
£ £
Assets
Non-current assets
Mineral property development 9 14,787,943 14,753,566
Property, plant and equipment 204,687 204,687
Investment 10 4,996,574 7,964,532
Deposit 122,454 122,204
20,111,658 23,044,989
Current assets
Other receivables 38,071 40,239
Cash and cash equivalents 431,793 670,345
469,864 710,584
Total assets 20,581,522 23,755,573
Liabilities
Current liabilities
Trade and other payables (78,363) (100,677)
(78,363) (100,677)
Net current assets 391,501 609,907
Non-current liabilities
Loan (2,363,432) (2,306,283)
Long term provision (42,000) (42,000)
(2,405,432) (2,348,283)
Total liabilities (2,483,795) (2,448,960)
Net assets 18,097,727 21,306,613
Equity
Share capital 11 7,116,914 7,116,914
Share premium 9,848,949 9,848,949
Retained earnings 1,131,864 4,340,750
Total shareholders' equity 18,097,727 21,306,613
All attributable to equity holders of the company
Condensed consolidated statement of cash flows
Notes Unaudited Unaudited
six months six months
ended 30 ended 30
September September
2013 2012
£ £
Operating activities
Loss for the period (3,208,886) (7,396,989)
Adjustments for non-cash items:
Investment revenue (14,267) (27,075)
Finance costs 57,149 57,456
Share of loss of associate - 7,039,697
Losses on deemed
disposals in associate - 133,913
Loss on fair value of investment 10 2,440,187 -
Exchange difference on loss above 10 527,771 -
Foreign exchange movement 1,566 (8,887)
(196,480) (201,885)
Movements in working capital
Decrease in receivables 2,168 2,221
Decrease in payables (10,123) (50,682)
Net cash used in operating activities (204,435) (250,346)
Investing activities
Investment revenue 14,017 26,825
Mineral property development (46,568) (1,280,091)
Net cash used in investing activities (32,551) (1,253,266)
Financing activities
Proceeds from issue of shares - 234,718
Loan received -
Net cash generated from financing activities - 234,718
Net decrease in cash (236,986) (1,268,894)
and cash equivalents
Cash and cash equivalents at start of period 670,345 3,150,644
Foreign exchange movement (1,566) 8,887
Cash and cash equivalents at end of period 431,793 1,890,637
All attributable to equity holders of the company
Condensed consolidated statement of changes in group equity
Share Share Currency Retained Total
capital premium translation earnings £
£ £ reserve £ £
Equity at 1 April 7,116,914 9,848,949 - 4,340,750 21,306,613
2013 - audited
Total comprehensive
income for the
period:
Loss for the period - - - (3,208,886) (3,208,886)
Total comprehensive - - - (3,208,886) (3,208,886)
income for the
period:
Equity at 30 7,116,914 9,848,949 - 1,131,864 18,097,727
September 2013 -
unaudited
Comparative period
Equity at 1 April 7,096,914 9,634,231 3,241,170 35,792,148 55,764,463
2012 - audited
Total comprehensive
income for the
period:
(Loss) for the - - - (7,396,989) (7,396,989)
period
Exchange difference - - 42,465 - 42,465
on translation of
foreign holdings
Total comprehensive - - 42,465 (7,396,989) (7,354,524)
income for the
period:
Shares issued 20,000 220,000 - - 240,000
to discharge a
liability
Share issue costs - (5,282) - - (5,282)
Equity-settled - - - 284,991 284,991
benefits credit:
- associate
Equity at 30 7,116,914 9,848,949 3,283,635 28,680,150 48,929,648
September 2012 -
unaudited
All attributable to equity holders of the company
Notes to the accounts
1. Basis of preparation
This half-yearly financial report comprises the condensed consolidated
financial statements of the group for the six months ended 30 September 2013.
It has been prepared in accordance with the Disclosure and Transparency Rules
of the UK Financial Services Authority, the requirements of IAS 34 - Interim
financial reporting (as adopted by the European Union) and using the going
concern basis (and the directors are not aware of any events or circumstances
which would make this inappropriate). It was approved by the board of directors
on 25 November 2013. It does not constitute financial statements within the
meaning of section 434 of the Companies Act 2006 and does not include all of
the information and disclosures required for annual financial statements. It
should be read in conjunction with the annual report and financial statements
for the year ended 31 March 2013 which is available on request from the company
or may be viewed at www.angleseymining.co.uk.
The financial information contained in this report in respect of the year ended
31 March 2013 has been extracted from the report and financial statements for
that year which have been filed with the Registrar of Companies. The report of
the 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 results
for 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 2013. The following amendments to
interpretations were effective in the current period and have been adopted:
IAS 1 Presentation of Financial Statements: Amendments to revise the
way other comprehensive income is presented; Issued - June 2011; Effective -
Annual periods beginning on or after 1 July 2012. The amendments to IAS 1
require items of other comprehensive income to be grouped into those that will
be subsequently reclassified to profit or loss and those that will not. The
disclosures will be made in the group's financial statements for the year ended
31 March 2014.
IFRS 13 Fair Value Measurement: Original issue; Issued - May 2011;
Effective - Annual periods beginning on or after 1 January 2013. The
application of IFRS 13 has not significantly impacted the fair value
measurement of any financial assets or liabilities held by the group. IFRS 13
also requires additional disclosures at the interim period which have been
incorporated into IAS 34 These disclosures are given in note 12.
The adoption of the following amendments and new interpretations has not
resulted in a change to the accounting policies nor had a material effect on
the financial performance and position of the group. 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.
IFRS 11 Joint Arrangements: Original issue; Issued - May 2011;
Effective - Annual periods beginning on or after 1 January 2013.
IAS 19 Employee Benefits: Original issue; Issued - Amended June
2011; Effective - Annual periods on or after 1 January 2013.
IAS 27 Separate Financial Statements (as amended in 2011): Original
issue; Issued - May 2011; Effective - Annual periods beginning on or after 1
January 2013
IAS 28 Investments in Associated and Joint Ventures: Original issue;
Issued - May 2011; Effective - Annual periods beginning on or after 1 January
2013
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine;
Effective - Annual periods beginning on or after 1 January 2013
Annual improvements 2009-2011: these amendments to IAS 1, IAS 16 and IAS 32 are
effective for accounting periods beginning on or after 1 January 2013.
3. Risks and uncertainties
The principal risks and uncertainties set out in the group's annual report and
financial statements for the year ended 31 March 2013 remain the same for this
half-yearly financial report and can be summarised as: development risks in
respect of mineral properties, especially in respect of permitting and metal
prices; liquidity risks during development; and foreign exchange risks. More
information is to be found in the 2013 annual report - see note 1 above.
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 the
requirements of IAS 34 Interim financial reporting (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 2013 and authorised for issue on behalf of the board by Bill
Hooley, Chief Executive Officer and Danesh Varma, Finance Director.
5. Activities
The group is engaged in mineral property development and currently has no
turnover. There are no minority interests or exceptional items.
6. Earnings per share
The loss per share is computed by dividing the loss attributable to ordinary
shareholders of £3.2 million (2012 loss £7.4m), by 160,608,051 (2012 -
159,328,270) - the weighted average number of ordinary shares in issue during
the period. Where there are losses the effect of outstanding share options is
not dilutive.
7. Business and geographical segments
There are no revenues. The cost of all activities charged in the income
statement relates to exploration and development of mining properties. The
group's income statement and assets and liabilities are analysed as follows by
geographical segments, which is the basis on which information is reported to
the board.
Unaudited six months ended 30 Unaudited six months
September 2013 ended 30 September 2012
UK Canada - Total UK Canada - Total
investment associate
£ £ £ £ £ £
Expenses (196,480) - (196,480) (201,885) - (201,885)
Loss on fair - (2,440,187) (2,440,187) - - -
value of
investment
Exchange - (527,771) (527,771) - - -
difference
on loss
above
Share of - - - - (7,039,697) (7,039,697)
loss in
associate
Loss on - - - - (133,913) (133,913)
deemed
disposals
Investment
income 14,267 - 14,267 27,075 - 27,075
Finance
costs (57,149) - (57,149) (57,456) - (57,456)
Exchange (1,566) - (1,566) 8,887 - 8,887
rate
movements
Loss for the (240,928) (2,967,958) (3,208,886) (223,379) (7,173,610) (7,396,989)
period
Unaudited 30 September 2013 Audited 31 March 2013
UK Canada - Total UK Canada - Total
investment associate
£ £ £ £ £ £
Assets 15,584,948 4,996,574 20,581,522 15,791,041 7,964,532 23,755,573
Liabilities (2,483,795) - (2,483,795) (2,448,960) - (2,448,960)
Net assets 13,101,153 4,996,574 18,097,727 13,342,081 7,964,532 21,306,613
8. Deferred tax
There is an unrecognised deferred tax asset of £1.2 million (31 March 2013 - £
1.2m) which, in view of the group's results, is not considered to be
recoverable in the short term. There are also capital allowances, including
mineral extraction allowances, exceeding £11 million (unchanged from 31 March
2013) unclaimed and available. No deferred tax asset is recognised in the
condensed financial statements.
9. Mineral property development
Mineral development costs incurred by the group are carried in the condensed
consolidated financial statements at cost, less an impairment provision if
appropriate. The recovery of mineral development costs is dependent upon the
successful development and operation of the Parys Mountain project which is
itself conditional on finance being available to fund such development. During
the period expenditure of £34,377 was incurred (six months to 30 September 2012
- £370,623). The 2012 expenditure included more drilling costs and the cost of
terminating a net profits royalty agreement in respect of Parys Mountain. There
have been no indicators of impairment during the period.
10. Investment - formerly interest in an associate
Labrador Iron Mines Holdings Limited (LIM) 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. On 6 November 2012 the
group's holding in LIM was diluted from 26% to 15% as a result of LIM share
issues to third party interests. From that date its accounting treatment has
changed and LIM is now held as an investment.
Unaudited 30
September
2013 31 March 2013
£ £
Value of investment upon
recognition as a financial
investment - 10,483,858
Value brought forward 7,964,532 -
Addition to investment - 950,927
Loss on adjustment to fair value (2,440,187) (3,791,439)
Exchange difference arising on
adjustment above (527,771) 321,186
Amount carried in the group accounts 4,996,574 7,964,532
The published fair value of the group's investment in LIM at 30 September 2013
is £5 million (31 March 2013 - £8 million). The shares included above represent
an investment in listed equity securities that present the group with
opportunity for return through dividend income and trading gains. The group
holds a strategic non-controlling interest. These shares are not held for
trading and accordingly are classified as 'available for sale' which is deemed
to be the most appropriate classification under IFRS. The fair values of all
equity securities are based on quoted market prices. The above investment is
measured subsequent to initial recognition at fair value as 'Level 1' AFS based
on the degree to which the fair value is observable. Level 1 fair value
measurements are those derived from quoted prices (unadjusted) in active
markets.
11. Share capital
Ordinary shares of Deferred shares of Total
1p 4p
Issued and Nominal Number Nominal Number Nominal
fully paid value £ value £ value £
At 31 March 2012 1,586,081 158,608,051 5,510,833 137,770,835 7,096,914
Issued 11 July 2012 20,000 2,000,000 - - 20,000
-
At 31 March and 30 September 2013 1,606,081 160,608,051 5,510,833 137,770,835 7,116,914
12. Financial instruments
Available for sale Loans & Financial liabilities
asset receivables
Unaudited 31 March Unaudited 31 March Unaudited 31 March
30 Sep 13 2013 30 Sep 13 2013 30 Sep 13 2013
£ £ £ £ £ £
Financial assets
Investment 4,996,574 7,964,532 - - - -
Deposit - - 122,454 122,204 - -
Other debtors - - 38,071 40,239 - -
Cash and cash
equivalents - - 431,793 670,345 - -
- -
Financial liabilities - -
Trade creditors - - - - (12,533) (33,860)
Loans due to Juno - - - - (2,363,432) (2,306,283)
4,996,574 7,964,532 592,318 832,788 (2,375,965) (2,340,143)
13. Events after the reporting period
None.
14. Related party transactions
None.
********************************************************************
Directors:
John Kearney Chairman
Bill Hooley Chief executive
Danesh Varma Finance director
David Lean Non executive
Howard Miller Non executive
Roger Turner Non executive
Corporate office telephone: 01248 361333
Parys Mountain site: Parys Mountain, Amlwch, Anglesey, LL68 9RE
Phone 01407 831275
London office: Painter's Hall Chambers, 8 Little Trinity Lane, London, EC4V 2AN
Phone 020 7653 9881
Labrador Iron Mines TSX:LIM
www.labradorironmines.ca
Phone +1 647 728 4125
Registered office: Tower Bridge House, St. Katharine's Way, London, E1W 1DD
Share registrars: Capita Registrars www.capitaregistrars.com
Company registration number 1849957