REG-Anglesey Mining PLC: Half-yearly Report & Interim Management Statement <Origin Href="QuoteRef">AYM.L</Origin>
27/11/2015 07:10
Anglesey Mining plc
Half yearly report for the six months to 30 September 2015
Chairman's Statement and Management Report
As indicated in the Chairman's Statement in the Annual Report published in July
this year, the hoped for resurgence in the resources sector has not yet
occurred and indeed since the date of that Report the investment climate has
further deteriorated. Continuing economic difficulties in Europe and a
deepening slow down in Chinese consumption, coupled with an apparent increasing
involvement of hedge funds and sovereign investment funds in resource
derivative markets, have resulted in further worsening of key commodity prices
during the last three months. Prices for iron ore are now close to their lowest
since an open market for iron ore first evolved in 2007; and prices for base
metals such as copper, lead and zinc are now at multi-year lows.
It is unclear how matters will resolve themselves in both the next few months
and in the next few years. However it is apparent that with continuing low
commodity prices there will be shut downs of a number of producing mines and it
is highly unlikely that there will be significant new investment to replace all
of this lost production. Production on a global level must therefore fall.
Despite the Chinese slowdown in rate of economic growth, consumption of major
metals continues to increase. Initially this is likely to reduce the levels of
stocks firstly of concentrates and eventually of finished products and metals.
Inevitably and notwithstanding the activities of the hedge funds and sovereign
investment funds this must lead to a net deficit of supply over demand. The
problem will be further exacerbated by the near cessation of mineral
exploration particularly at the grass roots level which must severely limit the
flow of potential new projects to even maintain production levels as current
mines reach the end of their natural life. This will then only add to the
supply/demand shortfall.
The real question of course is over what time frame will these events unfold?
The minerals sector has always operated in cycles but the current trough
following the super-cycle of the early part of this century is deeper than
experienced by any currently working in the sector and there is little in the
way of guidance from the past to try to be certain of the way the cycle will
move in the future. Past cycles have often had a sharp increase once the bottom
was reached and hopefully that will again be the case this time round. But as a
word of caution it is by no means certain that we have yet seen the bottom, nor
is it clear how the new derivative players will affect the rate of recovery and
it is far from certain that capital will return to the sector to fund a rapid
regrowth after the pain that investors in the sector have suffered in the last
two or three years.
Nevertheless we must remain optimistic and we must continue to place ourselves
in the most favourable position to benefit from the upturn in whatever form and
whenever it does return. To this end we have significantly reduced our
operating costs particularly from a cash flow point of view at just £68,000 for
the half year being well under 50% of that for the comparable period last year.
Despite this we have managed to keep all of our major assets in good standing
and ready for relatively speedy development at the appropriate time. In this
regard I must thank all of our directors for their continuing support in
waiving fees and salaries during this critical time.
As always we continue to look for new opportunities for your Company within the
resources sector, particularly in commodities with which we are familiar and
within political sectors in which we feel comfortable. Given the difficulties
being felt by many others within the sector who do not benefit from our low
operating cost scenario a number of such opportunities are beginning to present
themselves and we will review each of these as they come to our attention.
Operations
The levels of operations and direct expenditure at all of our projects have
remained very low throughout the period. No field work has been carried out at
Parys Mountain but as shareholders will be aware we do own the freehold to the
surface area covering virtually all our published resources and fortunately
under UK law, with the exception of some minor commitments to prior land owner
and to the Crown for precious metals licences, this gives us perpetual ongoing
rights to these resources with no resultant demands from departments of mines
or similar for minimum expenditures and lease relinquishments. We can therefore
maintain our Parys Mountain assets for a very low holding cost.
The situation in Sweden, whilst governed by leases from the state, still allows
us to keep these leases for a number of years without any immediate demand for
minimum work levels. Again no field work has taken place but a number of
off-site technical reviews have been conducted to best position Grangesberg for
the possible upturn in what may well become a favourable market in the future,
particularly for the type of iron ore product that the project is expected to
produce in its geographical location.
In Canada, Labrador Iron Mines is now operating under the Canadian Companies
Creditors Arrangement Act. LIM does have some ongoing expenditure but it has
embarked on a process of non-essential asset sales to allow it sufficient time
to seek suitable financial restructuring arrangements with the aim of
maintaining its principal assets to permit a return to production when markets
return to higher levels.
Results
Anglesey recorded a net loss for the period of £0.14 million (2014 loss £0.88
million. Administration costs at £0.07 million were further reduced from £0.15
million in the comparative period in 2014. The group had no revenue for the
period. At the period end cash resources stood at £7,000 and there was a
working capital deficiency of £88,000. This was reduced by a loan of £50,000
from Juno after the period end however additional working capital will need to
be raised in the immediate future.
Outlook
The outlook in the short to medium term remains somewhat unclear. However it is
certain at least in the longer term that the demand to supply balance will need
to be restored and commodity prices will need to return to a level at which
ongoing production at a reasonable profit is sustainable. It remains our view
that zinc should be one of the earliest commodities to benefit from this
movement. This is reinforced by the closure of both the Century Mine in
Australia and the Lisheen Mine in Ireland in recent months both of which were
major producers, and by the curtailment of production by a number of others
including the substantial reduction recently announced by Glencore. All these
production reductions should mean that the supply demand balance would already
be in deficit and the small overhang of metal stocks should be eradicated
within this calendar year. We do not see any major new mines coming on stream
in the medium term, and with China continuing to grow, albeit at a slower rate
than previously, demand should continue to increase. However the current lower
levels of mine production of concentrates is likely to lead to the closure of
at least one the major smelters somewhere in the world. The resultant shortfall
in metal production should then lead to an early rise in the price of the
metal. Given the short time to move Parys Mountain into production we would be
in a strong position to benefit from this movement.
The situation of iron ore in the short term is less exciting. China continues
to import record quantities of iron ore but the build-up in production levels
particularly from Australia and Brazil over recent years following major
capital project commencements in 2010 and 2011 that have recently come on
stream, mean that a surplus of production capacity now exists that under normal
circumstances would take a number of years to be eroded by natural growth in
demand. Whilst China's growth remains subdued there is always the possibility,
maybe driven by internal political pressures, for that country to embark on a
new stimulus plan and that would have an immediate beneficial effect firstly on
iron ore pricing and later on base metals. Should such an upturn occur then LIM
with all its physical and geological assets in place would be well positioned
to benefit. Grangesberg too would also then be able to embark upon its
rejuvenation programme to bring its mine back into production in something like
a three year span from an investment decision.
In summary, while the current situation is dark and indeed the future is
uncertain, Anglesey remains positive that a recovery will occur within a
sensible time frame. We will maintain our assets in good standing to permit us
take the fullest advantage of the inevitable and I thank all shareholders for
their patience during these difficult times.
John F Kearney
Chairman
26 November 2015
Unaudited condensed consolidated income statement
Notes Unaudited six Unaudited six
months ended 30 months ended 30
September 2015 September 2014
All operations are continuing £ £
Revenue - -
Expenses (68,337) (152,230)
Impairment of investment 10 - (692,702)
Exchange difference on 10 - 20,850
investment impairment
Investment income 160 1,044
Finance costs (66,959) (56,200)
Foreign exchange (loss)/gain (813) 330
Loss before tax (135,949) (878,908)
Tax 8 - -
Loss for the period (135,949) (878,908)
Loss per share
Basic - pence per share (0.1)p (0.5)p
Diluted - pence per share (0.1)p (0.5)p
Unaudited condensed consolidated statement of comprehensive income
Loss for the period (135,949) (878,908)
Other comprehensive income:
Exchange difference on 33 -
translation of foreign holding
Total comprehensive loss (135,916) (878,908)
for the year
All attributable to equity holders of the company
Unaudited condensed consolidated statement of financial position
Notes 30 September 2015 31 March
2015
£ £
Assets
Non-current assets
Mineral property exploration and 9 14,901,320 14,877,193
evaluation
Property, plant and equipment 204,687 204,687
Investments 10 86,660 86,660
Deposit 122,906 122,806
15,315,573 15,291,346
Current assets
Other receivables 29,990 30,977
Cash and cash equivalents 7,970 96,873
37,960 127,850
Total assets 15,353,533 15,419,196
Liabilities
Current liabilities
Trade and other payables (124,851) (121,557)
(124,851) (121,557)
Net current (liabilities)/assets (86,891) 6,293
Non-current liabilities
Loans (2,949,461) (2,882,502)
Long term provision (50,000) (50,000)
(2,999,461) (2,932,502)
Total liabilities (3,124,312) (3,054,059)
Net assets 12,229,221 12,365,137
Equity
Share capital 11 7,116,914 7,116,914
Share premium 9,848,949 9,848,949
Currency translation reserve (31,130) (31,163)
Retained losses (4,705,512) (4,569,563)
Total shareholders' equity 12,229,221 12,365,137
All attributable to equity holders of the company
Unaudited condensed consolidated statement of cash flows
Notes Unaudited six Unaudited six
months ended 30 months ended 30
September 2015 September 2014
£ £
Operating activities
Loss for the period (135,949) (878,908)
Adjustments for:
Investment income (160) (1,044)
Finance costs 66,959 56,200
Impairment of investment 10 - 692,702
Exchange difference on 10 - (20,850)
investment impairment
Foreign exchange movement 813 (330)
(68,337) (152,230)
Movements in working capital
Decrease/(increase) in 1,002 (3,513)
receivables
Increase in payables 8,329 13,877
Net cash used in operating (59,006) (141,866)
activities
Investing activities
Investment income 60 834
Mineral property exploration and (29,144) (41,899)
evaluation
Investment - (74,940)
Net cash used in investing activities (29,084) (116,005)
Net decrease in cash (88,090) (257,871)
and cash equivalents
Cash and cash equivalents at start 96,873 289,097
of year
Foreign exchange movement (813) 330
Cash and cash equivalents at end of 7,970 31,556
year
All attributable to equity holders of the company
Unaudited condensed consolidated statement of changes in group equity
Share Share Currency Retained Total
capital premium translation losses £
£ £ reserve £ £
Equity at 1 April 2015 7,116,914 9,848,949 (31,163) (4,569,563) 12,365,137
- audited
Total comprehensive
income for the period:
Exchange difference on - - 33 - 33
translation of foreign
holding
Loss for the period - - - (135,949) (135,949)
Total comprehensive - - 33 (135,949) (135,916)
income for the period:
Equity at 7,116,914 9,848,949 (31,130) (4,705,512) 12,229,221
30 September 2015 -
unaudited
Comparative period
Equity at 1 April 2014 7,116,914 9,848,949 - (2,832,953) 14,132,910
- audited
Total comprehensive
income for the period:
Loss for the period - - - (878,908) (878,908)
Total comprehensive - - - (878,908) (878,908)
income for the period:
Equity at 7,116,914 9,848,949 - (3,711,861) 13,254,002
30 September 2014 -
unaudited
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 2015. 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 26 November 2015. 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 2014 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 2015 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 2015. The following amendments
to interpretations were effective in the current period and have been adopted.
IFRIC 21 Levies; Effective - Annual periods beginning on or after 17 June 2014
IAS 19 Employee Benefits: Amendment relating to the accounting for
contributions from employees or third parties to defined benefit plans;
Effective - Annual periods beginning on or after 1 February 2015
Annual Improvements 2010 - 2012 cycle: Amendments to IFRS2, IFRS3, IFRS8 IAS
16, IAS24 and IAS38; Effective for accounting periods beginning on or after 1
February 2015.
Annual Improvements 2011 - 2013 cycle: Amendments to IFRS3, IFRS13 and IAS40;
Effective for accounting periods beginning on or after 1 January 2015
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 2015 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 2015 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 26 November 2015 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 2014 £0.9m), by 160,608,051
(2014 - 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 2015
UK Sweden - Canada - Total
investment investment
£ £ £ £
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)
Unaudited six months ended 30 September 2014
UK Sweden - Canada - Total
investment investment
£ £ £ £
Expenses (152,230) - - (152,230)
Loss on fair - - (692,702) (692,702)
value of investment
Exchange - - 20,850 20,850
difference on loss above
Investment income 1,044 - - 1,044
Finance costs (56,200) - - (56,200)
Exchange rate movements 330 - - 330
Loss for the period (207,056) - (671,852) (878,908)
Assets and liabilities
` Unaudited 30 September 2015
UK Sweden Canada Total
investment investment
£ £ £ £
Non current assets 15,228,913 86,659 1 15,315,573
Current assets 33,513 4,447 - 37,960
Liabilities (2,894,766) (229,546) - (3,124,312)
Net assets/(liabilities) 12,367,660 (138,440) 1 12,229,221
Audited 31 March 2015
UK Sweden Canada Total
investment investment
£ £ £ £
Non current assets 15,204,686 86,659 1 15,291,346
Current assets 123,364 4,486 - 127,850
Liabilities (2,831,473) (222,586) - (3,054,059)
Net assets/(liabilities) 12,496,577 (131,441) 1 12,365,137
8. Deferred tax
There is an unrecognised deferred tax asset of £1.2 million (31 March 2015 - £
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 £11 million (unchanged from 31 March
2015) 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 £24,127 was incurred (six months
to 30 September 2014 - £53,159). There have been no indicators of impairment
during the period.
10. Investments
Labrador Grangesberg Total
£ £ £
At 31 March 2014 1,257,985 - 1,257,985
Addition during period - 86,659 86,659
Impairment resulting (1,231,218) - (1,231,218)
from adjustment to nominal value
Exchange difference arising on (26,766) - (26,766)
adjustment above
At 31 March 2015 1 86,659 86,660
Addition during period - - -
At 30 September 2015 1 86,659 86,660
Labrador: At 31 March 2014 the group treated its 15% holding in LIM as an
investment held at its published fair value. At 31 March 2015 the value of the
LIM investment was deemed to be impaired given the decline in the share price
and the loss its quotation on the Toronto Stock Exchange on 2 April 2015 and
the directors decided to write down the value of the LIM shares to 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 Deferred shares Total
of 1p of 4p
Issued and Nominal Number Nominal Number Nominal
fully paid value £ value £ value £
-
At 31 March 2014, 1,606,081 160,608,051 5,510,833 137,770,835 7,116,914
2015 and 30 September
2015
12. Financial instruments
Group Available for sale Loans & receivables
assets
30 31 March 30 31 March
September 2015 September 2015
2015 2015
£ £ £ £
Financial assets
Investments 1 1 - -
Deposit - - 122,906 122,806
Other debtors - - 29,990 30,977
Cash and cash - - 7,970 96,876
equivalents
- -
1 1 160,866 250,659
30 31 March
September 2015
2015
£ £
Financial liabilities
Trade creditors (69,832) (71,538)
Other creditors (105,019) (100,019)
Loans (2,949,461) (2,882,502)
(3,124,312) (3,054,059)
13. Events after the reporting period
None.
14. Related party transactions
None.
Anglesey Mining plc
Directors:
John Kearney Chairman
Bill Hooley Chief executive
Danesh Varma Finance director
David Lean Non executive
Howard Miller Non executive
Roger Turner 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
END
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