REG-Anglesey Mining PLC: Interim report at 30 September 2021
12/11/2021 07:05
Anglesey Mining plc
Half yearly report for the six months to 30 September 2021
Chairman’s Statement and Management Report
The period ended 30 September has been very positive for both the minerals
industry in general and for Anglesey Mining in particular. Most commodity
prices have been well supported over the period, particularly copper and zinc
which are the key metals expected to be produced from the Parys Mountain
project. Iron ore prices almost halved from their record highs.
As previously announced, we appointed Jo Battershill as Chief Executive in
August. His focus is to take Anglesey forward by securing funding to ensure
that both the Parys Mountain and Grängesberg assets can be advanced to the
next decision points. Subsequent to the end of the period, we raised £768,000
that will be used to undertake drilling and environmental studies at Parys
Mountain and to fund a Preliminary Economic Assessment on the Grängesberg
iron project.
As per our comments in the Annual Report, the impact of Covid-19 on the
day-to-day running of Anglesey Mining has been quite limited. We believe that
encouraging developments with vaccines will lead to stability in general
economic and operating conditions and the inevitable stimulus relief and
infrastructure programmes will bolster demand for all metals; in particular
the electrification of the economy which is likely to lead to increased demand
for copper, zinc and silver.
Commodity prices
Over the period, all the metals that would be produced from the Parys Mountain
project have shown ongoing support from improving levels of economic activity
and some global supply outages. Some of the world’s largest mines in Peru
and Chile have seen reduced production from strike action and community
blockades.
As with the previous period, continuing pressure on current operating mines in
some countries because of Covid has created a shortfall in supply that is
dominating the base metal markets. It is our belief that this is likely to
continue for some time to come. This shortfall is accompanied by increasing
demand from the major infrastructure and Covid relief programmes that continue
to be announced by governments across the globe. In the US alone a $1 trillion
infrastructure programme was approved subsequent to the end of the period.
Of particular importance to Parys Mountain is the price of copper which will
be the mainstay of the project in the long term. Copper has continued to make
steady gains over the period, hitting a 10 year high of around $4.90/lb in May
and trading at over $4.00 per pound at the end of September. The current price
of $4.38 per pound is 56 percent higher than the price of $2.81 per pound used
in the 2021 PEA. Similarly, zinc climbed to $1.36 per pound at the end of
the September period and peaked at $1.73 per pound in October, comfortably
above the $1.20 per pound price used in the 2021 study.
Potential revenues from a mine at Parys Mountain would also benefit from gold
and silver by-products, the prices of which appear to have stabilised around
the $1,750 per ounce and $23 per ounce levels respectively – these are
significantly higher than the $1,459 per ounce and $16.67 per ounce used in
the 2021 study. The price outlook for these metals remains supported in the
face of expected worldwide deficit spending by many governments and inflation
that appears to be anything but transitory.
After a very strong 12 months that saw the iron ore 62% Fe benchmark price
reach a record high of around $230 per tonne in May, the recent impact of
potential defaults in the Chinese property development sector, which caused
unease in the Chinese economy, has seen the price retrench significantly to
around $100 per tonne. The Grängesberg project in Sweden is expected to
produce a premium higher grade >68% Fe product that continues to be supported
by the traditional premiums to the 62% Fe benchmark price.
We expect this support for all the commodities that are of interest to
Anglesey to continue as the global stimulus programmes take effect.
Parys Mountain
During October, after the period end, we awarded a drilling contract to Irish
Drilling to complete an initial 9-hole programme at the Parys Mountain copper,
zinc, lead, gold and silver project located on the island of Anglesey in North
Wales.
This aim of the drilling programme is twofold; firstly, to infill drill the
upper section of the White Rock Zone to convert the bulk of the remaining
Inferred resources to the higher confidence Indicated category and secondly to
collect important geotechnical and metallurgical information. This information
is expected to feed into further feasibility work in 2022.
Iron Ore
Grängesberg - Sweden
Anglesey continues to manage Grängesberg Iron AB (“GIAB”) which holds the
Grängesberg iron ore project in Central Sweden where an indicated and
inferred resource of 148 million tonnes at 41.3% Fe was identified in 2014.
Anglesey holds 19.9% of the company directly, together with a right of first
refusal on a further 50% holding.
Site activities have been kept at a low level but growing support for
higher-grade iron ore like the premium product that Grängesberg would produce
has encouraged us to now actively seek out alternative development and
corporate strategies to move the project and GIAB forward. We believe that the
superior geographic location of the Grängesberg deposit and its projected
premium product specification of >68% Fe could enable such alternative
approaches to be beneficial for the group in the coming periods.
Anglesey has recently engaged Micon International to undertake a Preliminary
Economic Assessment on the re-opening of the Grängesberg iron ore project.
This follows on from the Pre-Feasibility Study completed in 2012 which
demonstrated an extremely robust development option based on annual production
of 5.3Mtpa of ore, producing 2.5Mtpa of >68% Fe concentrate, equating to a
mine life of c.16-years.
Labrador - Canada
The group continues to hold a 12% interest in Labrador Iron Mines Holdings
Limited (LIM) which has a 52% interest in extensive iron ore resources in the
Schefferville area of Labrador and Quebec in Canada. In line with the pullback
in iron ore, the market price of LIM shares on the OTC Markets in the United
States declined significantly from 29 cents on 31 March 2021 to 11.2 US cents
on 30 September 2021, resulting in a mark to market change in fair value and
charge to comprehensive income during the period of £2.5 million.
LIM holds direct shipping mineral resources of approximately 55 million tonnes
at an average grade of 56.8% in the Houston project. In addition, LIM holds
the Elizabeth Taconite Project which has a current inferred mineral resource
estimated at 620 million tonnes at an average grade of 31.8% Fe.
In March 2021 LIM announced the results of a new updated independent PEA
regarding LIM’s direct shipping Houston project located approximately 20
kilometres south of its previously mined James deposit. The projected
financial results from the PEA were very encouraging with an after-tax NPV8 of
CAD109 million, assuming an iron ore price for 62% Fe of US$90 per tonne. The
Houston PEA assessed a production rate of 2 million tonnes of 62.2% Fe per
annum, with an overall mine life of 12 years. Production would be expected to
be 30% lump ore and 70% sinter fines.
LIM’s Elizabeth Project represents an opportunity to develop a major new
taconite operation in the Schefferville region of the Labrador Trough which
would produce a high-quality saleable iron ore product. This would attract
premium prices in the current iron ore market.
Operations and financial
As with previous reporting periods, we have kept our corporate and operating
costs at the lowest level consistent with maintaining our assets in good
order. However, in gearing up for the future, recruiting a new chief executive
and reinstating directors’ salaries and fees there have been increased
expenses for this period. With the increase in activity at both assets there
will also be an increase in investment in the properties.
The group had no revenue for the period. The loss for the six months to 30
September 2021 was £(298,055) (2020 £(152,882)) and the expenditures on the
mineral property in the period were £42,412 compared to £27,827 in the
comparative period. Net current assets at 30 September 2021 were £539,077
compared to £796,920 at 31 March 2021. The drop in value of our LIM shares
resulted in a charge to other comprehensive income of £2.5 million and a
total comprehensive loss for the period of £2.7 million.
The recent private placing has put Anglesey in a position to fund its planned
operations for the next 12-months
Outlook
We continue to be encouraged by growing investor interest and a positive
commodity price outlook resulting from decarbonisation of the global economy.
A further favourable factor is the shift to cleaner energy enhanced by
announced global infrastructure programmes as the world recovers from the
Covid-19 slowdown.
We believe that the ongoing strong fundamentals that have driven commodity
prices upwards will continue for the foreseeable future and will provide solid
support for our projects. Metals are essential for electrification, copper
for power generation, motors, transmission and energy storage, zinc for
extending the lifespan of products, and lead for energy storage.
We look forward to sharing the results of the current Parys Mountain work
programmes with investors over the coming months as the drilling is completed
and assays returned. We also expect to be in a position to report the results
of the PEA on Grängesberg early in the New Year.
All in all, we are confident of the way forward and positive on the outlook
for Anglesey Mining for the remainder of 2021 and 2022.
I would like to thank shareholders for their continued and renewed support.
John F Kearney
Chairman
11th November 2021
Unaudited condensed consolidated income statement
Notes Unaudited six months ended 30 September 2021 Unaudited six months ended 30 September 2020
All operations are continuing £ £
Revenue - -
Expenses (215,267) (68,439)
Investment income 35 50
Finance costs (82,826) (84,460)
Foreign exchange movement 3 (33)
Loss before tax (298,055) (152,882)
Taxation 8 - -
Loss for the period 7 (298,055) (152,882)
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 (298,055) (152,882)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
Change in fair value of investment (2,453,226) -
Foreign currency translation reserve (5,799) 8,747
Total comprehensive (loss) for the period (2,757,080) (144,135)
All attributable to equity holders of the company
Unaudited condensed consolidated statement of financial position
Notes 30 September 2021 31 March 2021
£ £
Assets
Non-current assets
Mineral property exploration and evaluation 9 15,359,705 15,317,293
Property, plant and equipment 204,687 204,687
Investments 10 1,710,438 4,163,664
Deposit 123,822 123,787
17,398,652 19,809,431
Current assets
Other receivables 33,997 31,381
Cash and cash equivalents 713,918 891,767
747,915 923,148
Total assets 18,146,567 20,732,579
Liabilities
Current liabilities
Trade and other payables (208,838) (126,228)
(208,838) (126,228)
Net current assets 539,077 796,920
Non-current liabilities
Loans (4,235,752) (4,147,294)
Long term provision (50,000) (50,000)
(4,285,752) (4,197,294)
Total liabilities (4,494,590) (4,323,522)
Net assets 13,651,977 16,409,057
Equity
Share capital 11 7,765,591 7,765,591
Share premium 10,941,509 10,941,509
Currency translation reserve (96,332) (90,533)
Retained losses (4,958,791) (2,207,510)
Total shareholders' funds 13,651,977 16,409,057
All attributable to equity holders of the company
Unaudited condensed consolidated statement of cash flows
Notes Unaudited six months ended 30 September 2021 Unaudited six months ended 30 September 2020
£ £
Operating activities
Loss for the period (298,055) (152,882)
Adjustments for:
Investment income (35) (50)
Finance costs 82,826 84,460
Foreign exchange movement (3) 33
(215,267) (68,439)
Movements in working capital
(Increase) in receivables (2,498) (5,153)
Increase in payables 76,038 27,862
Net cash used in operating activities (141,727) (45,730)
Investing activities
Mineral property exploration and evaluation (36,125) (21,811)
Investment - (5,428)
Net cash used in investing activities (36,125) (27,239)
Financing activities
Issue of share capital - 184,000
Net cash generated from financing activities - 184,000
Net (decrease)/increase in cash and cash equivalents (177,852) 111,031
Cash and cash equivalents at start of period 891,767 95,311
Foreign exchange movement 3 (33)
Cash and cash equivalents at end of period 713,918 206,309
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 2021 - audited 7,765,591 10,941,509 (90,533) (2,207,510) 16,409,057
Total comprehensive loss for the period:
Loss for the period - - - (298,055) (298,055)
Change in fair value of investment - - - (2,453,226) (2,453,226)
Exchange difference on translation of foreign holding - - (5,799) - (5,799)
Total comprehensive loss for the period - - (5,799) (2,751,281) (2,757,080)
Shares issued - - - - -
Share issue expenses - - - - -
Equity at 30 September 2021 - unaudited 7,765,591 10,941,509 (96,332) (4,958,791) 13,651,977
Comparative period
Equity at 1 April 2020 - audited 7,380,591 10,258,309 (80,466) (5,932,498) 11,625,936
Total comprehensive loss for the period:
Exchange difference on translation of foreign holding - - 8,747 - 8,747
Loss for the period - - - (152,882) (152,882)
Total comprehensive loss for the period - - 8,747 (152,882) (144,135)
Shares issued 125,000 75,000 - - 200,000
Share issue expenses - (16,000) - - (16,000)
Equity at 30 September 2020 - unaudited 7,505,591 10,317,309 (71,719) (6,085,380) 11,665,801
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 2021. It has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority, the requirements of IAS
34 - Interim financial reporting (as adopted by the UK) and using the going
concern basis. The directors are not aware of any events or circumstances
which would make this inappropriate. 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 2021 which is available
on request from the company or may be viewed at
www.angleseymining.co.uk/accounts.
The financial information contained in this report in respect of the year
ended 31 March 2021 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 by the company’s auditor.
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 2021.
The following changes to IFRS became effective during the period but did not
result in material changes to the financial statements:
· Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16)
· Covid 19-Related Rent Concessions beyond 30 June 2021 (Amendment to
IFRS 16)
The group has not applied certain new standards, amendments and
interpretations to existing standards that have been issued but are not yet
effective. They are either not expected to have a material effect on the
consolidated financial statements or they are not currently relevant for the
group.
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 2021 remain the same for this
half-yearly period and for the period to 31 March 2022. They 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 2021 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 UK); and
(b) the interim management report includes a fair review of the information
required by the FCA'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 11 November
2021 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 £0.298 million (loss to 30 September 2020 £0.153m), by
225,475,732 (2020 – 189,571,360) - 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 trading revenues. The cost of all activities charged in the
income statement relates to exploration and evaluation 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 2021
UK Sweden - investment Canada - investment Total
£ £ £ £
Expenses (215,267) - - (215,267)
Investment income 35 - - 35
Finance costs (77,117) (5,709) - (82,826)
Exchange rate movements - 3 - 3
Loss for the period (292,349) (5,706) - (298,055)
Unaudited six months ended 30 September 2020
UK Sweden - investment Canada - investment Total
£ £ £ £
Expenses (68,439) - - (68,439)
Investment income 50 - - 50
Finance costs (77,117) (7,343) - (84,460)
Exchange rate movements - (33) - (33)
Loss for the period (145,506) (7,376) - (152,882)
Assets and liabilities
` 30 September 2021
UK Sweden investment Canada investment Total
£ £ £ £
Non current assets 15,688,214 110,157 1,600,281 17,398,652
Current assets 746,801 1,114 - 747,915
Liabilities (4,150,977) (343,613) - (4,494,590)
Net assets/(liabilities) 12,284,038 (232,342) 1,600,281 13,651,977
Audited 31 March 2021
UK Sweden investment Canada investment Total
£ £ £ £
Non current assets 15,645,767 110,157 4,053,507 19,809,431
Current assets 922,056 1,092 - 923,148
Liabilities (3,991,250) (332,272) - (4,323,522)
Net assets/(liabilities) 12,576,573 (221,023) 4,053,507 16,409,057
8. Deferred tax
There is an unrecognised deferred tax asset of £1.3 million (31 March 2021 -
£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 £12.8 million (unchanged from 31
March 2021) 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 £42,412 was incurred (six
months to 30 September 2020 - £27,827). There have been no indicators of
impairment during the period.
10. Investments
Labrador Grangesberg Total
£ £ £
At 1 April 2020 1 100,098 100,099
Net change during the period 4,053,506 10,059 4,063,565
At 31 March 2021 4,053,507 110,157 4,163,664
Net change during the period (2,453,226) - (2,453,226)
At 30 September 2021 1,600,281 110,157 1,710,438
Labrador – Canada
The group has an investment in Labrador Iron Mines Holdings Limited, (LIM) a
Canadian company which is carried at fair value through other comprehensive
income. The group’s holding of 19,289,100 shares in LIM (12% of LIM’s
total issued shares) is valued at the closing price traded on the OTC Markets
in the United States. In the directors’ assessment this market is
sufficiently active to give the best measure of fair value, which on 30
September 2021 was 11.2 US cents per share, a significant decline from its
price at 31 March 2021 of 29 cents. At 8 November 2021 the price was 11.4
cents.
Grangesberg - Sweden
The group has, through its Swedish subsidiary Angmag AB, a 19.9% ownership
interest (31 March 21 – 19.9%) in Grangesberg Iron AB (GIAB - an unquoted
Swedish company) which holds rights over the Grangesberg iron ore deposits.
The directors assessed the fair value of the investment in GIAB under IFRS 9
and consider the cost at the date of transition and the investment’s value
at the period end to approximate the fair value at these dates. Following
negotiation the group has, until June 2023, a right of first refusal over a
further 50.1% of the equity of GIAB together with management direction of the
activities of GIAB, subject to certain restrictions. Although the group has
significant influence over certain relevant activities of GIAB, equity
accounting has not been applied in respect of this influence as the directors
consider this would not have any material affect. The group’s share in the
net assets of GIAB at 31 March 2021 was approximately £316,000. There are no
accounts on which to base an equivalent figure for 30 September 2021 but in
the opinion of the directors it is unlikely to be significantly different from
the value at 31 March 2021.
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 1 April 2020 1,869,758 186,975,732 5,510,833 137,770,835 7,380,591
Issued in the period 385,000 38,500,000 - - -
At 1 April 2021 2,254,758 186,975,732 5,510,833 137,770,835 7,765,591
Issued in the period - - - - -
At 30 September 2021 2,254,758 186,975,732 5,510,833 137,770,835 7,765,591
The deferred shares are non-voting, have no entitlement to dividends and have
negligible rights to return of capital on a winding up.
On 9 October 2021 a placing of 22,595,000 new ordinary shares was made to
several institutions, representing approximately 10% of the company’s then
current issued share capital, at 3.4 pence per share to raise a total of
£768,230.
12. Financial instruments
Group Financial assets classified at fair value through other comprehensive income Financial assets measured at amortised cost
30 September 2021 31 March 2021 30 September 2021 31 March 2021
£ £ £ £
Investments 1,710,438 4,163,664 - -
Deposit - - 123,822 123,787
Other receivables - - 33,997 31,381
Cash and cash equivalents - - 713,918 891,767
- -
1,710,438 4,163,664 871,737 1,046,935
Financial liabilities measured at amortised cost
30 September 2021 31 March 2021
£ £
Trade payables (58,817) (4,366)
Other payables (150,021) (121,862)
Loans (4,235,752) (4,147,294)
(4,444,590) (4,273,522)
13. Events after the reporting period
In October 2021 the sum of £725,105 net of issuance costs of £43,125 was
raised by the issuance of 22,595,000 ordinary shares at a price of 3.4 pence
each by means of a placing. These funds are intended to be used for diamond
drilling and environmental studies at Parys Mountain and the commencement of a
preliminary economic assessment at the Grängesberg iron project.
14. Related party transactions
None.
Anglesey Mining plc
Directors
John Kearney
Chairman
Bill
Hooley
Deputy chairman
Jo Battershill
Chief executive
Danesh Varma
Finance director
Howard Miller Non
executive
Parys Mountain site: Parys Mountain, Amlwch, Anglesey, LL68 9RE Phone
01407 831275
London office: Level2, 39 Cheval Place, South Kensington, London Phone 020
7036 0225
Registered office: Tower Bridge House, St. Katharine's Way, London, E1W 1DD
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
Share registrars: Link Group www.linkgroup.eu
Share dealing at www.signalshares.com Helpline phone 0371 664 0300
Calls are charged at the standard geographic rate and will vary by provider.
If you are outside the United Kingdom, please call +44 371 664 0300. Calls
outside the United Kingdom will be charged at the applicable international
rate. Lines are open between 9.00am and 5.30pm, Monday to Friday excluding
public holidays in England and Wales.
For further information, please contact:
Jo Battershill, CEO + 44 (0)7540 366000
John Kearney, Chairman + 1 416 362 6686
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