Trading Symbol
AIM: AYM
12th January 2023
Anglesey Mining
plc
(“Anglesey” or
“the Company”)
Anglesey acquires
a further 29.8% of Grängesberg Iron AB
Anglesey Mining plc (AIM:AYM), the UK minerals development
company, is pleased to announce it has entered into an agreement to
acquire an additional 29.8% of Grängesberg Iron AB (“GIAB”), the
entity that owns the Grängesberg Iron Ore Project in Sweden, taking Anglesey’s stake to 49.75%.
- Anglesey Mining plc has agreed with Roslagen Resources AB
(“Roslagen”) to purchase Roslagen’s 29.8% stake in GIAB, taking
Anglesey’s ownership level to 49.75%, and the assignment to
Anglesey of 40% of outstanding subordinated debt owed to Roslagen
by GIAB with a nominal value of £335,000, for a total consideration
of £525,000, to be satisfied as follows:
- A cash payment on completion of SEK
1,090,000 (c.£87,000), funded from the Company’s existing
resources; and,
- The issue to Roslagen of 14,544,827 new ordinary shares of
Anglesey Mining at a price of 3.0
pence per share (the “Consideration Shares”), to be held in
escrow for twelve months from the date of issue. A further
announcement will be made upon the issue of the Consideration
Shares.
- At the closing of the transaction, Roslagen will hold 4.9% of
the expanded capital of Anglesey and will also continue to hold
approximately SEK 6,280,000
(£500,000) in subordinated debt due from GIAB
- Anglesey has a Right of First Refusal on the remaining 50.25%
of GIAB
- Andreas Simoncic, a director and
shareholder of Roslagen will remain on the Board of GIAB
- The Updated PFS for Grängesberg completed in July 2022 highlighted the robust economics of the
asset with a post-tax NPV8 of US$688m, at an iron ore price of US$120/tonne, 62% Fe, CFR China benchmark, and
FOB costs of US$53/t to the ice-free
port of Oxelösund, Sweden
- Previously, revenue was also generated from the sale of apatite
concentrates (17-19% P) produced from the tailings stream. While
the PFS indicates potential apatite production of 210ktpa, no sales
have yet been included in the financial evaluation. This product
also contains elevated rare earth content
- The Swedish Mining Inspectorate granted Grängesberg Iron AB a
25-year mining concession for the iron ore mine in 2013
Jo Battershill, Chief
Executive of Anglesey Mining, commented: “We are very
excited to agree this transaction with Roslagen, increasing
Anglesey’s holding in Grängesberg. We are also very pleased to
retain the services of Andreas
Simoncic on the Board of GIAB and welcome Roslagen’s ongoing
involvement as an Anglesey shareholder. Andreas’ long history with
the project will be an important component in moving Grängesberg
forward.”
“We continue to believe the
Grängesberg project has the potential to be restarted as one of
Europe’s largest individual producers of iron ore concentrates.
When combined with the high-grade nature of the concentrate and
proximity to European steel mills, the asset clearly demonstrates
highly strategic positioning.”
“As we have previously communicated,
the opportunity for Anglesey Mining is now to advance the project
through to a Financial Investment Decision. This could be completed
along with securing a strategic investor, offtake partner, separate
listing, or a combination of these options. However, we recognise
that there is still a lot of work to complete at Grängesberg,
including updating both the resource and reserve models and
undertaking environmental assessment studies as preliminary steps
to preparing a Feasibility Study.”
Additional Information on GIAB
As at 31 December 2021, GIAB had
gross assets of SEK 90,091,613
(£7.2m). GIAB reported a loss before tax of SEK (6,001,706) (£0.48m) for the year ended
31 December 2021.
Background on Grängesberg Iron AB
Grängesberg Iron AB (“GIAB”) is a private Swedish company that
was founded in 2007 by Roslagen with the target of re-opening the
historic iron ore mine in Grängesberg.
In May 2014, as part of a
financial and capital restructuring process in GIAB, Anglesey
Mining entered into agreements giving it the right to acquire a
controlling interest in the Grängesberg Iron Ore Project. The
agreements included a payment of US$145,000 for a direct 6% interest in GIAB.
At the same time, Eurang Limited, a UK private company, agreed
to invest $1.75 million, of which
$1.25 million was invested in GIAB,
for new shares representing a 51% shareholding interest in GIAB.
The additional $500,000 was used to
cover transaction costs, expenses and certain outstanding
liabilities. Roslagen held the remaining shares. Anglesey also
entered into shareholder and cooperation agreements such that
Anglesey holds management control and operatorship of GIAB with
three out of five directors to the board of GIAB including the
Chair. Through this structure, Anglesey Mining retains a Right of
First Refusal over the GIAB stake held by Eurang.
Anglesey Mining’s stake in GIAB was subsequently increased to
the current 19.9% through working capital injections in the company
since 2014, while Roslagen’s shareholding was diluted.
GIAB Balance Sheet
As part of the 2014 agreements and reorganisation, an
outstanding loan in GIAB in the principal amount of US$3.5 million due to KII Holdings Limited, a
Cypriot subsidiary company to a substantial Greek shipping group,
was also renegotiated. At the end of December 2022, the liabilities on the GIAB
balance sheet included outstanding debt of SEK 93,023,816 (£7.4m), which included
SEK 79,675,695 (£6.3m) payable to KII
and SEK 10,448,605 (£0.8m) to
Roslagen, prior to the assignment of SEK
4,200,000 to Anglesey as part of the proposed
transaction.
The debt is non-recourse to Anglesey Mining and all creditors
have the right at maturity, or in connection with an IPO, to
convert all or part of the loan into shares in GIAB at:
(i)
valuation of GIAB in IPO; or,
(ii)
valuation to be agreed or determined by independent investment
bank
The term of this funding has been extended since the 2014
reorganisation and discussions are currently ongoing with respect
to a further extension beyond the current expiry at the end of
January, 2023.
Grängesberg Iron Ore Project
The Grängesberg Iron ore project, owned by GIAB, is located 10
km to the southwest of Ludvika in Dalarna County, central
Sweden, within the Bergslagen
mining district. The project is situated approximately 200 km
northwest from Stockholm, the
capital of Sweden.
The Grängesberg Mine produced iron ore from the late sixteenth
century until 1990 when the mine closed due to the prevailing iron
ore price. Grängesberg was one of Sweden's most important iron ore mines, next
only to Kiruna and Malmberget and was producing approximately
4.0Mtpa in the latter years of operations.
At the time of closure significant amounts of iron ore were
reported to still remain in the mine, which have been estimated by
GIAB to NI43-101 standards. GIAB intend to re-open the iron ore
mine for future production in line with the Pre-Feasibility Study
Update completed in July 2022.
Resources and Reserves
The resource and reserve estimates for Grängesberg are provided
below.
|
Resource |
Tonnes |
Fe |
P |
Contained Fe |
|
Category |
(Mt) |
(%) |
(%) |
(Mt) |
Grängesberg |
Indicated |
115.2 |
40.2 |
0.78 |
46.3 |
|
Inferred |
33.1 |
45.1 |
0.91 |
15.0 |
|
Total |
148.3 |
41.3 |
0.81 |
61.3 |
Resources were last estimated in 2014 to a cut-off grade of 20%
Fe and with a minimum mining width of 10m applied.
|
Reserve |
Tonnes |
Fe |
Contained Fe |
|
Category |
(Mt) |
(%) |
(Mt) |
Grängesberg |
Probable |
82.4 |
37.2 |
30.7 |
|
Total |
82.4 |
37.2 |
30.7 |
Reserves were calculated to a cut-off grade 25% Fe and with a
minimum mining width of 15m applied.
The estimate also assumed 85% mining recovery and 15% mining
dilution with a long-term pellet price of 180 US¢/dmtu Fe.
Key Project Metrics
The key project metrics from the July
2022 Pre-Feasibility Study Update are shown in the tables
below.
Key Metric |
Unit |
2022 PFS
Update |
Ore to Mill |
Mt |
82.3 |
Life of Mine |
Years |
16.0 |
Contained Fe |
Mt |
30.6 |
Recovery |
% |
85 |
Recovered Fe |
Mt |
26.0 |
Outgoing Concentrate |
Mt |
37.2 |
Concentrate Grade |
% Fe |
70 |
Average annual Concentrate
Output |
Mt |
2.3 |
Cash cost* |
US$/t Conc |
53.60 |
All-in Sustaining Cost** |
US$/t Conc |
57.80 |
Pre-production capital |
US$m |
399 |
Post-tax
NPV8% |
% |
688 |
Post-tax Internal Rate of
Return |
% |
26 |
Project payback |
Years |
3.6 |
Average annual Post-tax Operating
Cashflow *** |
US$m |
130 |
* Cash costs are inclusive of mining costs, processing costs,
site G&A, transportation charges to port and royalties
** All-in Sustaining Cost includes cash costs plus sustaining
capital and closure cost
*** Post-tax Operating Cashflow based on iron ore price forecast
of US$120/t China CFR 62% Fe
benchmark
About Anglesey Mining plc
Anglesey Mining is traded on the AIM market of the London Stock
Exchange and currently has 280,675,721 ordinary shares on
issue.
Anglesey is developing its 100% owned Parys Mountain
Cu-Zn-Pb-Ag-Au deposit in North
Wales, UK with a 2020 reported resource of 5.2 million
tonnes at 4.3% combined base metals in the Indicated category and
11.7 million tonnes at 2.8% combined base metals in the Inferred
category.
Upon completion of the transaction Anglesey will hold an almost 50%
interest in the Grangesberg Iron project in Sweden, together with management rights and a
right of first refusal to increase its interest to 100%.
Anglesey also holds 12% of Labrador Iron Mines Holdings
Limited, which through its 52% owned subsidiaries, is engaged in
the exploration and development of direct shipping iron ore
deposits in Labrador and
Quebec.
For further information, please
contact:
Anglesey Mining plc
Jo Battershill, Chief Executive –
Tel: +44 (0)7540 366000
John Kearney, Chairman – Tel: +1
416 362 6686
Davy
Nominated Adviser & Joint
Corporate Broker
Brian Garrahy / Lauren O’Sullivan
– Tel: +353 1 679 6363
WH Ireland
Joint Corporate Broker
Katy Mitchell / Harry Ansell – Tel: +44 (0) 207 220 1666
Scout Advisory Limited
Investor Relations Consultant
Sean Wade – Tel: +44 (0) 7464
609025
LEI: 213800X8BO8EK2B4HQ71