REG-Anglesey Mining PLC: Half-year Report <Origin Href="QuoteRef">AYM.L</Origin>
18/11/2016 11:15
Anglesey Mining plc
Half yearly report for the six months to 30 September 2016
Chairman’s Statement and Management Report
In 2016, year to date, to a large extent we have seen an improvement in all
the metals which are key to Anglesey Mining and the immediate outlook for all
these metals is very positive.
Base metal prices move ahead
Zinc has continued to be one of the strongest performing metals in 2016,
rising from the US$0.70 per pound level at the end of 2015 to US$1.15 per
pound in recent days, an improvement in the year to date of more than 50%. For
the past five years the zinc market has been in deficit and the fundamentals
for zinc have been steadily improving. The closing in 2015 of Australia’s
Century mine and the Lisheen mine in Ireland, combined with earlier closures
of the Glencore’s Brunswick and Perseverance mines in Canada has removed
more than one million tonnes of mine supply which represents almost 9.9% of
world mine production.
Lead has also performed well in 2016 rising from US$0.75 per pound at the end
of 2015 to US$0.95 per pound during the third quarter, while uncertainty about
the global economy and investor anxiety continue to support the prices of gold
and silver.
More recently, following the election of Donald Trump in the United States,
there has been a dramatic increase in the prices of most metals, particularly
copper and iron ore. Copper is now selling at over $2.60 per pound, a level
not seen for several years. The likelihood of a major infrastructure programme
in the United Sates would be very significant for both copper and iron ore
and particularly for zinc, the demand for which is closely linked to steel
production and hence to iron ore demand.
Iron ore showing some strength
Iron ore is now selling at US$74 per tonne on a 62% iron basis FIS China. This
is a level not seen for almost two years, while at the same time the price of
metallurgical coal, the other major ingredient in steel making, has more than
doubled in the past six months. It is clear that Chinese consumption of iron
ore continues to increase. On a positive note particularly relevant to the
company the premiums for high grade fines and pellets, as would be produced by
Grangesberg in Sweden, are also increasing.
In the longer term, per capita steel consumption in China must catch up with
levels in the West and that would see at least a doubling in iron ore and zinc
demand.
Operations
At Anglesey Mining we have continued to keep our corporate and operating costs
at the lowest level possible and indeed have reduced general expenses by a
further 38% compared to the same period last year, which as noted at that time
were 50% of the prior year. The direct expenditure at all our projects has
again remained low throughout the period.
New studies on Parys Mountain
As announced in the Annual Report the company is updating the earlier scoping
and economic studies on its Parys Mountain zinc/lead/copper/silver/gold
property in Wales. This updated scoping study is being prepared by Micon
International Limited and by Fairport Engineering Limited, both of which are
acknowledged experts and leaders in the resources sector.
The Parys Mountain property is a significant zinc, copper and lead deposit
with small amounts of silver and gold, with a 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. The site
has a head frame, a 300m deep production shaft and planning permission for
operations and there is also important exploration potential.
It is expected that the results of this updated study will form a solid base
from which to move the project towards production and will be used to assist
with future planning and potential financing of the development of the Parys
Mountain project. We expect that capital costs of developing Parys Mountain
will be lower in today’s less competitive environment and, coupled with
positive changes in exchange rates, could make the project attractive at
expected metal prices. The Parys Mountain project will of course benefit from
the expected increase in zinc price which is the predominant metal to be
produced during in the early years of the mine life.
Labrador restructuring
In Canada, Labrador Iron Mines has made significant progress. A Plan of
Arrangement has been filed with Ontario Court and a meeting of creditors will
be held in early December. This filing marks a major milestone in the
court-supervised process to complete a restructuring of LIM’s business. The
plan is intended to restructure LIM’s business to preserve its mining assets
and to position LIM to refinance an orderly resumption of its iron ore mining
activities when economic conditions warrant. If the plan is implemented as
expected then Anglesey’s holding in LIM will be diluted by an approximately
25%.
Grangesberg well positioned
In Sweden, a number of technical reviews have been continued to position the
Grangesberg iron ore project should the iron ore market continue to
strengthen. Anglesey holds a direct 6% interest in Grangesberg and a right
of first refusal over a further 51%. It has a shareholder and cooperation
agreements for operatorship of GIAB. The mining leases can be maintained for a
number of years with only minimum work levels. 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. In the meantime, Grangesberg is also actively looking at
alternative resource projects in Sweden that could benefit from the local
knowledge and corporate support available, whilst awaiting a sustainable
upturn in the iron ore and financing markets.
Financial results
The group had no revenue for the period. The loss for the six months to 30
September 2016 was £124,576, a reduction of £11,373 in the loss from the
comparative period last year due to a reduction in administrative expenses.
The cash and net current liabilities positions also improved compared with the
last period as a result of cash advances of £125,000 from Juno under the
working capital agreement. Additional financing will be required for working
capital to maintain the group and carry out planned progress at Parys
Mountain.
Outlook
Anglesey is exposed to zinc, lead, copper and precious metals at Parys
Mountain and to iron ore at LIM and Grangesberg. With recent political
developments in the UK and the United States, coupled with the likelihood of
renewed stimulus investment in China, we feel that there is sound reason to
believe that the future outlook for the commodity prices which are important
to Anglesey Mining is very positive.
We thank shareholders for their continued patience and support.
John F Kearney
Chairman
17 November 2016
Unaudited condensed consolidated income statement
Notes Unaudited six months ended 30 September 2016 Unaudited six months ended 30 September 2015
All operations are continuing £ £
Revenue - -
Expenses (42,418) (68,337)
Investment income 103 160
Finance costs (82,392) (66,959)
Foreign exchange gain/(loss) 131 (813)
Loss before tax (124,576) (135,949)
Taxation 8 - -
Loss for the period 7 (124,576) (135,949)
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 (124,576) (135,949)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
Exchange difference on translation of foreign holding (18,135) 33
Total comprehensive loss (142,711) (135,916)
for the period
All attributable to equity holders of the company
Unaudited condensed consolidated statement of financial position
Notes Unaudited 30 September 2016 Audited 31 March 2016
£ £
Assets
Non-current assets
Mineral property exploration and evaluation 9 14,945,175 14,926,626
Property, plant and equipment 204,687 204,687
Investments 10 86,660 86,660
Deposit 123,078 123,078
15,359,600 15,341,051
Current assets
Other receivables 30,411 32,759
Cash and cash equivalents 40,608 11,504
71,019 44,263
Total assets 15,430,619 15,385,314
Liabilities
Current liabilities
Trade and other payables (98,500) (136,259)
(98,500) (136,259)
Net current liabilities (27,481) (91,996)
Non-current liabilities
Loans (3,323,437) (3,097,662)
Long term provision (50,000) (50,000)
(3,373,437) (3,147,662)
Total liabilities (3,471,937) (3,283,921)
Net assets 11,958,682 12,101,393
Equity
Share capital 11 7,116,914 7,116,914
Share premium 9,848,949 9,848,949
Currency translation reserve (56,592) (38,457)
Retained losses (4,950,589) (4,826,013)
Total shareholders' equity 11,958,682 12,101,393
All attributable to equity holders of the company
Unaudited condensed consolidated statement of cash flows
Notes Unaudited six months ended 30 September 2016 Unaudited six months ended 30 September 2015
£ £
Operating activities
Loss for the period (124,576) (135,949)
Adjustments for:
Investment income (103) (160)
Finance costs 82,392 66,959
Foreign exchange movement (131) 813
(42,418) (68,337)
Movements in working capital
Decrease in receivables 2,348 1,002
(Decrease)/increase in payables (25,672) 8,329
Net cash used in operating activities (65,742) (59,006)
Investing activities
Investment income 103 60
Mineral property exploration and evaluation (30,388) (29,144)
Net cash used in investing activities (30,285) (29,084)
Financing activities
Loans 125,000 -
Net cash generated from financing activities 125,000 -
Net increase/(decrease) in cash 28,973 (88,090)
and cash equivalents
Cash and cash equivalents at start of period 11,504 96,873
Foreign exchange movement 131 (813)
Cash and cash equivalents at end of period 40,608 7,970
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 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
Comparative period
Equity at 1 April 2015 - audited 7,116,914 9,848,949 (31,163) (4,569,563) 12,365,137
Total comprehensive income for the period:
Exchange difference on translation of foreign holding - - 33 - 33
Loss for the period - - - (135,949) (135,949)
Total comprehensive income for the period: - - 33 (135,949) (135,916)
Equity at 30 September 2015 - unaudited 7,116,914 9,848,949 (31,130) (4,705,512) 12,229,221
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 2016. 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 17 November 2016. 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 2016 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 2016 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 are
unaudited.
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 2016. The following
amendments to interpretations were effective in the current period and have
been adopted:
IAS 1 (amendment) ‘Presentation of Financial Statements’ - Disclosure
initiative - 1 January 2016
IAS 16 (amendment) ‘Property, Plant and Equipment’ and IAS 38 (amendment)
‘Intangible Assets’ - Clarification of acceptable methods of depreciation
and amortisation - 1 January 2016
IAS 27 (amendment) ‘Separate Financial Statements’ - Equity method in
separate financial statements - 1 January 2016
IFRS 11 (amendment) ‘Joint Arrangements’ - Accounting for acquisitions of
interests in joint operations - 1 January 2016
Annual Improvements to IFRS (2012 - 2014) - 1 January 2016
The adoption of the amendments and new interpretations has not resulted in a
change to the accounting policies nor had a material effect on the financial
performance and position of the group. In preparing these financial statements
any accounting assumptions and estimates made by management were consistent
with those applied to the aforesaid annual report and 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 2016 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 2016 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 17 November 2016 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 £0.1 million (loss to 30 September 2015 £0.1m), by
160,608,051 (2015 - unchanged) - 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 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)
Unaudited six months ended 30 September 2015
UK Sweden - investment Canada - investment Total
£ £ £ £
Expenses (68,337) - - (68,337)
Investment income 160 - - 160
Finance costs (66,959) - - (66,959)
Exchange rate movements - (57) (756) (813)
Loss for the period (135,136) (57) (756) (135,949)
Assets and liabilities
` Unaudited 30 September 2016
UK Sweden investment Canada investment Total
£ £ £ £
Non current assets 15,272,940 86,659 1 15,359,600
Current assets 69,755 1,264 - 71,019
Liabilities (3,191,748) (280,189) - (3,471,937)
Net assets/(liabilities) 12,150,947 (192,266) 1 11,958,682
Audited 31 March 2016
UK Sweden investment Canada investment Total
£ £ £ £
Non current assets 15,254,391 86,659 1 15,341,051
Current assets 43,069 1,194 - 44,263
Liabilities (3,038,460) (245,461) - (3,283,921)
Net assets/(liabilities) 12,259,000 (157,608) 1 12,101,393
8. Deferred tax
There is an unrecognised deferred tax asset of £1.3 million (31 March 2016 -
£1.2m) 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 2016) 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 £18,549 was incurred (six
months to 30 September 2015 - £24,127). There have been no indicators of
impairment during the period.
10. Investments
Labrador Grangesberg Total
£ £ £
At 1 April 2015 1 86,659.00 86,660
Addition during period - -
At 31 March 2016 1 86,659 86,660
Addition during period - - -
At Unaudited 30 September 2016 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 2015, 2016 and 30 September 2016 1,606,081 160,608,051 5,510,833 137,770,835 7,116,914
12. Financial instruments
Group Available for sale assets Loans & receivables
Unaudited 30 September 2016 31 March 2016 Unaudited 30 September 2016 31 March 2016
£ £ £ £
Financial assets
Investments 1 1 - -
Deposit - - 123,078 123,078
Other debtors - - 30,411 32,759
Cash and cash equivalents - - 40,608 11,504
- -
1 1 194,097 167,341
Unaudited 30 September 2016 31 March 2016
£ £
Financial liabilities
Trade payables (44,206) (77,465)
Other payables (54,294) (58,794)
Loans (3,323,437) (3,097,662)
(3,421,937) (3,233,921)
13. Events after the reporting period
None.
14. Related party transactions
None.
Corporate information
Directors:
John Kearney Chairman
Bill Hooley Chief executive
Danesh Varma Finance director
David Lean Non executive
Howard Miller Non executive
Parys Mountain site: Parys Mountain, Amlwch, Anglesey, LL68 9RE
Phone 01407 831275
London office: Painter's Hall, 9 Little Trinity Lane, London, EC4V 2AD
Phone 020 7653 9881
Registered office: Tower Bridge House, St. Katharine's Way, London, E1W 1DD
Share registrars: Capita Registrars www.capitaregistrars.com
Phone: 0871 664 0300 - for all change of address and shareholder
administration matters (calls cost 10p per minute plus network extras,
lines open 0830 to 1730 Mon-Fri)
Web site: www.angleseymining.co.uk
E-mail: mail@angleseymining.co.uk
Shares listed on the London Stock Exchange - LSE:AYM
Company registration number 1849957
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