REG-Anglesey Mining PLC: Half-year Report 30 Sept 17 <Origin Href="QuoteRef">AYM.L</Origin>
30/11/2017 07:05
Anglesey Mining plc
Half yearly report for the six months to 30 September 2017
Chairman’s Statement and Management Report
We are pleased to report that the broad trend of improving base metal prices
is prevailing during 2017. The current price of zinc is strong and the
long-term price outlook remains very positive.
The rally in base metals, which began in 2016 is continuing with the London
Metal Exchange zinc price hitting a new 10-year high of US$1.52 per pound in
late September. Since the beginning of 2017, the zinc price is up almost 30%
and the year-over-year increase is approximately 40%.
We therefore believe that it is now opportune to move forward with the
development of the Parys Mountain base metal project in North Wales and we are
putting in place a number of key elements to facilitate this.
Parys Mountain
During the half year the updated Scoping Study on Parys Mountain, prepared by
Micon International Limited and Fairport Engineering Limited, was received.
The positive results from that Study, which were described in some detail in
the annual report issued in July, indicate a processing rate for the planned
Parys Mountain Mine of 1,000 tonnes per day, generating average copper, lead
and zinc concentrate production of approximately 22,000 tonnes per annum in
total.
The Scoping Study was based on copper prices of $US2.50 per pound, zinc of
$US1.25 per pound and lead of $US1.00 per pound, generating an overall net
smelter return of $US270 million with an IRR of 28% and an NPV10 of $US43
million.
Subsequent to preparation of the Study, metal prices have continued to improve
significantly with copper now selling at around $US3.10 per pound, zinc at
$US1.45 per pound and lead at $US1.10 per pound. If these current market
prices were used in the Study, the financial results indicated would increase
substantially.
We have previously described four key steps in the development of the project.
These are: the commencement of an Environmental Impact Assessment; the
conversion of the Scoping Study to a Definitive Feasibility Study; the
recruitment of key corporate staff; and pursuing discussions with potential
providers of project finance.
Progress has been made on each of these areas and discussions have been held
with potential new executives with the expectation that they will be recruited
in time to have inputs into the other key activities.
Of particular importance has been an external review of the projects current
Planning Permissions and associated ongoing requirements for licences and
permits. This external review has confirmed that the Planning Permissions
remain in good standing but as expected will be reviewed during the
feasibility study. The external review also examined the particular
requirements for environmental compliance and how these will tie in with the
planning review. We now have determined the route forward to progress each of
these matters to achieve our target of initial production during 2020.
Grangesberg Iron
Activities at Grangesberg have been kept at a low level whilst the prospects
for the price for iron ore remains somewhat subdued. However, Grangesberg
would be a producer of high quality saleable product likely in the form of
iron ore pellets. Demand for iron ore worldwide driven particularly by China
continues to increase, albeit not at the same pace as that achieved several
years ago and there is a growing requirement for high grade product and in
particular for pellets.
The premium price for pellets is now forecast to range between $US35 and $US50
per tonne in the China market, primarily as a result of demand for higher
quality iron ore as China plans to shut down up to 1,000 low grade domestic
iron ore mines due to pollution concerns. Such a pellet premium, if sustained,
would indicate the potential for a viable operation on the Grangesberg
project, under the evaluation studies carried out within the last five years.
Nevertheless, the capital cost to develop such an operation will be
significant and it will be necessary to be confident that the current pellet
premiums will be sustainable in the longer term. Anglesey continues to support
Grangesberg and recognises that it is likely that further external partners
will be required to raise the capital required for full development.
Labrador
Labrador Iron Mines operations at Schefferville are being maintained in
stand-by care and maintenance following the completion of LIM’s financial
restructuring in late 2016. Notwithstanding the challenging financial
environment during the past several years, LIM continued to conduct a variety
of operational activities with the objective of preserving its assets,
maintaining its mineral properties on a standby basis, fulfilling
environmental and regulatory obligations and controlling costs.
Anglesey, with a holding of 12% in LIM, maintains a watching but passive
interest.
Operations
As previously, we have continued to keep corporate and operating cost at the
lowest possible level, although these were a little higher than the previous
year because of increased activity. In accordance with the company’s
accounting policies and past practice, the expenditures on the Parys Project
related to the Scoping Study have in general been capitalised in the accounts
rather than expensed.
Financial results
The group had no revenue for the period. The loss for the six months to 30
September 2017 was £167,186 compared to £135,949 for the comparative period
ended 30 September 2016. The net current assets reduced from £301,339 to
£157,560 over the six months due to property expenditures capitalised of
£65,943 together with the current operating expenses. Additional financing
will be required for working capital to maintain the group and carry out
planned progress at Parys Mountain.
Outlook
After a number of years when the outlook seemed hopeful but still uncertain,
we can now look forward to a more positive future. The outlook for the key
commodities upon which we rely - copper, zinc and lead, remains positive. The
positive outlook is based largely on straightforward supply/demand criteria
with considerably less influence from inventory adjustments and hedge trading
that appeared to unduly influence prices previously.
This coming year will be critical for the development of Parys Mountain. We
need to manage the transition to an expanded management team which will be
instrumental in raising funds in what remains a demanding market, particularly
for equity capital in the smaller resource company sector.
We look forward to being able to further update shareholders on these
developments at appropriate times in the near future.
I would like to thank our limited management and our very supportive board of
directors for their continued valuable input and advice and we again thank
shareholders for their continued patience and support.
John F Kearney
Chairman
29 November 2017
Unaudited condensed consolidated income statement
Notes Unaudited six months ended 30 September 2017 Unaudited six months ended 30 September 2016
All operations are continuing £ £
Revenue - -
Expenses (78,100) (42,418)
Equity-settled employee benefits (9,324) -
Investment income 56 103
Finance costs (79,954) (82,392)
Foreign exchange gain 136 131
Loss before tax (167,186) (124,576)
Taxation 8 - -
Loss for the period 7 (167,186) (124,576)
Loss per share
Basic - pence per share (0.1)p (0.1)p
Diluted - pence per share (0.1)p (0.1)p
Unaudited condensed consolidated statement of comprehensive income
Loss for the period (167,186) (124,576)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
Exchange difference on translation of foreign holding 21,155 (18,135)
Total comprehensive loss for the period (146,031) (142,711)
All attributable to equity holders of the company
Unaudited condensed consolidated statement of financial position
Notes Unaudited 30 September 2017 Audited 31 March 2017
£ £
Assets
Non-current assets
Mineral property exploration and evaluation 9 15,076,765 15,010,822
Property, plant and equipment 204,687 204,687
Investments 10 86,660 86,660
Deposit 123,168 123,118
15,491,280 15,425,287
Current assets
Other receivables 34,239 23,603
Cash and cash equivalents 226,088 392,293
260,327 415,896
Total assets 15,751,607 15,841,183
Liabilities
Current liabilities
Trade and other payables (102,767) (114,557)
(102,767) (114,557)
Net current assets 157,560 301,339
Non-current liabilities
Loans (3,474,659) (3,415,738)
Long term provision (50,000) (50,000)
(3,524,659) (3,465,738)
Total liabilities (3,627,426) (3,580,295)
Net assets 12,124,181 12,260,888
Equity
Share capital 11 7,286,914 7,286,914
Share premium 10,171,986 10,171,986
Currency translation reserve (52,355) (73,510)
Retained losses (5,282,364) (5,124,502)
Total shareholders' equity 12,124,181 12,260,888
All attributable to equity holders of the company
Unaudited condensed consolidated statement of cash flows
Notes Unaudited six months ended 30 September 2017 Unaudited six months ended 30 September 2016
£ £
Operating activities
Loss for the period (167,186) (124,576)
Adjustments for:
Investment income (56) (103)
Finance costs 79,954 82,392
Equity-settled employee benefits 6 9,324 -
Foreign exchange movement (136) (131)
(78,100) (42,418)
Movements in working capital
(Increase)/decrease in receivables (10,636) 2,348
Decrease in payables (25,693) (25,672)
Net cash used in operating activities (114,429) (65,742)
Investing activities
Investment income 6 103
Mineral property exploration and evaluation (51,918) (30,388)
Net cash used in investing activities (51,912) (30,285)
Financing activities
Loans - 125,000
Net cash generated from financing activities - 125,000
Net (decrease)/increase in cash and cash equivalents (166,341) 28,973
Cash and cash equivalents at start of period 392,293 11,504
Foreign exchange movement 136 131
Cash and cash equivalents at end of period 226,088 40,608
All attributable to equity holders of the company
Unaudited condensed consolidated statement of changes in group equity
Share Share Currency translation reserve Retained losses Total
capital premium £ £ £
£ £
Equity at 1 April 2017 - audited 7,286,914 10,171,986 (73,510) (5,124,502) 12,260,888
Total comprehensive income for the period:
Exchange difference on translation of foreign holding - - 21,155 - 21,155
Loss for the period - - - (167,186) (167,186)
Total comprehensive income for the period - - 21,155 (167,186) (146,031)
Equity-settled employee benefits - - - 9,324 9,324
Equity at 30 September 2017 - unaudited 7,286,914 10,171,986 (52,355) (5,282,364) 12,124,181
Comparative period
Equity at 1 April 2016 - audited 7,116,914 9,848,949 (38,457) (4,826,013) 12,101,393
Total comprehensive income for the period:
Exchange difference on translation of foreign holding - - (18,135) - (18,135)
Loss for the period - - - (124,576) (124,576)
Total comprehensive income for the period - - (18,135) (124,576) (142,711)
Equity at 30 September 2016 - unaudited 7,116,914 9,848,949 (56,592) (4,950,589) 11,958,682
All attributable to equity holders of the company
Notes to the accounts
1. Basis of preparation
This half-yearly financial report comprises the unaudited condensed
consolidated financial statements of the group for the six months ended 30
September 2017. It has been prepared in accordance with the Disclosure and
Transparency Rules of the UK Financial Services Authority, the requirements of
IAS 34 - Interim financial reporting (as adopted by the European Union) and
using the going concern basis and the directors are not aware of any events or
circumstances which would make this inappropriate. It was approved by the
board of directors on 29 November 2017. It does not constitute financial
statements within the meaning of section 434 of the Companies Act 2006 and
does not include all of the information and disclosures required for annual
financial statements. It should be read in conjunction with the annual report
and financial statements for the year ended 31 March 2017 which is available
on request from the company or may be viewed at www.angleseymining.co.uk.
The financial information contained in this report in respect of the year
ended 31 March 2017 has been extracted from the report and financial
statements for that year which have been filed with the Registrar of
Companies. The report of the auditors on those accounts did not contain a
statement under section 498(2) or (3) of the Companies Act 2006 and was not
qualified. The half-yearly results for the current and comparative periods
have not been audited or reviewed.
2. Significant accounting policies
The accounting policies applied in these unaudited condensed consolidated
financial statements are consistent with those set out in the annual report
and financial statements for the year ended 31 March 2017.
Early Annual Improvements to IFRSs (2014 - 2016).
Effective 1 January 2017 and expected to be endorsed by the EU in Q3 2017.
*
IFRS 9 Financial Instruments. Effective 1 January 2018. Early application is
permitted.
*
IFRS 15 Revenue from Contracts with Customers. Effective 1 January 2018. Early
application is permitted
*
Clarifications to IFRS 15 Revenue from Contracts with Customers. Effective 1
January 2018 and expected to be endorsed by the EU in Q2 2017. Early
application is permitted.
Annual Improvements to IFRSs (2014 - 2016).
Effective 1 January 2018 and expected to be endorsed by the EU in Q3 2017.
*
IFRS 16 Leases. Effective 1 January 2019 and expected to be endorsed by the EU
in Q4 2017. Early application is permitted with application of IFRS 15 Revenue
from Contracts with Customers.
The directors expect that the adoption of the above pronouncements (with the
possible exceptions of IFRS9 and IFRS16) will have no material impact to the
financial statements in the period of initial application other than
disclosure. IFRS 9 is still ongoing and yet to be adopted by the EU. The group
is not yet generating any revenue consequently the implementation of IFRS15
will have no impact at present. The directors have not yet assessed the full
impact IFRS16 on these financial statements.
There have been no other new or revised International Financial Reporting
Standards, International Accounting Standards or Interpretations that are in
effect since that last annual report that have a material impact on the
financial statements.
3. Risks and uncertainties
The principal risks and uncertainties set out in the group's annual report and
financial statements for the year ended 31 March 2017 remain the same for this
half-yearly financial report and can be summarised as: development risks in
respect of mineral properties, especially in respect of permitting and metal
prices; liquidity risks during development; and foreign exchange risks. More
information is to be found in the 2017 annual report – see note 1 above.
4. Statement of directors' responsibilities
The directors confirm to the best of their knowledge that: (a) the unaudited
condensed consolidated financial statements have been prepared in accordance
with the requirements of IAS 34 Interim financial reporting (as adopted by the
European Union); and (b) the interim management report includes a fair review
of the information required by the FSA's Disclosure and Transparency Rules
(4.2.7 R and 4.2.8 R). This report and financial statements were approved by
the board on 29 November 2017 and authorised for issue on behalf of the board
by Bill Hooley, chief executive officer and Danesh Varma, finance director.
5. Activities
The group is engaged in mineral property development and currently has no
turnover. There are no minority interests or exceptional items.
6. Earnings per share
The loss per share is computed by dividing the loss attributable to ordinary
shareholders of £0.167 million (loss to 30 September 2016 £0.125m), by
177,608,051 (2016 – 160,608,051) - the weighted average number of ordinary
shares in issue during the period. Where there are losses the effect of
outstanding share options is not dilutive.
7. Business and geographical segments
There are no revenues. The cost of all activities charged in the income
statement relates to exploration and development of mining properties. The
group's income statement and assets and liabilities are analysed as follows by
geographical segments, which is the basis on which information is reported to
the board.
Income statement analysis
Unaudited six months ended 30 September 2017
UK Sweden - investment Canada - investment Total
£ £ £ £
Expenses (78,100) - - (78,100)
Equity settled employee benefits (9,324) - - (9,324)
Investment income 56 - - 56
Finance costs (72,116) (7,838) - (79,954)
Exchange rate movements 136 - - 136
Loss for the period (159,348) (7,838) - (167,186)
Unaudited six months ended 30 September 2016
UK Sweden - investment Canada - investment Total
£ £ £ £
Expenses (42,409) (9) - (42,418)
Investment income 103 - - 103
Finance costs (82,392) - - (82,392)
Exchange rate movements 105 26 - 131
Loss for the period (124,593) 17 - (124,576)
Assets and liabilities
` Unaudited 30 September 2017
UK Sweden investment Canada investment Total
£ £ £ £
Non current assets 15,404,620 86,659 1 15,491,280
Current assets 259,059 1,268 - 260,327
Liabilities (3,343,051) (284,375) - (3,627,426)
Net assets/(liabilities) 12,320,628 (196,448) 1 12,124,181
Audited 31 March 2017
UK Sweden investment Canada investment Total
£ £ £ £
Non current assets 15,338,627 86,659 1 15,425,287
Current assets 414,655 1,241 - 415,896
Liabilities (3,282,725) (297,570) - (3,580,295)
Net assets/(liabilities) 12,470,557 (209,670) 1 12,260,888
8. Deferred tax
There is an unrecognised deferred tax asset of £1.3 million (31 March 2017 -
£1.3m) which, in view of the group's results, is not considered to be
recoverable in the short term. There are also capital allowances, including
mineral extraction allowances, exceeding £12.5 million (unchanged from 31
March 2017) unclaimed and available. No deferred tax asset is recognised in
the condensed financial statements.
9. Mineral property exploration and evaluation costs
Mineral property exploration and evaluation costs incurred by the group are
carried in the unaudited condensed consolidated financial statements at cost,
less an impairment provision if appropriate. The recovery of these costs is
dependent upon the successful development and operation of the Parys Mountain
project which is itself conditional on finance being available to fund such
development. During the period expenditure of £65,943 was incurred (six
months to 30 September 2016 - £18,549). There have been no indicators of
impairment during the period.
10. Investments
Labrador Grangesberg Total
£ £ £
At 1 April 2016 1 86,659 86,660
Addition during period - -
At 31 March 2017 1 86,659 86,660
Addition during period - - -
At 30 September 2017 1 86,659 86,660
Labrador: The group’s investment is classified as ‘unquoted’ and is
held at a nominal value of £1.
Grangesberg: The group has a 6% holding in Grangesberg Iron AB (an unquoted
Swedish company) and a right of first refusal over shares amounting to a
further 51% of that company. This investment has been initially recognised and
subsequently measured at cost, on the basis that the shares are not quoted and
a reliable fair value is not able to be estimated.
11. Share capital
Ordinary shares of 1p Deferred shares of 4p Total
Issued and Nominal Number Nominal Number Nominal
fully paid value £ value £ value £
At 31 March 2016 1,606,081 160,608,051 5,510,833 137,770,835 7,116,914
Shares issued for cash 170,000 17,000,000 - - 170,000
At 31 March 2017 and 30 September 2017 1,776,081 177,608,051 5,510,833 137,770,835 7,286,914
12. Financial instruments
Group Available for sale assets Loans & receivables
Unaudited 30 September 2017 31 March 2017 Unaudited 30 September 2017 31 March 2017
£ £ £ £
Financial assets
Investments 1 1 - -
Deposit - - 123,168 123,118
Other receivables - - 34,239 23,603
Cash and cash equivalents - - 226,088 392,293
- -
1 1 383,495 539,014
13. Events after the reporting period
None.
14. Related party transactions
None.
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