REG-Anglesey Mining PLC: Annual Financial Report announcement <Origin Href="QuoteRef">AYM.L</Origin> - Part 1
26/07/2016 07:05
Anglesey Mining plc
A UK mining company listed on the London Stock Exchange
Anglesey holds 100% of the Parys Mountain underground
zinc-copper-lead-silver-gold deposit in North Wales, UK where it is exploring
and plans to carry out evaluation and pre-feasibility work when financial
conditions permit.
Anglesey holds 15% of Labrador Iron Mines Holdings Limited which has direct
shipping iron ore deposits in Labrador and Quebec and is currently undergoing
a financial restructuring.
Anglesey holds a 6% interest and management rights to the Grangesberg Iron
project in Sweden, together with a right of first refusal to increase its
interest to 51%.
Chairman’s statement
Once again we have to report that the expected resurgence in the resources
sector, and in particular the prices of the metals that form the bases of our
assets, has largely not materialised. With the continuing underlying
weaknesses in commodities, the equities markets for small cap miners has
remained at best thin and at other times almost non-existent. Anglesey Mining
is no different from its peers in this respect and it has proved virtually
impossible during the last year to create any interest in raising new funds
from the market.
The recent upward movement in zinc and precious metals’ prices could now
begin to improve this position and if this momentum is maintained Anglesey
will look for the opportunity to improve the balance sheet and permit funding
of project development activities. Gold and silver have increased in value
over the last year and are trading near their 12 month highs.
The price of iron ore, on which both Labrador and Grangesberg rely, did show
some improvement during the early part of 2016, albeit not to the levels that
would sustain a return to production at Labrador, but unfortunately that rally
was not sustained and prices have fallen back to lower levels.
The recent improvement in the price of zinc may be the sign that we have been
waiting for a number of years. There is a general consensus based on
supply/demand imbalance that zinc prices must improve from recent levels.
There is no doubt that following a number of major mine closures during 2015
there is a current deficit in zinc supply compared to demand and, with few
major new mines planned, that deficit is likely to continue for a number of
years. However, the levels of derivative trading and warehousing in various
forms often impacts this classical economic view and in the recent past has
served to apparently hold prices down against an expected increase.
The other factor that affects project viability, particularly for Parys
Mountain, is currency exchange rates. With all commodity prices quoted in US
dollars, movements in domestic exchange rates can have significant impacts.
The British Pound and Swedish Krona have fallen during the last year and this
will have improved the economics of projects based in those countries where
the majority of costs will be priced in the local currency.
Your directors have worked hard to keep costs to a minimum, director’s
salaries and fees continued to be waived and this will continue until the
financial position of the group improves. I thank the directors and management
for these efforts, and I also thank our loyal shareholders for their patience
and understanding while we work our way through this particularly ugly phase
of the commodity cycle.
Parys Mountain
The Parys Mountain property has a significant zinc, copper and lead deposit
with small amounts of silver and gold. A feasibility study in 1991
demonstrated the technical and economic viability of bringing the property
into production at a rate of 350,000 tonnes per annum, producing zinc, copper
and lead concentrates. In 2012 the first JORC Code compliant resource estimate
of the property was published and 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 and there is substantial
exploration potential.
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 has the support of local people and government.
The directors are of the opinion that this project is at an advanced state and
the existence of the current JORC resource estimate and the original
feasibility study, together with the valid planning permissions, represent a
solid base from which to move the project towards production. A detailed
review of the previous technical and feasibility studies of Parys Mountain,
including current estimates of operating and capital costs, is planned for the
summer of 2016 with a view to completing an updated scoping and economic study
later this year. It is expected that the results of this review will be
available in the early autumn and will be used to assist with future planning
and potential financing of the development of the Parys Mountain project.
The directors carried out an impairment review with an effective date of 26
March 2016. This review was based on an estimate of discounted future cash
flows from the development and operation of the Parys Mountain project over
the initial projected mine life of 16 years and assumed that there would be a
two year delay before any activities commence. Capital costs were estimated at
current costs and the key assumptions utilised were a discount rate of 10%
applied to future cashflows with metal prices (long-term estimates) of: zinc
$US1.25 /lb; copper $US 2.50 /lb; lead $US1.00 /lb; silver $US17.50 per ounce
and gold $US1275 per ounce and an exchange rate US$1.40/£1.00. Further
details of this review are included in note 10 to the financial statements.
Based on the above parameters and the assumptions utilised the directors
believe that no impairment provision is necessary or appropriate. The
directors also re-evaluated the impairment review following the recent EU
Referendum in the UK and concluded there was no requirement for any change in
their original assessment or calculations. Any depreciation in the value of
sterling in relation to the US dollar would have a positive effect on the
project cashflows.
Operation of the mine and the receipt of cashflows from it are dependent on
finance being available to fund the development of the property.
Grangesberg Iron
With iron ore prices remaining depressed operations at Grangesberg have been
limited. We continue to manage the project on behalf of the company and its
other shareholders. The economics of Grangesberg will be more positive than
many of the other iron ore projects that have failed or missed realization in
the last three years. The high grade of concentrate to be produced from
Grangesberg, together with the extensive existing infrastructure on site and
nationally, and the potential for sales within Sweden’s domestic markets,
negating the requirements for major port facilities and expensive handling and
shipping costs, will be key drivers in this expectation.
Labrador Iron
As reported last year, Labrador Iron Mines (“LIM”) is operating under the
Canadian Companies Creditors Arrangement Act. This process continues and it is
expected that a plan of arrangement will be put in place later this year.
Under this arrangement Anglesey’s current 15% shareholding in LIM will be
significantly diluted but it is expected that the reorganized entity will
maintain title to its iron ore assets in Labrador such that they could be
restarted when the economics of iron ore in Canada improve, and at the same
time LIM will have the flexibility to pursue alternative business
opportunities.
Outlook
The future for commodity prices in general continues to be somewhat uncertain.
The group is exposed to base and precious metals at Parys Mountain, which
recently show signs of improvement, and to iron ore at LIM and at Grangesberg.
The only cash draw on the group is a limited requirement for Parys Mountain
and for normal corporate costs. As has been noted both these cost centres have
been kept to a minimum.
The outlook for iron ore has changed little over the last year. Consolidation
of the industry with many small miners closing down is probably near
completion leaving the supply side dominated by Rio Tinto, BHP Billiton and
Vale likely supplying around 75% of all sea borne iron ore. Comments by these
majors have suggested that, while profitable at the current lower prices, they
foresee that higher prices will be needed to ensure the necessary investment
to maintain production levels.
The Parys Mountain project will benefit from the expected improvements in base
metals and particularly from an increase in the price of zinc which will be
the predominant metal to be produced in the early years of the project. ICBC
Standard Bank in a recent note suggested that zinc stocks could fall to a
critical point by as early as November this year and on that basis they are
forecasting that zinc prices will at least double from the recent level of
$US0.95 per pound within 24 months. We share this optimism and see no reason
to doubt this analysis and we are therefore now embarking on a technical
review and updated scoping and economic study of the Party Mountain project.
Whilst there still are a number of uncertainties in the metals markets we feel
that there is sound reason to believe that we have passed the low point in the
commodities cycle. We believe China may reposition its economy to be less
reliant upon construction but with ongoing urbanization its demand for metals
will continue and coupled with reductions on the supply side will inevitably
lead to much higher metal prices than we see today.
We trust that this time next year we will be able to report upon a positive
outlook for the future and for Anglesey Mining.
John F. Kearney
Chairman
25 July 2016
Strategic Report
Principal activities and business review
The group is engaged in the business of exploring and evaluating its wholly
owned Parys Mountain project in North Wales, although activities there have
been very limited during the year.
Under various agreements the group also 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.
Operations at the Labrador iron project in eastern Canada in which group has a
15% holding (2015 – 15%) are currently suspended. LIM is now operating under
the Canadian Companies’ Creditors Arrangement Act to facilitate a
restructuring and refinancing of its business operations.
The group continues its search for other mineral exploration and development
opportunities.
The aim of the group is to create value in the Parys Mountain and Grangesberg
properties, 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.
Parys Mountain
The Parys Mountain property has a significant zinc, copper and lead deposit
with small amounts of silver and gold. A feasibility study in 1991
demonstrated the technical and economic viability of bringing the property
into production at a rate of 350,000 tonnes per annum, producing zinc, copper
and lead concentrates. In 2012 the first JORC Code compliant resource estimate
of the property was published and 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 and there is substantial
exploration potential.
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 has the support of local people and government.
The directors are of the opinion that this project is at an advanced state and
the existence of the current JORC resource estimate and the original
feasibility study, together with the valid planning permissions, represent a
solid base from which to move the project towards production. A detailed
review of the previous technical and feasibility studies of Parys Mountain,
including current estimates of operating and capital costs, is planned for the
summer of 2016 with a view to completing an updated scoping and economic study
later this year. It is expected that the results of this review will be
available in the early autumn and will be used to assist with future planning
and potential financing of the development of the Parys Mountain project.
The directors carried out an impairment review with an effective date of 26
March 2016. This review was based on an estimate of discounted future cash
flows from the development and operation of the Parys Mountain project over
the initial projected mine life of 16 years and assumed that there would be a
two year delay before any activities commence. Capital costs were estimated at
current costs and the key assumptions utilised were a discount rate of 10%
applied to future cashflows with metal prices (long-term estimates) of: zinc
$US1.25 /lb; copper $US 2.50 /lb; lead $US1.00 /lb; silver $US17.50 per ounce
and gold $US1275 per ounce and an exchange rate US$1.40/£1.00. Further
details of this review are included in note 10 to the financial statements.
Based on the above parameters and the assumptions utilised the directors
believe that no impairment provision is necessary or appropriate. The
directors also re-evaluated the impairment review following the recent EU
Referendum in the UK and concluded there was no requirement for any change in
their original assessment or calculations. Any depreciation in the value of
sterling in relation to the US dollar would have a positive effect on the
project cashflows.
Operation of the mine and the receipt of cashflows from it are dependent on
finance being available to fund the development of the property.
Grangesberg Iron AB
In May 2014 the group entered into agreements giving it certain rights in the
Grangesberg iron ore mine 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 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 now has a direct 6% interest in GIAB, a private Swedish company
founded in 2007 which in 2014 completed a financial and capital restructuring
with assistance from the group and a right of first refusal over 51% of the
enlarged share capital of GIAB until June 2018. 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 Anglesey
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.
A new geo-mechanical and hydro-geological review was also commissioned. This
report confirmed the expected position of a fault zone in the near surface
area and measured a number of hydro-geological criteria in that zone.
Generally, the results were in line with prior expectations and the report
made recommendations regarding some additional investigations that will be
required as part of any future definitive feasibility study.
During the coming year, Grangesberg will continue to operate under
Anglesey’s direction. 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
Labrador Iron Mines Holdings Limited (LIM) was formerly an associate company
in the group however following a dilution of the group’s holding in November
2012 it became an investment in which Anglesey holds a 15% interest.
LIM is engaged in the exploration, development and mining of direct shipping
iron ore projects near Schefferville in the central part of the Labrador
Trough region, one of the major iron ore producing regions in the world. LIM
owns extensive iron ore resources, processing plants and equipment and rail
infrastructure and facilities in its Schefferville Projects. LIM commenced
mining operations in 2011 and in the three year period of 2011, 2012 and 2013
produced a total of 3.6 million dry metric tonnes of iron ore, which was sold
in 23 cape-size shipments into the Chinese spot market. LIM did not undertake
mining operations during the 2014 or 2015 operating seasons, due to a
combination of prevailing low iron ore prices and a continuing need for
start-up working capital and development financing.
In April 2015 LIM initiated proceedings under the Canadian Companies'
Creditors Arrangement Act to provide an opportunity for the orderly
restructuring of its business and financial affairs, so as to enable the
company to emerge with a viable business in the most favourable position to
secure additional development financing to proceed with the development of its
Houston Project and continue as a going concern. It is expected that a Plan of
Arrangement will be presented to creditors and the court later this year.
Other activities
The directors continue to search for 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 2016 after tax was £256,450 compared to a loss of
£1,736,610 in the 2015 fiscal year. The larger 2015 loss was due chiefly to
falls in the value of the group’s investment in Labrador Iron. There were
also significant expense reductions during the year (including the waiver by
directors of salaries and fees, continuing from July 2014) and the
administrative and other costs excluding investment income and finance charges
were £112,279. This compares to £355,071 in the previous year which included
expenses of £167,256 in connection with the acquisition of the interests in
Grangesberg.
During the year there were no additions to fixed assets (2015 - nil) and
£49,433 (2015 - £75,145) was capitalised in respect of the Parys Mountain
property as mineral property exploration and evaluation.
At 31 March 2016 the group held mineral property exploration and evaluation
assets with a carrying value of £14.9 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 2016 was £32,759 (2015 - £96,873).
The foreign exchange loss of £2,039 (2015 –loss £4,574) shown in the
income statement arises on cash balances held in Canadian dollars and Swedish
Krona.
At 31 March 2016 the company had 160,608,051 ordinary shares in issue,
unchanged from last year.
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. It also aims to be a valued and
responsible member of the communities which it operates in or affects.
The group has no operations; 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. At 31
March 2016 the company had six male directors; there were no female directors
or employees.
Financial instruments
The group’s use of financial instruments is described in note 24.
Bill Hooley
Chief executive officer
25 July 2016
Directors’ report
The directors are pleased to submit their report and the audited accounts for
the year ended 31 March 2016.
The corporate governance statement which follows forms part of this report. In
accordance with statutory requirements, the principal activities of the group
and other information is set out in the strategic report section preceding
this report.
Directors
The names of the directors are shown in the directors’ remuneration report
and biographical details are shown on the inside rear cover. 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 36.1% 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 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.
John Kearney is chairman and chief executive of LIM, Bill Hooley is a director
and vice-chairman of LIM and Danesh Varma is a director of LIM. All three are
shareholders of LIM. John Kearney receives remuneration from LIM in his
capacity of chief executive. There are no transactions between LIM, the group
and the company which are required to be disclosed.
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
£245,461 at the year end (2015 – £226,857). 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 13 July 2016 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
36.1% 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 12 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 £540,000
(54,000,000 ordinary shares) which is approximately one third of the total
issued ordinary share capital of the company as at 13 July 2016. 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 13 is to authorise the directors to allot new shares
pursuant to the general authority given by resolution 12 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 £401,500
(40,150,000 ordinary shares). This aggregate nominal amount represents
approximately 25% of the issued ordinary share capital of the company at 25
July 2016. 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 13 will expire on 31 December 2017. 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
(2015 – 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 document “Going concern and liquidity risk: Guidance for
directors of UK companies 2009”.
The ongoing 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 order to meet its planned business
objectives and continue as a going concern. Additional financing will be
required in the short term 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 the continuing operations of the group are dependent
upon its ability to raise adequate financing and that this represents a
material uncertainty which may cast significant 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.
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.
Danesh Varma
Company Secretary
25 July 2016
Report of the auditors
We have audited the financial statements of Anglesey Mining plc for the year
ended 31 March 2016 which comprise the Group Income Statement, the Group
Consolidated Statement of Comprehensive Income, the Group and Company
Statement of Financial Position, the Group and Company Statement of Changes in
Equity, the Group and Company Statement of Cash Flows and the related notes.
The financial reporting framework that has been applied in their preparation
is applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement on page
9, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International Standards on
Auditing (ISAs) (UK and Ireland). Those standards require us to comply with
the Auditing Practices Board’s Ethical Standards for Auditors.
This report is made solely to the company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s members those matters we
are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as
a body for our audit work, for this report, or for the opinions we have
formed.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether accounting policies
are appropriate to the group’s and the parent company’s circumstances and
have been consistently applied and adequately disclosed, the reasonableness of
significant accounting estimates made by the directors and the overall
presentation of the financial statements. In addition, we read all the
financial and non-financial information in the annual report in order to
identify material inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect based on, or
materially inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
There are 7 legal entities accounting for 100% of the group’s operating
loss, 100% of net assets and 100% of total assets all of which were subject to
full scope audits for the year ended 31 March 2016. The audit of all the
entities within the group was undertaken by the group audit team.
Our assessment and application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements on the financial statements and
our audit. Materiality is used so we can plan and perform our audit to obtain
reasonable, rather than absolute, assurance about whether the financial
statements are free from material misstatement. The level of materiality we
set is based on our assessment of the magnitude of misstatements that,
individually or in aggregate, could reasonably be expected to have influence
on the economic decisions of the users of the financial statements.
Based on our professional judgement the level of overall materiality we set
for the group financial statements is outlined below:
Overall Group materiality: £363,000
Benchmark applied: This has been calculated with reference to the group’s net assets, of which it represents approximately 3%.
Basis for chosen benchmark: Net assets represents shareholders’ funds and we have determined it to be the principal benchmark within the financial statements relevant to shareholders, as the group has no revenues and is still exploring and evaluating mineral sites in which it retains an interest. 3% has been chosen to reflect the level of understanding of the stakeholders of the Group in relation to the inherent uncertainties around accounting estimates and judgements.
We agreed with the Audit Committee that we would report to it all audit
differences in excess of £11,000, as well as differences below that threshold
that, in our view, warranted reporting on qualitative grounds. We also report
to the Audit Committee on disclosure matters that we identified during the
course of assessing the overall presentation of the financial statements.
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 IAS1 ‘Presentation of Financial Statements’. Given the cash position of the group at the year end, the net current liabilities of £91,996, the net cash outflows since the year end, and the projected net cash outflows for the next 12 months there is a potential material uncertainty that the group does not have sufficient cash or other financial resources to continue in operation for at least 12 months from the date of authorising these financial statements. 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 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 its ability to provide adequate funds for its 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 alternative sources
of funding. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the group and company’s ability to continue as a going concern. Accordingly, as outlined below, without modifying our opinion on the
financial statements in respect of this matter, we have included an emphasis of matter.
Potential impairment of capitalised costs associated with the exploration and evaluation of the Parys Mountain mine site The group has held rights to explore and mine the site for a number of years but has not completed exploration and evaluation activities and feasibility assessments to an extent where the site has been confirmed as being commercially viable and mining activities commenced. There is a risk that accounting criteria associated with the capitalisation of exploration and evaluation expenditure may no longer be appropriate and that capitalised costs exceed the value in use. Any assessment of the value in use is highly judgemental and is based on the directors’ assessment of a number of factors, including: long term metal commodity prices, the estimated mineral deposits from independent experts’ studies, costs associated with mineral extraction and sale, discount rates and exchange rate factors. Our audit work included, but was not restricted to, a review of the directors’ assessment of the criteria for the capitalisation of exploration and evaluation expenditure and whether there are any indicators of impairment to capitalised costs. The
directors concluded that there were indicators of potential impairment, however their assessment did not indicate that an impairment of the asset was required. Our work included a review of the integrity of the discounted cash flow model used by the
directors to make an assessment as to whether impairment had occurred, as well as using our professional scepticism to challenge and test the key assumptions for sensitivity to the model. These key assumptions included: the expected future revenue and
costs associated with the extraction and sale of the mineral deposits, future metal prices, currency exchange rates, demand for the minerals and the discount rate utilised in the financial model. Our work did not indicate that impairment to exploration and
evaluation assets was required.
Potential impairment of the investment in the subsidiary, Parys Mountain Mines Limited, in the company financial statements The cost of the investment in and loan due from the subsidiary, Parys Mountain Mines Limited, held in the balance sheet of the In conjunction with our work associated with the potential impairment of the exploration and evaluation assets held within Parys Mountain Mine Limited, we considered whether there was an indication that the cost of the investment in and loan due from the subsidiary required writing down in the company. As there was no impairment of the asset held by Parys Mountain Mine Limited, there is no indication that the carrying value of the investment in and loan due from the company was not
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