REG-Anglesey Mining PLC: Interim report for the six months to 30 September 2018
30/11/2018 07:05
Anglesey Mining plc
Half yearly report for the six months to 30 September 2018
Chairman’s Statement and Management Report
In our most recent Annual Report to shareholders, issued in July, I commented
that metal prices had softened somewhat during 2018 but that there was a
strong expectation of a continued positive outlook for base metals,
particularly for zinc and copper. Despite the current geopolitical uncertainty
caused by fears of trade wars and tariffs, that general prognosis still holds
and we continue to maintain a positive outlook for all these metals.
The recently announced Project Development and Cooperation Agreement entered
into with QME Mining Technical Services, a division of QME Ltd, (“QME”) is
a very important and positive step forward in the advancement of the Parys
Mountain copper, zinc, lead, gold and silver project, located on the island of
Anglesey in North Wales. (See Anglesey Mining plc News release 26 November
2018).
QME is experienced in underground mine development and has developed and
recruited the necessary skills in mine planning to deliver local and relevant
mining expertise to assist Anglesey to progress the Parys Mountain project at
no direct cash cost to Anglesey or dilution of its shareholders.
Under the Agreement, QME will, at its own cost, carry out an agreed programme
of design, engineering and optimisation studies relating to the future
development of Parys Mountain. This will enable Anglesey to complete this
work without additional cash commitment.
Anglesey has granted QME various rights relating to the future development of
Parys Mountain. On completion of the optimisation study Anglesey will award
QME, on an exclusive basis, contracts for the development of the decline and
underground mine development, including rehabilitation of the shaft, and in
addition, will grant QME the right and option, upon completion of a
Prefeasibility Study, to undertake at QME’s cost and investment, the
underground development component of Parys Mountain, with a scope to be
agreed, to the point of commencement of production, in consideration of which
QME would earn a 30% undivided joint venture interest in the Parys Mountain
project. If exercised, this would represent a significant portion of the
capital cost of the project and could be considered to be a major equity
contribution in any future financing package.
Parys Mountain - Path towards Production
We have continued to review the results of the 2017 Scoping Study on Parys
Mountain with the objective of enhancing the economics of the project to
attract the capital financing necessary to achieve our target of getting the
Parys Mountain Mine into production at the earliest date possible. The 2017
Scoping Study by Micon International Limited and Fairport Engineering Limited
recommended further work as interim steps towards undertaking a Feasibility
Study, including more detailed mine planning and design, more engineering
studies, additional metallurgical test work and a review of tailings
management and environmental and planning permissions, all of which require
new and further financing.
The Project Development and Co-operation Agreement with QME Mining Technical
Services will see the completion of a substantial part of the recommended
further work on mine planning and design and project optimisation. The 2017
Scoping Study was based on mining only the 2.1 million tonnes of indicated
resources reported by Micon in 2012. Micon had reported a further 4.1 million
tonnes of inferred resources which were not incorporated into the Scoping
Study. Development of even half of these inferred resources would
significantly increase the projected life of the Parys Mountain mine with
potential positive outcomes on the project economics.
The Development Agreement with QME will examine a revised mine model with the
objective of incorporating some of the inferred resources, including part of
the higher-grade Engine Zone inferred resources, into the earlier years of the
mine plan with the intention of increasing the life of the mine to at least 10
years.
The 2017 Scoping Study was based on the initial development and production
from the White Rock zone using a newly developed decline eventually leading to
development of the deeper Engine zone and then the rehabilitation and use of
the Morris Shaft as a hoisting facility. The QME programme will examine
whether different approaches to accessing the orebodies, particularly by the
early dewatering, rehabilitation and recommissioning of the Morris Shaft,
could speed up access to the higher-grade Engine zone resources. This should
have a beneficial effect upon both the net present value of the operation and
the pay-back period.
It is expected that these optimisation studies will be completed by the middle
of 2019 and, subject to financing being available, would then form the basis
for commissioning of a Preliminary Feasibility Study to lead to an overall
project financing package. In the meantime, we will continue to maintain our
mineral interests in good standing. We have confirmed that our current
planning consents remain in good order and we will make the appropriate
preparations for those further environmental baseline studies that will be
required as part of the expected Preliminary Feasibility Study. We will also
continue to discuss concentrate and metal sales with brokers, traders and
smelters as part of both the longer-term financing plan and as inputs to the
future studies.
Iron Ore
Iron ore prices have continued to grow steadily if not spectacularly during
2018 and currently 62%Fe ore is trading at just under $75 per tonne. The
premiums for higher grade ore have weakened slightly but still provide an
exceptional differential over the 62% Fe basis. This slow but steady growth
period represents some consolidation after fairly erratic trading during the
last five years and could herald the beginning of a more mature and
financeable market.
Grangesberg
Anglesey continues to manage the Grangesberg iron ore project in Central
Sweden though these activities have been kept at a minimum level while product
prices have remained low. However, the greater maturity of the market coupled
with some increase in price, the continuing premiums expected for premium
product, and importantly the announcement by LKAB that its flagship Kiruna
project in northern Sweden will have a shorter life than originally planned,
makes the interest in developing the Grangesberg project albeit at significant
capital cost much more likely. We continue to support Grangesberg and
recognise that it is likely that further external partnerships will be
required to raise the capital required for full development.
Labrador
The group continues to hold a 12% interest in Labrador Iron Mines Limited
which owns extensive iron ore resources and facilities in the Schefferville
area of Labrador and Quebec in Canada. These resources are kept on a stand-by
care and maintenance basis and subject to financing are positioned to resume
operations as soon as economic conditions warrant.
Operations
As always, we have kept our corporate and operating costs at the lowest level
consistent with maintaining our assets in good order. We will maintain this
policy going forward but costs will increase once a feasibility study is
commissioned on Parys Mountain and as activity is resumed on our iron ore
properties.
Financial results
The group had no revenue for the period. The loss for the six months to 30
September 2018 was £137,117 (2017 - £167,186) and the expenditures on the
mineral property in the period were £25,755 compared to £65,943 in the
comparative period when there were additional expenses in respect of
consultants’ fees. Net current assets at 30 September 2018 were £7,874
compared to £91,033 at 31 March 2018. Further funding will be required for
continuing expenses as well as the maintenance and development of the
group’s mineral properties. A substantial amount of work on mine planning
and project optimisation at Parys Mountain will be completed at no cost to
Anglesey under the Project Development Co-operation Agreement with QME
Technical Services.
Outlook
We remain confident that demand for metals will remain strong and the outlook
for commodity prices will remain positive for the foreseeable future. There
will be occasional pressures on price by external geopolitical forces but the
underlying growth of the emerging industrialised nations particularly China
will support demand growth in the longer term.
On that basis we look to move Parys Mountain forward in a planned and
sequential manner, firstly through optimisation studies to determine the best
development plan and then advancing through feasibility for raising the
necessary finance. We will also continue to review the commercial and
development opportunities for our iron ore projects and look for other new
opportunities as they present themselves.
I would like to thank the current directors for their continuing diligence and
support in moving the Parys Mountain mine project forward and again thank
shareholders for their continued confidence and patience.
John F Kearney
Chairman
29 November 2018
Unaudited condensed consolidated income statement
Notes Unaudited six months ended 30 September 2018 Unaudited six months ended 30 September 2017
All operations are continuing £ £
Revenue - -
Expenses (57,477) (78,100)
Equity-settled employee benefits - (9,324)
Investment income 52 56
Finance costs (79,719) (79,954)
Foreign exchange movement 27 136
Loss before tax (137,117) (167,186)
Taxation 8 - -
Loss for the period 7 (137,117) (167,186)
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 (137,117) (167,186)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss:
Exchange difference on translation of foreign holding (21,265) 21,155
Total comprehensive loss for the period (158,382) (146,031)
All attributable to equity holders of the company
Unaudited condensed consolidated statement of financial position
Notes Unaudited 30 September 2018 Audited 31 March 2018
£ £
Assets
Non-current assets
Mineral property exploration and evaluation 9 15,136,896 15,111,141
Property, plant and equipment 204,687 204,687
Investments 10 86,660 86,660
Deposit 123,279 123,227
15,551,522 15,525,715
Current assets
Other receivables 18,014 19,790
Cash and cash equivalents 57,537 137,113
75,551 156,903
Total assets 15,627,073 15,682,618
Liabilities
Current liabilities
Trade and other payables (67,677) (65,870)
(67,677) (65,870)
Net current assets 7,874 91,033
Non-current liabilities
Loans (3,644,266) (3,543,236)
Long term provision (50,000) (50,000)
(3,694,266) (3,593,236)
Total liabilities (3,761,943) (3,659,106)
Net assets 11,865,130 12,023,512
Equity
Share capital 11 7,286,914 7,286,914
Share premium 10,171,986 10,171,986
Currency translation reserve (63,286) (42,021)
Retained losses (5,530,484) (5,393,367)
Total shareholders' funds 11,865,130 12,023,512
All attributable to equity holders of the company
Unaudited condensed consolidated statement of cash flows
Notes Unaudited six months ended 30 September 2018 Unaudited six months ended 30 September 2017
£ £
Operating activities
Loss for the period (137,117) (167,186)
Adjustments for:
Investment income (52) (56)
Finance costs 79,719 79,954
Equity-settled employee benefits - 9,324
Foreign exchange movement (27) (136)
(57,477) (78,100)
Movements in working capital
Decrease/(increase) in receivables 1,812 (10,636)
Increase/(decrease) in payables 694 (25,693)
Net cash used in operating activities (54,971) (114,429)
Investing activities
Investment income - 6
Mineral property exploration and evaluation (24,632) (51,918)
Net cash used in investing activities (24,632) (51,912)
Financing activities
Loans - -
Net cash generated from financing activities - -
Net (decrease) in cash and cash equivalents (79,603) (166,341)
Cash and cash equivalents at start of period 137,113 392,293
Foreign exchange movement 27 136
Cash and cash equivalents at end of period 57,537 226,088
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 2018 - audited 7,286,914 10,171,986 (42,021) (5,393,367) 12,023,512
Total comprehensive income for the period:
Exchange difference on translation of foreign holding - - (21,265) - (21,265)
Loss for the period - - - (137,117) (137,117)
Total comprehensive income for the period - - (21,265) (137,117) (158,382)
Equity-settled employee benefits - - - - -
Equity at 30 September 2018 - unaudited 7,286,914 10,171,986 (63,286) (5,530,484) 11,865,130
Comparative period
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
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 2018. 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 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 2018. 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 2018 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 2018 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 2018.
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 2018.
New standards and interpretations effective from 1 January 2018:
* IFRS 9 Financial Instruments;
* IFRS 15 Revenue from Contracts with Customers;
* Interpretation IFRIC 22 Foreign Currency Transactions and Advance
Consideration;
* Amendments to IAS 40 Transfer of Investment Property;
* Amendments to IFRS 2 Share based payments, on clarifying how to account for
certain types of share-based payment transactions; and
* Annual improvements to IFRS Standards 2014-2016 Cycle (certain items
effective from 1 January 2017).
The above standards and interpretations have not led to any changes to the
group’s accounting policies (other than disclosure) or had any other
material impact on its financial position or performance.
IFRS 9 ‘Financial Instruments’ has been implemented with effect from 1
April 2018 and has not had a material impact on either the unaudited condensed
consolidated financial statements. However additional disclosures in respect
of the impairment of financial assets may be required in the financial
statements for the year ending 31 March 2019. IFRS 15 has no effect in this
period as the group currently has no customers.
New standards and interpretations effective from 1 January 2019:
* Clarification to IFRS15 revenue from contracts with customers;
* Annual improvements to IFRS Standards 2015-2017 Cycle;
* Amendments to IFRS 9 Financial instruments, amendments in relation to
prepayment features with negative compensation;
* Amendments to IAS 28 Investments in associates, on long term interests in
associates and joint ventures;
* Amendments to IAS 19 Employee benefits on plan amendment, curtailment or
settlement;
* IFRIC 23 Uncertainty over Income Tax Treatments; and
* IFRS 16 Leases.
New standards and interpretations effective from 1 January 2020:
* Conceptual Framework (Revised) and amendments to related references in IFRS
standard.
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 16 ‘Leases’ will be effective for periods beginning on or after 1
January 2019 and therefore will be effective in the financial statements for
the year ending on 31 March 2020; transition to IFRS 16 should take place on 1
April 2019. The directors have not yet assessed the full impact IFRS16 on
these financial statements but in view of the nature of the group’s leases,
which are mineral leases with a notice periods of more than one year, believe
that it will not have a significant effect.
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 2018 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 2018 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 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 29 November 2018 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 £0.137 million (loss to 30 September 2017 £0.167m), by
177,608,051 (2017 – 177,608,051) - 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 2018
UK Sweden - investment Canada - investment Total
£ £ £ £
Expenses (57,477) - - (57,477)
Equity settled employee benefits - - - -
Investment income 52 - - 52
Finance costs (72,117) (7,602) - (79,719)
Exchange rate movements - 27 - 27
Loss for the period (129,542) (7,575) - (137,117)
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)
Assets and liabilities
` Unaudited 30 September 2018
UK Sweden investment Canada investment Total
£ £ £ £
Non current assets 15,464,862 86,659 1 15,551,522
Current assets 74,446 1,105 - 75,551
Liabilities (3,452,195) (309,748) - (3,761,943)
Net assets/(liabilities) 12,087,113 (221,984) 1 11,865,130
Audited 31 March 2018
UK Sweden investment Canada investment Total
£ £ £ £
Non current assets 15,439,055 86,659 1 15,525,715
Current assets 155,792 1,111 - 156,903
Liabilities (3,378,271) (280,835) - (3,659,106)
Net assets/(liabilities) 12,216,576 (193,065) 1 12,023,512
8. Deferred tax
There is an unrecognised deferred tax asset of £1.3 million (31 March 2018 -
£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 2018) 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 £25,755 was incurred (six
months to 30 September 2017 - £65,943). There have been no indicators of
impairment during the period.
10. Investments
Labrador Grangesberg Total
£ £ £
Balance at 1 April 2018, 31 March 2018 and 31 March 2019 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 2017 and 31 March 2018 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 2018 31 March 2018 Unaudited 30 September 2018 31 March 2018
£ £ £ £
Investments 1 1 - -
Deposit - - 123,279 123,227
Other receivables - - 18,014 19,790
Cash and cash equivalents - - 57,537 137,113
- -
1 1 198,830 280,130
Financial liabilities measured at amortised cost
Unaudited 30 September 2018 31 March 2018
£ £
Trade payables (17,337) (17,631)
Other payables (50,340) (48,239)
Loans (3,644,266) (3,543,236)
(3,711,943) (3,609,106)
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
Parys Mountain site: Parys Mountain, Amlwch, Anglesey, LL68 9RE Phone
01407 831275
London office: Painter's Hall Chambers, 8 Little Trinity Lane, London, EC4V
2AN Phone 07740 932766
Registered office: Tower Bridge House, St. Katharine's Way, London, E1W 1DD
Share registrars: Capita Registrars www.capitaregistrars.com
Phone: 0371 664 0445 - for all change of address and shareholder
administration matters (calls are charged at standard geographic rate and will
vary by provider), from overseas +44 371 664 0445 (charged at the applicable
international rate).
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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