REG-Anglesey Mining PLC: Anglesey acquires a further 29.8% of Grängesberg Iron AB

Anglesey MiningAnnouncement

12/01/2023 07:15

Trading Symbol

AIM: AYM

12(th) 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 NPV(8) 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$m           399        
 Post-tax NPV (8% )                                   %            688        
 Post-tax Internal Rate of Return                     %             26        
 Project payback                                    Years          3.6        
 Average annual Post-tax Operating Cashflow ***     US$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



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