REG-Anglesey Mining PLC: Annual Report and Notice of AGM <Origin Href="QuoteRef">AYM.L</Origin> - Part 1

Anglesey MiningAnnouncement

31/07/2017 07:05

Anglesey Mining plc

Projects:

100% of the Parys Mountain underground zinc-copper-lead-silver-gold deposit in
North Wales, UK where an updated Scoping Study was completed in 2017. The
results of this Study are positive and provide a clear route to develop the
project through to production.

12% of Labrador Iron Mines Holdings Limited, which was restructured during the
year, holds direct shipping iron ore deposits in Labrador and Quebec.

A 6% interest in, and management rights to, the Grangesberg Iron project in
Sweden, together with a right of first refusal to increase its interest to
51%.

Strategic report – Chairman’s statement

To Anglesey Shareholders

It is pleasing to report, after several years of depressed market conditions,
that in several areas of significance to Anglesey Mining there are now real
signs of resurgence. I believe we have passed the bottom of the mining cycle
and there is a strong expectation of upward movement in metal prices,
particularly for zinc and to some extent for copper, in the near future. 
This positive outlook is now being reflected in the capital markets where
after several years of depressed market conditions there is renewed investor
interest in the mining sector and the opportunity to raise new capital is
being demonstrated. 

Parys Mountain -  2017 Scoping Study

Against this background of improving metal prices and increased investor
interest it would seem opportune that we have recently undertaken a new
Scoping Study on the Parys Mountain copper-lead-zinc project in North Wales
which demonstrates a viable mine development and a healthy financial rate of
return.

The Scoping Study was prepared by Micon International Limited (Micon) and
Fairport Engineering Ltd (Fairport).  The selected base case envisages a
mining rate of 1,000 tonnes per day, to produce an average annual output of
14,000 tonnes of zinc concentrate at 57% Zn, 7,200 tonnes of lead concentrate
at 52% Pb and 4,000 tonnes of copper concentrate at 25% Cu annually over an
initial mine life of eight years. 

The overall net smelter return (NSR) for the three concentrates, including the
silver and gold precious metals contributions, is expected to total more than
$270 million at the forecast metal prices used for the base case
calculations. 

The base case yields a pre-tax net present value of $33.2 million, or £26.6
million, at a conservative 10 per cent discount rate, using present day metal
prices of $1.25 per pound for zinc, $1.00 per pound for lead, $2.50/pound for
copper, $17.50 per ounce for silver and $1,275 per ounce for gold and at an
exchange rate of £1.00 = $US1.25. With an estimated pre-production capital
cost of $53 million, or £42 million, this results in an indicated internal
rate of return (IRR) of 28.3%. 

Using longer term metal price projections of $1.35 per pound for zinc and
$3.00 per pound for copper the NPV10 would be $43.2 million, or £34.6
million.  At an 8% discount rate, used to reflect the relatively low risks of
the project given its advanced level of development and low political risk in
the UK, the NPV8 would be enhanced to $41 million, or £32.8 million, for the
base case metal price scenario and to $53 million, or £421.9 million for the
higher longer-term metal prices, with an IRR of 33%.

Importantly, the study was based on only the 2.1 million tonnes of indicated
resources reported by Micon in 2012. Micon had also reported a further 4.1
million tonnes of inferred resources which were not incorporated into the
Scoping Study.  It is expected that a high proportion of these inferred
resources will be converted to indicated probable reserves once exploration
drilling from underground takes place. These additional resources would be
processed through the same concentrator plant and would significantly increase
the projected life of the mine, to perhaps double the projected mine-life to
15 or 18 years, and enhance the NPV.

I have been involved with the Parys Mountain project for many years, and I am
encouraged that many of the variables and moving parts, including metal
prices, treatment charges and used plant availability, have now moved in our
favour and present a real and realisable opportunity for the Parys Mountain
project.  There is of course still much to be do but we now have a clear path
forward.

Iron Ore

The price of iron ore doubled during calendar 2016, driven by increased
Chinese demand, reaching a two-year high of US$80 per tonne in December 2016
and moved even higher in early 2017, hitting a high of US$97 per tonne in
February 2017, its highest level since mid-2014, before retreating somewhat to
approximately US$70 per tonne in July 2017.   Our investments in Grangesberg
Iron and in Labrador Iron rely heavily for their future success on this
commodity.

Grangesberg Iron

Our operations at Grangesberg have been restricted during the past year while
we continue to manage the project on behalf of both the company and
Grangesberg’s other shareholders.  The economics of Grangesberg are more
positive than many other iron ore projects but will still require both higher
long-term iron ore prices as well as major levels of capital expenditure. The
high-quality product from Grangesberg, together with the extensive existing
infrastructure and the potential for sales within Sweden’s domestic markets,
will be key to making the project viable when iron prices do move. Together
with the other shareholders and stakeholders in Grangesberg we will continue
to investigate all options to develop a viable business plan for the project.

Labrador Iron

During the year Labrador Iron Mines Holdings Limited (“LIM”) completed a
financial restructuring as part which creditors were issued with shares in LIM
and its subsidiary and as a result the group’s holding in LIM was diluted
from 15% to just under 12%.  LIM is now debt free and continues to hold its
iron ore assets in Labrador and Quebec.  Nevertheless, it will require a
significant and sustained increase in the price of iron ore for the Labrador
operations to be restarted.

Outlook

The outlook for Anglesey Mining is now brighter than at any time during the
last few years.  Metal prices particularly zinc, copper and lead, which form
the basis of Parys Mountain revenue, seem set for their long-awaited upward
movement. 

Based on the positive results of the Scoping Study we now plan to engage in
discussions with potential financiers or partners for the development of the
Parys Mountain project.   Recommendations have been made by Micon and
Fairport regarding further work to optimise and enhance the project as the
next step ahead of mine development.  It is hoped that financing for this
work can be arranged as speedily as possible and will be followed by
subsequent financings to move towards mine construction.

We expect that sterling will continue to be traded at relatively low levels
against the United States dollar for the foreseeable future whilst
negotiations over the Brexit withdrawal and the ensuing uncertainty around the
actual exit take effect.  It may be that sterling will experience even
further weakness in the longer term, which would benefit the Parys Mountain
project.  Apart from these matters we do not expect Brexit issues to unduly
influence the group.

It is likely that China will continue to experience economic growth and will
make ever increasing demands for commodities that could be produced from your
Anglesey’s projects.  Normal industrial demand in the United States and
Europe, as well as larger developing countries, will also play an important
part of the commodity markets.  China’s continuing growth coupled with a
reluctance by major miners to embark on large new projects, generally in
geographically and politically difficult environments, should see continuing
demand for metals resulting in a long term and sustainable uplift in metal
prices.

The strength in the markets and return of investor interest has been reflected
in the price of the Company’s shares which has increased around fourfold
from this time last year.  This has been coupled with strong trading volumes
and gave us the opportunity to raise funds on two occasions during the year. 

I would like to thank all our shareholders, whether at a major investment
level or at smaller levels, for their continuing support during the difficult
recent years that we have been through. 

We trust that your patience and support will soon be recognised and rewarded.

John F. Kearney

Chairman

28 July 2017

Strategic report - Operations

Principal activities and business review

Anglesey Mining is engaged primarily in the business of exploring and
evaluating its wholly owned Parys Mountain zinc, lead, copper project in North
Wales. Although site activities there have been limited during the year to
care and maintenance, a scoping and economic study bringing earlier reports up
to date has been prepared during the year.

Under various agreements the group participates in the management of the
Grangesberg iron ore property in Sweden in which it has a 6% holding and a
right of first refusal to acquire a further 51% ownership interest. The group
also has a 12% holding (2016 – 15%) in the Labrador iron project in eastern
Canada, currently in care and maintenance.

The aim of the group is to create value in the Parys Mountain property,
including by co-operative arrangements where appropriate, and to actively
engage in other mineral ventures using the group’s own resources together
with such external investment and finance as may be available where
appropriate

Parys Mountain

The Parys Mountain property hosts a significant polymetallic zinc, copper,
lead, silver and gold deposit. The site has a head frame, a 300m deep
production shaft and planning permission for operations. The group has
freehold ownership of the minerals and surface land. Infrastructure is good,
political risk is low and the project enjoys the support of local people and
government.

An independent JORC resource estimate completed in 2012 by Micon International
Limited reported a resource of 2.1 million tonnes at 6.9% combined base metals
in the indicated category and 4.1 million tonnes at 5.0% combined base metals
in the inferred category with substantial exploration potential.

Physical operations at Parys Mountain were again kept at a low level during
the past year, with only essential maintenance work carried out, while the
main focus of activity was undertaking a new scoping study.

Scoping Study 2017

The Scoping Study was prepared by Micon International Limited (Micon) and
Fairport Engineering Ltd (Fairport) and was completed in July 2017. 

Development Plan

The original feasibility studies conducted on the Parys Mountain project in
the 1990s envisaged production at a rate of 1,000 tpd being mined at depth
through the 300-metre-deep Morris Shaft.  During the period 2006-2010
Anglesey Mining carried out a detailed drilling programme on the White Rock
Zone which lies adjacent to the Morris Shaft and largely overlies the deeper
Engine Zone deposits, but which extends to surface.  As a result of this
drilling the 2012 resource estimate carried out by Micon included both the
White Rock Zone and the Engine Zone. 

A new mining plan based on a surface decline to access the White Rock zone was
prepared.  The proposed decline would be developed by mining contractors and
would be used as the initial means of access to the resource for development
and mining. Mined ore would be trucked up the decline to the proposed surface
processing plant. During the initial production phase from White Rock the
decline would continue to be driven to reach the current bottom of the Morris
Shaft and beyond.  The shaft would then be dewatered and deepened by
approximately 150 metres and would be recommissioned as a hoisting shaft for
the remnant White Rock ore and for the deeper and more valuable Engine Zone
ore.

Production Alternatives

The initial work on the Scoping Study was designed on a throughput of 500
tonnes per day using conventional processing.  As the first results became
available it became apparent that a higher daily production throughput would
be financially more attractive.  Accordingly, assessment of increased
throughput alternatives of 700 tpd and 1,000 tpd were added to the initial
scope of the study. 

In addition, the concept of adding a dense media separation plant ahead of the
main concentrator was reviewed.  Dense media separation (DMS) is a process to
remove largely non-metal bearing material from the mine feed ahead of the
concentrator.  This results in a substantial reduction in the tonnage of ore
to be treated by the concentrator.  Obviously there are additional costs
associated with building and operating a DMS plant, and there is some loss of
metal associated with the DMS tailings, but overall inclusion of a DMS plant
improves the financial performance. 

Concurrent with evaluation of these processing options, mine planning at 700
tpd and 1,000 tpd was also studied.  Mining would be carried out initially
from the main decline using rubber-tyred equipment including drill jumbos,
load-haul-dump machines and trucks to remove development waste to surface and
production ore to the processing plant.  It was concluded that after an
initial ramp-up period, the higher production level can be maintained.  In
due course, the lower level of the shaft will be accessed from the decline and
deepened as originally planned. The existing hoist and headframe will be
refurbished and used to bring ore to the surface for delivery to the adjacent
processing plant.

The processing plant was initially designed in a modular form with a capacity
of 500 tpd throughput expandable to 1,000 tpd to minimise up-front capital
costs.  The plant will consist of crushing and grinding followed by
conventional three stage flotation to produce copper, zinc and lead
concentrates to be shipped to smelters in Europe.  The study showed that the
best results can be obtained with higher throughputs.  There is little
additional capital cost required for the higher throughput and this increase
is offset by lower operating costs and increased revenue.

Based on these outcomes it was concluded that the preferred development option
for the Parys Mountain is a 1,000 tpd mine and plant with a DMS section and a
mine life of approximately eight years.

Mineral Resources and Exploration Potential

The 2017 Scoping Study utilises the Micon 2012 JORC Code compliant resource
estimate of 2.1 million tonnes at 6.9% combined base metals in the indicated
category.  Micon had also reported a further 4.1 million tonnes at 5.0%
combined base metals in the inferred category. These inferred mineral
resources are not included in the current study but would significantly extend
the projected operating life of the mine with a consequential increase in the
resultant estimated valuation. 

As reported in 2012, the resource estimate was made using a gross metal
product value cut-off of $80 per tonne.  It is noted that the cash operating
cost of the project, prior to royalties and taxes, is forecast at $47 per
tonne.  This will enable some further review of the resource to be
undertaken.  A lower cut-off grade would increase the tonnes in the indicated
category at the same time as reducing the grade.  The larger tonnage would
increase the mine life but would reduce the annual revenue due to the lower
feed grade to the plant.  An optimisation study will be required to determine
the optimum cut-off grade that would provide the maximum increased return over
that currently reported.

In addition to the indicated and inferred resources reported by Micon, the
Parys Mountain area, over which the group holds the mineral rights, contains
numerous indications of mineralisation across several kilometres many of which
have been disclosed in earlier releases and reports.  As most of these
indications have been encountered in drilling at some depth, further
exploration would be more effective from underground locations once mining
operations commence.  Should any of these exploration efforts prove
successful an increased throughput and a further extended mine life would be
the likely outcome.

Capital and Operating Costs

The pre-production capital cost of the preferred option base case including
mining, DMS, concentrator and infrastructure is estimated at $53 million. 
The initial capital cost for mine development is estimated to be $13 million,
the concentrator $29.5 million including $3 million for the DMS plant and
infrastructure $10 million, for a total of $53 million.  Included within
these figures is a $4 million contingency provision. 

The major component of capital costs is initially associated with the
processing plant and surface infrastructure.    Capital costs have been
estimated based on quotes provided by equipment suppliers together with
construction costs forecast by Fairport. Capital costs for the processing
plant and infrastructure includes, when suitable, some used and reconditioned
plant which has been identified as readily available.  The remainder would be
new equipment. 

Despite the quite wide spread in throughputs studied it became apparent that
the lower throughput options did not present significant savings in capital
cost.  This is largely due to minimum equipment sizes required for several
units that could also accomplish the duty for the higher throughputs and with
the fixed items of work required for buildings, construction and
infrastructure that do not change materially across the throughput range. Mine
development capital costs are based on all new equipment and on mine
contractor development costs.

Operating costs have been developed by Micon and Fairport based on current
knowledge and experience. Cash operating costs at the higher levels of
production are forecast at around $47 per tonne of ore treated. Whilst capital
costs were fairly constant across the throughput spectrum, operating cash
costs per tonne of ore mined and milled varied significantly with the higher
throughputs benefitting from much lower costs.  This lead to the clear
conclusion that the higher the throughput the better the financial result. 

The following table shows the key financial outcomes derived for each of the
alternatives.

                          500tpd no DMS  700 tpd no DMS  700 tpd with DMS  1,000 tpd with DMS  
 Life of Mine (Years)           16             12               12                  8          
 Initial Capital Cost $m        48             50               52                 53          
 Operating cash cost $/t        63             55               53                 47          
 NPV10 $m *                    9.0            21.6             19.3               33.2         
 IRR % *                       13.8           20.3             18.8               28.3         
 Payback (Years) *              7               5                5                  4          
*
Pre-Tax Based on Cu $2.50/lb, Zn $1.25/lb, Pb $1.00/lb, Ag $17.50/oz, Au
$1,275/oz

Selected Base Case Option - 1,000 tpd

The 1,000 tpd option is clearly the most favourable financial outcome.  The
additional capital cost required is only $5 million higher than the lowest
cost option and at these levels that is not considered critical.  The
inclusion of the DMS plant results in the rejection of approximately 37% of
mined material ahead of the concentrator.  Included within this is
approximately 4.5% of the metal in feed that will be permanently lost to
tailings.  As a result of the application of the DMS the net concentrator
feed to the floatation circuits will be approximately 700 tpd.

The NPV and IRR generated are significantly better at 1,000 tpd than the lower
throughput options.  Therefore the 1,000 tpd option has been chosen as the
base case for further consideration. No detailed study was carried out on a
1,000 tpd throughput without the DMS.  However, a short study indicated that
it is likely that DMS will be far more favourable when the plant capacity is
expanded to around 1,500 tpd which should occur when the inferred resources
are upgraded to the indicated category.  The incorporation of DMS is
therefore considered advisable and prudent.

Metal Production

Metallurgical performance and recovery is based on the large volume of
information available from test work on Parys Mountain ores over the years. 
Total base metal recovery in the concentrator to each of the three copper,
zinc and lead concentrates is forecast to be 89.8% and taking into account the
DMS losses overall recovery will be approximately 85.7%.  Significant amounts
of silver and gold will report to each of the concentrates.  Some free gold
will be recovered by gravity methods ahead of the concentrates and will be
sold as Welsh gold.

It is expected that each of the three base metal concentrates will be sold to
smelters in Europe.  Smelter payment terms and penalties have been based on
treatment charges currently prevailing from these smelters.  It is possible
that better terms could be obtained from Chinese smelters from time to time
but the cost of shipping to the Far East compared to the proximity of shipping
to continental Europe is likely to make such options less viable.

On average 14,000 tonnes of zinc concentrate at 57% Zn, 7,200 tonnes of lead
concentrate at 52% Pb and 4,000 tonnes of copper concentrate at 25% Cu, will
be produced annually.  These figures will vary somewhat during the life of
the mine as mine feed varies depending upon the particular ore bodies being
mined at any time. This will result in average annual metal production into
concentrates of 17.6 million pounds of zinc ,8.3 million pounds of lead and
2.2 million pounds of copper.

Using estimated shipping costs, smelter terms and penalties, the overall NSR
for the three concentrates, including the precious metals, is expected to
total in excess of $270 million at the metal prices used for the base case. 
This would represent a NSR of approximately 72% of the metal value in
concentrates delivered to the smelters. 

Project Financial Results

The base case yields a pre-tax net present value of $33.2 million, or £26.6
million, at a conservative 10 per cent discount rate, using present day metal
prices of $1.25 per pound for zinc, $1.00 per pound for lead, $2.50/pound for
copper, $17.50 per ounce for silver and $1,275 per ounce for gold and at an
exchange rate of £1.00 = $US1.25. With an estimated pre-production capital
cost of $53 million, or £42 million, this results in an indicated internal
rate of return (IRR) of 28.3%. 

Using longer term metal price projections of $1.35 per pound for zinc and
$3.00 per pound for copper the NPV10 would be $43.2 million, or £34.6
million.  At an 8% discount rate, used to reflect the relatively low risks of
the project given its advanced level of development and low political risk in
the UK, the NPV8 would be enhanced to $41 million, or £32.8 million, for the
base case metal price scenario and to $53 million, or£421.9 million for the
higher longer-term metal prices, with an IRR of 33%.

The pre-tax net present values, at 10% and 8% discount rates, and internal
rates of return, are illustrated in the table below, all at a sterling:US
dollar exchange rate of £1.00 = $US1.25.

                               Metal Prices                                               Pre-Tax Cash Flows                 
 Zinc  US$/lb  Lead US$/lb  Copper  US$/lb  Silver  US$/oz  Gold  US$/oz  Undiscounted  $M  NPV 10%  $M  NPV 8%  $M  IRR  %  
     1.25          1.00          2.50            17.50          1,275           91.2            33.2        41.0      28.3   
     1.35          1.00          3.00            17.5           1,275           110.8           43.2        52.4      33.1   
                                        Foreign Exchange assumed to be £1.00: $1.25US                                        

Further work on Parys Mountain

Both Micon and Fairport have recommended that further work to optimise and
enhance the project as the next step ahead of mine development, including more
detailed mine and stope design, underground geotechnical studies, additional
infill drilling in some locations, more detailed engineering studies,
additional metallurgical test work including work to improve recovery of
specific metals to their own concentrate, and review of tailings management
and paste processes. Several opportunities for cost reduction or productivity
improvement have been identified for further study. It is planned to carry out
these and other activities as suitable funds are available.  This will then
lead to the generation of more detailed production and costing feasibility
reviews to support project financing to move towards mine construction.

The directors are of the opinion that the Parys Mountain project is at an
advanced stage and the existence of the current JORC resource estimate, the
new scoping study and the original feasibility study, together with the valid
planning permissions, represent a solid base from which to move the project
towards production. There is in addition substantial exploration potential on
the property.

Grangesberg Iron AB

The Grangesberg iron ore mine is situated in the mineral-rich Bergslagen
district of central Sweden about 200 kilometres north-west of Stockholm. Until
its closure in 1989 due to prevailing market conditions, Grangesberg had mined
in excess of 150 million tonnes of iron ore. GIAB is a private Swedish company
founded in 2007 which in 2014 completed (with assistance from the group) a
financial and capital restructuring of the mine. GIAB holds a 25 year
exploitation permit covering the previously mined Grangesberg underground
mining operations granted by the Swedish Mining Inspectorate in May 2013.

The group has a direct 6% interest in GIAB and, until June 2018, a right of
first refusal over 51% of the enlarged share capital of GIAB. This right has
been granted in exchange for the group continuing to co-manage GIAB on a cost
recovery basis. The group also has shareholder and cooperation agreements such
that it holds operatorship of GIAB subject to certain conditions and appoints
two out of five directors to the board of GIAB.

In September 2014 an NI 43-101 Technical Report was prepared by Roscoe Postle
Associates Inc (“RPA”) showing a compliant resource estimate for the
Grangesberg Mine of 115.2 million tonnes at 40.2% Fe in the indicated category
and 33.1 million tonnes at 45.2% Fe in the inferred category. RPA concluded
that the Grängesberg iron ore deposit hosts a significant iron resource that
has excellent potential for expansion at depth.

During the coming year, Grangesberg will continue to operate under the
direction of the group. It is planned that subject to the availability of
adequate funding, Grangesberg will advance a number of environmental studies
and other activities as a pre-requisite to a definitive feasibility study.

Labrador Iron

The group has an investment holding of 12% (2016 -15%) in Labrador Iron Mines
Holdings Limited which in the three years up to 2013 produced a total of 3.6
million dry metric tonnes of iron ore from its properties in Labrador, Canada.
Since then mining operations have been suspended due to low iron ore prices.
In December 2016 LIM completed a financial restructuring which resulted in the
conversion of liabilities into equity of LIM and its subsidiaries. As a
result, the group’s interest in LIM has been diluted from 15% to 12%.

LIM continues to own all of its direct shipping iron ore projects in the
central part of the Labrador Trough region, one of the major iron ore
producing regions in the world, containing extensive iron ore resources, and
where LIM owns processing plants and equipment and rail infrastructure and
facilities being held on care and maintenance. 

Other activities

The directors continue to seek out new properties suitable for development
within a relatively short time frame and within the financing capability
likely to be available to the group.

Performance

The directors expect to be judged by results of project development and/or
exploration and by their success in creating long term value for shareholders.
The group holds shares in mineral companies and has interests in exploration
and evaluation properties and, until economically recoverable reserves can be
identified, there are no standardised performance indicators which can
usefully be employed to gauge the performance of the group, other than the
market price of the company’s shares.

The chief external factors affecting the ability of the group to move forward
are primarily the demand for metals and minerals, levels of metal prices and
exchange rates; these and other factors are dealt with in the risks and
uncertainties section below.

Financial results and position

The group has no revenues from the operation of its properties. The loss for
the year ended 31 March 2017 after tax was £307,968 compared to a loss of
£256,450 in the 2016 fiscal year. The administrative and other costs
excluding investment income and finance charges were £141,022 compared to
£112,279 in the previous year.

During the year there were no additions to fixed assets (2016 - nil) and
£84,196 (2016 - £49,433) was capitalised in respect of the Parys Mountain
property as mineral property exploration and evaluation, the increase being
largely due to the expenses of the scoping study.

At 31 March 2017 the group held mineral property exploration and evaluation
assets with a carrying value of £15.0 million. These carrying values may not
reflect the realizable value of the properties if they were offered for sale
at this time.

The group’s cash balance at 31 March 2017 was £392,293 (2016 - £11,504)
the increase being due to two placings of new shares for cash during the year
which raised £493,037 net of share issue costs. The foreign exchange gain of
£178 (2016 – loss £2,039) shown in the income statement arises on cash
balances held in Canadian dollars and Swedish Krona.

At 31 March 2017 the company had 177,608,051 (2016 - 160,608,051) ordinary
shares in issue following the two share placings referred to above.

Financial instruments

The group’s use of financial instruments is described in note 24.

Employment, community, donations and environment

The group is an equal opportunity employer in all respects and aims for high
standards from and for its employees. At 31 March 2017 the company had five
male directors; there were no female directors or employees. It also aims to
be a valued and responsible member of the communities which it operates in or
affects.

The group holds planning permission for the development of the Parys Mountain
property but further consents will be required to carry out proposed
activities and these may be subject to various reclamation and operational
conditions. The group currently has no operations and consequently its effect
on the environment is very slight, being limited to the operation of two small
offices, where recycling and energy usage minimisation are taken seriously and
encouraged. It is not practical or useful to quantify the effects of these
measures. There are no social, community or human rights issues which require
the provision of further information in this report.

Risks and uncertainties

In conducting its business the group faces a number of risks and uncertainties
some of which have been described above in regard to particular projects.
However, there are also risks and uncertainties of a nature common to all
mineral projects and these are summarised below.

General mining risks

Actual results relating to, amongst other things, mineral reserves, mineral
resources, results of exploration, capital costs, mining production costs and
reclamation and post closure costs, could differ materially from those
currently anticipated by reason of factors such as changes in general economic
conditions and conditions in the financial markets, changes in demand and
prices for minerals that the group expects to produce, legislative,
environmental and other judicial, regulatory, political and competitive
developments in areas in which the group operates, technological and
operational difficulties encountered in connection with the group’s
activities, labour relations, costs and changing foreign exchange rates and
other matters.

The mining industry is competitive in all of its phases. There is competition
within the mining industry for the discovery and acquisition of properties
considered to have commercial potential. The group faces competition from
other mining companies in connection with the acquisition and retention of
properties, mineral claims, leases and other mineral interests as well as for
the recruitment and retention of qualified employees and other personnel.

Development and liquidity risk

On previous occasions and during the year the group has relied upon its
largest shareholder, Juno Limited, for financial support and may be required
to do so in the future to ensure the group will have adequate funds for its
current activities. In the absence of support from Juno Limited the group
would be dependent on the proceeds of share issues or other sources of
funding. Developing the Parys project will be dependent on raising further
funds from various sources.

Exploration and development

Exploration for minerals and development of mining operations involve risks,
many of which are outside the group’s control. The group currently operates
in politically stable environments and hence is unlikely to be subject to
expropriation of its properties but exploration by its nature is subject to
uncertainties and unforeseen or unwanted results are always possible.

Metal prices

The prices of metals fluctuate widely and are affected by many factors outside
the group’s control. The relative prices of metals and future expectations
for such prices have a significant impact on the market sentiment for
investment in mining and mineral exploration companies. Metal price
fluctuations may be either exacerbated or mitigated by currency fluctuations
which affect the amount which might be received by the group in sterling.

Foreign exchange

LIM is a Canadian company; Angmag AB and GIAB are Swedish companies.
Accordingly the value of the group’s holdings in these companies is affected
by exchange rate risks. Operations at Parys Mountain are in the UK and
exchange rate risks are minor. The majority of the cash balance at the year
end was held in sterling – see notes 17 and 24.

Permitting, environment and social

The group holds planning permission for the development of the Parys Mountain
property but further consents will be required to carry out proposed
activities and these may be subject to various reclamation and operational
conditions.

Employees and personnel

The group is dependent on the services of a small number of key executives
specifically the chairman, chief executive and finance director. The loss of
these persons or the group’s inability to attract and retain additional
highly skilled and experienced employees for any areas in which the group
might engage may adversely affect its business or future operations.

This report was approved by the board of directors on 28 July 2017 and signed
on its behalf by:

Bill Hooley

Chief executive officer      

Directors’ report

The directors are pleased to submit their report and the audited accounts for
the year ended 1H31 March 2017.

The corporate governance statement which follows forms part of this report.
The principal activities of the group and other information is set out in the
strategic report section preceding this report. Certain matters relating to
financial performance, risk exposure and management, and future developments
which are required to be disclosed in the directors report have instead been
included within the strategic report.

Directors

The names of the directors are shown in the directors’ remuneration report
and biographical details are shown on the inside rear cover. All directors
remain in office except Roger Turner who retired on 29 July 2016. The
directors wish to place on record their appreciation for his services to the
company over a period of ten years. It is the company’s procedure to submit
re-election resolutions for all directors at the annual general meeting. The
company maintains a directors’ and officers’ liability policy on normal
commercial terms which includes third party indemnity provisions. The powers
of the directors are described in the Corporate Governance Report.

With regard to the appointment and replacement of directors, the company is
governed by its Articles, the Corporate Governance Code, the Companies Act and
related legislation. The Articles themselves may be amended by special
resolution of the shareholders. Under the Articles, any director appointed by
the board during the year must retire at the AGM following his appointment. In
addition, the Articles require that one-third of the remaining directors
retire by rotation at each general meeting and seek re-appointment. However it
is now the company’s practice to submit re-election resolutions for all
directors at each AGM.

Directors’ interests in material contracts

Juno Limited (Juno), which is registered in Bermuda, holds 32.6% of the
company’s ordinary share capital. The company has a controlling shareholder
agreement and working capital agreement with Juno. Advances made under the
working capital agreement are shown in note 19. Apart from these advances and
interest charges there were no transactions between the group and Juno or its
group during the year. An independent committee reviews and approves any
transactions and potential transactions with Juno. Danesh Varma is a director
and, through his family interests, a significant shareholder of Juno.

Bill Hooley and Danesh Varma are directors of Grangesberg Iron AB and of the
special purpose vehicle Eurmag AB. Danesh Varma has been associated with the
Grangesberg project since 2007 when he became a director of Mikula Mining
Limited, a company subsequently renamed Eurang Limited, previously involved in
the Grangesberg project. He did not take part in the decision to enter into
the Grangesberg project when this was approved by the board. The group has a
liability to Eurmag AB a subsidiary of Eurang amounting to £297,570 at the
year end (2016 – £245,461). See also note 25.

There are no other contracts of significance in which any director has or had
during the year a material interest.

Substantial shareholders

At 18 July 2017 the following shareholder had advised the company of an
interest in the issued ordinary share
capital: Juno Limited notified an interest in 57,924,248 shares representing
32.6% of the issued ordinary shares.

Shares

Allotment authorities and disapplication of pre-emption rights

The directors would usually wish to allot any new share capital on a
pre-emptive basis, however in the light of the group’s potential requirement
to raise further funds for the acquisition of new mineral ventures, other
activities and working capital, they believe that it is appropriate to have a
larger amount available for issue at their discretion without pre-emption than
is normal or recommended for larger listed companies. At this year's annual
general meeting, the directors will seek a renewal and replacement of the
company's existing share allotment authorities.

The authority sought in resolution 11 of the notice of the AGM is to enable
the directors to allot new shares and grant rights to subscribe for, or
convert other securities into shares, up to a nominal value of £590,000
(59,000,000 ordinary shares) which is approximately one third of the total
issued ordinary share capital of the company as at 18 July 2017. The directors
will consider issuing shares if they believe it would be appropriate to do so
in respect of business opportunities that arise consistent with the company's
strategic objectives. The directors have no present intention of exercising
this general authority, other than in connection with the potential issue of
shares pursuant to the company's employee share and incentive plans.

The purpose of resolution 12 is to authorise the directors to allot new shares
pursuant to the general authority given by resolution 11 in connection with a
pre-emptive offer or offers to holders of other equity securities if required
by the rights of those securities or as the board otherwise considers
necessary, or otherwise up to an aggregate nominal amount of £440,000
(44,000,000 ordinary shares). This aggregate nominal amount represents
approximately 25% of the issued ordinary share capital of the company at 18
July 2017. Whilst such authority is in excess of the 5% of existing issued
ordinary share capital which is commonly accepted and recommended for larger
listed companies, it will provide additional flexibility which the directors
believe is in the best interests of the group in its present circumstances.
The authority sought under resolution 12 will expire on 31 December 2018. The
directors intend to seek renewal of this authority at future annual general
meetings.

Rights and obligations attaching to shares

The rights and obligations attaching to the ordinary and deferred shares are
set out in the Articles of Association. Details of the issued share capital
are shown in note 21. Details of employee share schemes are set out in the
Directors Remuneration Report and in note 22.

Each ordinary share carries the right to one vote at general meetings of the
company. Holders of deferred shares, which are of negligible value, are not
entitled to attend, speak or vote at any general meeting of the company, nor
are they entitled to receive notice of general meetings.

Subject to the provisions of the Companies Act 2006, the rights attached to
any class may be varied with the consent of the holders of three-quarters in
nominal value of the issued shares of the class or with the sanction of an
extraordinary resolution passed at a separate general meeting of the holders
of the shares of the class.

There are no restrictions on the transfer of the company’s shares.

Voting rights

Votes may be exercised at general meetings in relation to the business being
transacted either in person, by proxy or, in relation to corporate members, by
corporate representative. The Articles provide that forms of proxy shall be
submitted not less than 48 hours (excluding any part of a day that is not a
working day) before the time appointed for holding the meeting or adjourned
meeting.

No member shall be entitled to vote at a general meeting or at a separate
meeting of the holders of any class of shares in the capital of the company,
either in person or by proxy, in respect of any share held by him unless all
monies presently payable by him in respect of that share have been paid.
Furthermore, no shareholder shall be entitled to attend or vote either
personally or by proxy at a general meeting or at a separate meeting of the
holders of that class of shares or on a poll if he has been served with a
notice after failing to provide the company with information concerning
interests in his shares required to be provided under the Companies Act 2006.

Significant agreements and change of control

There are no agreements between the company and its directors or employees
that provide for compensation for loss of office or employment that may occur
because of a takeover bid. The company’s share plans contain provisions
relating to a change of control. Outstanding awards and options would normally
vest and become exercisable on a change of control, subject to the
satisfaction of any performance conditions.

Dividend

The group has no revenues and the directors are unable to recommend a dividend
(2016 – nil).

Going concern

The directors have considered the business activities of the group as well as
its principal risks and uncertainties as set out in this report. When doing so
they have carefully applied the guidance given in the Financial Reporting
Council’s documents ‘Going concern and liquidity risk: Guidance for
directors of UK companies 2009’ and ‘Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting’ issued in September
2014.

The financial statements are prepared on a going concern basis. The validity
of the going concern basis is dependent on finance being available for the
continuing working capital requirements of the group for the foreseeable
future, being a period of at least twelve months from the date of approval of
the accounts. Whilst the group has such working capital, the long term
operations of the group are dependent on its ability to raise adequate
financing. The group relies on equity financing and support from its
shareholders to fund its working capital requirements. The group will need to
generate additional financial resources in the future in order to meet its
planned business objectives and continue as a going concern. Additional
financing will be required to continue the development of the group’s
properties and in the longer term to put the Parys Mountain Mine into
production.

The directors recognise that the long term continuing operations of the group
are dependent upon its ability to raise adequate financing and that this
represents an uncertainty which may cast doubt about the group’s ability to
continue as a going concern. The directors have a reasonable expectation that
the required financing will be raised and are actively pursuing various
financing options with certain shareholders and financial institutions
regarding proposals for financing. The directors have reasonable expectations
that these financing discussions will be successful and therefore the
financial statements have been prepared on the going concern basis.

Greenhouse Gas emissions

The group does not itself undertake any activities or processes which lead to
the production of greenhouse gases. The extent to which its administrative and
management functions result in greenhouse gas emissions is slight and the
directors do not believe that any useful purpose would be served by attempting
to quantify the amounts of these emissions.

Report on payments to governments

The group is required to disclose payments made to governments in countries
where exploration or extraction activities are undertaken and hereby reports
that any such payments made in the year were below the minimum disclosable
level.

Post balance sheet events

There are no post balance sheet events to report.

Statement of directors’ responsibilities

The directors are responsible for preparing the annual report and the
financial statements. The directors are required to prepare the financial
statements for the group in accordance with International Financial Reporting
Standards as adopted by the European Union (“IFRS”) and have also elected
to prepare financial statements for the company in accordance with IFRS.
Company law requires the directors to prepare group and parent company
financial statements for each financial year. Under that law they are required
to the prepare the financial statements in accordance with IFRS, the Companies
Act 2006 and, in relation to the group financial statements, Article 4 of the
IAS Regulation.

Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the group and parent company financial statements and of their
profit and loss for that period.

In preparing the financial statements the directors are required to:
*
select suitable accounting policies and then apply them consistently;
*
make judgements and estimates that are reasonable and prudent;
*
state that the financial statements comply with IFRSs as adopted by the
European Union; and
*
prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the group and the parent company will continue
in business.

The directors confirm that they consider the annual report and accounts, taken
as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the company and group’s performance,
business model and strategy.

The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent company’s transactions and
disclose with reasonable accuracy at any time the financial position of the
parent company and the group and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the parent company and the group and hence for
taking reasonable steps for the prevention and detection of fraud and other
irregularities.

Under applicable law and regulations the, the directors are also responsible
for preparing a Strategic Report, Directors’ Report, Remuneration Report and
Corporate Governance Statement that comply with that law and those
regulations.

The directors are responsible for the maintenance and integrity of the group
website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.

Each of the directors, whose names and functions are listed on the inside rear
cover, confirm that, to the best of their knowledge:
*
the group financial statements, which have been prepared in accordance with
IFRSs as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and loss of the group; and
*
the Strategic and Directors’ Reports include a fair review of the
development and performance of the business and the position of the group,
together with a description of the principal risks and uncertainties that it
faces.

Auditor

Each of the directors in office at the date of approval of the annual report
confirms that so far as they are aware there is no relevant audit information
of which the company’s auditor is unaware and that each director has taken
all of the steps which they ought to have taken as a director in order to make
themselves aware of that information and to establish that the company’s
auditor is aware of that information. This confirmation is given and should be
interpreted in accordance with the provisions of s418 of the Companies Act
2006.

A resolution to reappoint Mazars LLP as auditor and to authorise the directors
to fix their remuneration will be proposed at the annual general meeting.

This report was approved by the board of directors on 28 July 2017 and signed
on its behalf by:

Danesh Varma

Company Secretary

Independent auditor’s report to the members of Anglesey Mining plc

Opinion on the financial statements

In our opinion:
*
the financial statements give a true and fair view of the state of the
group’s and of the parent company’s affairs as at 31 March 2017 and of the
group’s loss for the year then ended;
*
the group financial statements have been properly prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union;
*
the parent company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
*
the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.

We have audited the financial statements of Anglesey Mining PLC for the year
ended 31 March 2017, which comprise the Group Income Statement, the
Consolidated Statement of Comprehensive income, the Group and Company
Statements of Financial Position, the Group and Company Statements of Changes
in Equity, the Group and Company Statements of Cash Flow and the related
notes. The financial reporting framework that has been applied in their
preparation is applicable law and IFRSs as adopted by the European Union and,
as regards the parent company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.

Our assessment of the risks of material misstatement

The assessed risks of material misstatement described below are those that had
the greatest effect on our audit strategy, the allocation of resources in the
audit and directing the efforts of the engagement team:

 The risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Our response                                                                                                                                                                                                                                                    
 Going concern  The financial statements are prepared on a going concern basis in accordance with IAS 1 ‘Presentation of Financial Statements’. During the year £493,037 net was raised through two placings of new ordinary shares. At the year end the group held cash and cash equivalents of £392,293 had net current assets of £301,339 and net assets of £12,260,888. Net cash used in operating activities in the year was £141,498. In note 2 the Directors describe: their assessment of going concern; that funding is sufficient to meet current liabilities as they fall due for the foreseeable future; that the group relies on equity finance and support from its shareholders to fund its working capital requirements; and that additional financing will be required to continue the development of the group’s properties and in the longer term to put the Parys Mountain Mine into production. Whilst the directors’ opinion is they have a reasonable expectation that required funding will be raised, in the event that sufficient funding to continue the group’s developments and projects cannot be raised then there would be significant doubt about the group’s ability to remain a going concern.                   We evaluated the directors’ assessment of the group’s ability to continue as a going concern. In particular, we reviewed and challenged the cash flow forecasts including key assumptions to assess the risk of the group’s inability to meet liabilities as    
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    they fall due. We have considered the group’s reliance on ongoing support from its largest shareholder, Juno Limited, including their ability to provide adequate funds for the group’s current and future activities and the availability of other sources of  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    finance to the group to support the going concern assumption. In the absence of support from Juno Limited, the Directors consider that the going concern status of the group would be dependent on the raising of funds from share issues or from accessing     
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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