ANGLESEY MINING PLC: Half-yearly Report 30 September 2013
Anglesey Mining plc
Half yearly report for the six months to 30 September 2013
Chairman's Statement and Management Report
The half year to the end of September 2013 has been difficult for the group and particularly for the investment in Labrador Iron Mines ("LIM").
For the six months ended 30 September 2013, LIM sold six shipments of iron ore totalling 980,000 dry tonnes and expects to achieve its target for the production and sale of 1.7 million wet tonnes for the year. However the quality of that product was below expectations, largely because of lower grade encountered in the deeper part of the James mine, and the net revenue received was negatively impacted, despite the improvement in iron ore prices. At the same time LIM's operating costs continued at higher levels than anticipated. The result was a very large loss reported by LIM. Now that LIM is treated as an investment this loss does not directly impact the group's accounts. However the LIM share price had declined at the period end and that fall in price is now reflected as a loss in our income statement. The increase in value of sterling against the Canadian dollar over the period has added further to this loss.
At the same time Parys Mountain has been maintained on a low activity level with only a limited amount of geological review being conducted. This has ensured that costs have been kept to a minimum and cash conserved. A number of cost limitation matters have been completed and these should lead to a reduction of operating expenses in future periods.
We continue to monitor the markets for the various metals that comprise the Parys Mountain project with the expectation that we will be able to move the project forward, with its relatively short lead time, to production once we sense the future upturn in these metal prices is well founded. We also continue to monitor other potential projects in suitable commodities in politically stable environments.
LIM detailed the following highlights for the three and six month periods ended 30 September 2013:
· During the quarter, LIM sold four shipments of iron ore totalling 652,000 dry tonnes, and reported revenue of C$40.3 million. For the six months ended September 30, 2013, LIM has completed the sale of six shipments of iron ore totalling 980,000 dry tonnes.
· Revenues were impacted by value-in-use deductions arising primarily from the lower grade of ore mined.
· With a number of cost reduction measures implemented and higher production volumes achieved, operating unit costs were lower quarter over quarter.
· For the half year ended 30 September 2013, LIM reported a net loss of C$53.4 million, which included a non-cash depletion and depreciation charge of C$26.3 million.
· During the period, LIM completed the Joint Venture Agreement with Tata Steel Minerals Canada ("TSMC") for the exploration and development of LIM's Howse Deposit and received a cash consideration of C$30 million.
Mining, Processing and Rail
During the first half of the 2013 operating season, LIM mined a total of 1.33 million tonnes of ore from the James Mine, Redmond Mine and Ferriman stockpiles. At James, approximately 1.12 million tonnes of ore were mined during the period. Mining activity took place deeper in the pit and the ore exhibited a lower in-situ iron grade and contained a greater fines component than previously experienced.
Initial mining of the Redmond Mine commenced in July 2013 and 190,000 tonnes of ore was extracted during the period. Waste removal from Redmond was minimal, partially offsetting the additional costs of hauling the material approximately 12 kilometres to Silver Yards. High clay content in the Redmond material caused difficulties in the wet processing plant, resulting in poor recovery levels.
Bulk sampling of ore from the Ferriman stockpiles commenced in September 2013 and 18,500 tonnes of ore was reclaimed from Ferriman. The Ferriman material has responded well to wet processing.
Processing activities at Silver Yards increased significantly in the second quarter, with full operations from both the wet processing and dry screening facilities. A total of 1.8 million tonnes of plant feed were processed and screened during the period, producing an aggregate of 1.1 million tonnes of lump and sinter iron ore product. Product recovery rate was low at 61%, which was attributable to a higher amount of fines in the James plant feed extracted from deep in the pit, the high clay content of the Redmond plant feed and underperformance of the newly installed wet high intensity magnetic separator.
LIM railed a record of approximately 1.05 million tonnes of iron ore to the Port of Sept-Îles. By the end of July, a fourth train set was operating and rail operations averaged approximately five trains per week.
Iron Ore Sales
LIM completed six shipments of iron ore totalling 980,000 dry tonnes during the period. These shipments were sold to the Iron Ore Company of Canada. LIM recognized net revenue of C$58.2 million after netting shipping costs and IOC's participation from the CFR China actual realized price for these shipments.
LIM's product sales during the period experienced value-in-use deductions related to the silica, iron content and sizing specifications, which deviated from benchmark standards.
There has been a limited amount of work carried out on the Parys Mountain site. Geological data compilation, assessment and review have continued and this will increase in the coming months. The group continues to monitor the markets for its major metals and in particular the medium term prospects for zinc on which the immediate future development of mining and treatment operations is highly dependent. The lead time to move Parys Mountain into production, subject to financing, is relatively short. In the meantime expenditure will be kept to a minimum consistent with sufficient geological review being maintained.
There was a net loss for the period of £3.2 million (2012 loss - £7.4 million); almost £3 million of this loss was in respect of the holding in LIM. Administration expenses were slightly reduced. The group has no revenues from the operation of its properties. At the period end the cash resources of the group were £0.4 million (31 March 2013 - £0.7 million).
The iron ore price has firmed during the half year and has maintained some stability for a couple of months. Recent political signals from China suggest that infrastructure investment will continue and this should continue to support the price around current levels. LIM has to maintain its programme of cost reductions and couple this with detailed planning for the next stage of development at Houston. Together all these should, subject to additional financing, provide a solid basis for future operations.
Base metal prices, particularly of lead and zinc, have still to respond to any Chinese stimulus and to the perceived reduction in global production levels in the next few years. The group is of the view that sustained upward movements will occur in the near future.
John F Kearney Chairman 25 November 2013
Anglesey Mining plc - Group Condensed consolidated income statement
Notes Unaudited Unaudited six months six months ended 30 ended 30 September September
2013 2012 All operations are continuing £ £
Revenue - - Expenses (196,480) (201,885) Share of loss of associate - (7,039,697) Losses on deemed disposals - (133,913) in associate Loss on fair value of investment 10 (2,440,187) - Exchange difference on loss above 10 (527,771) - Investment income 14,267 27,075 Finance costs (57,149) (57,456)
Foreign exchange (loss)/profit (1,566) 8,887
Loss before tax (3,208,886) (7,396,989)
Tax 8 - -
Loss for the period (3,208,886) (7,396,989)
Loss per share Basic - pence per share (2.0)p (4.6)p
Diluted - pence per share (2.0)p (4.6)p
Condensed consolidated statement of comprehensive income
Loss for the period (3,208,886) (7,396,989)
Other comprehensive income: Exchange difference on - 42,465 translation of
Total comprehensive loss (3,208,886) (7,354,524) for the period
All attributable to equity holders of the company
Condensed consolidated statement of financial position
Notes Unaudited 30 September Audited 31 2013 March 2013
£ £ Assets
Non-current assets Mineral property development 9 14,787,943 14,753,566 Property, plant and equipment 204,687 204,687 Investment 10 4,996,574 7,964,532 Deposit 122,454 122,204 20,111,658 23,044,989 Current assets Other receivables 38,071 40,239 Cash and cash equivalents 431,793 670,345
Total assets 20,581,522 23,755,573
Current liabilities Trade and other payables (78,363) (100,677) (78,363) (100,677) Net current assets 391,501 609,907 Non-current liabilities Loan (2,363,432) (2,306,283) Long term provision (42,000) (42,000)
Total liabilities (2,483,795) (2,448,960)
Net assets 18,097,727 21,306,613
Share capital 11 7,116,914 7,116,914 Share premium 9,848,949 9,848,949
Retained earnings 1,131,864 4,340,750
Total shareholders' equity 18,097,727 21,306,613
All attributable to equity holders of the company
Condensed consolidated statement of cash flows
Notes Unaudited Unaudited
six months six months
£ £ Operating activities
Loss for the period (3,208,886) (7,396,989)
Adjustments for non-cash items:
Investment revenue (14,267)
Finance costs 57,149 57,456
Share of loss of associate - 7,039,697
Losses on deemed disposals in associate - 133,913 Loss on fair value of investment 10 2,440,187 - Exchange difference on loss above 10 527,771 - Foreign exchange movement 1,566 (8,887)
Movements in working capital Decrease in receivables 2,168 2,221
Decrease in payables (10,123)
Net cash used in operating activities (204,435) (250,346)
Investment revenue 14,017 26,825
Mineral property development (46,568) (1,280,091)
Net cash used in investing activities (32,551) (1,253,266)
Proceeds from issue of shares - 234,718 Loan received - Net cash generated from financing activities -
Net decrease in cash (236,986) (1,268,894) and cash equivalents
Cash and cash equivalents at start of period 670,345 3,150,644 Foreign exchange movement (1,566)
Cash and cash equivalents at end of period 431,793 1,890,637
All attributable to equity holders of the company
Condensed consolidated statement of changes in group equity
Share Share Currency Retained Total capital premium translation earnings £ £ £ reserve £ £ Equity at 1 April 7,116,914 9,848,949 - 4,340,750 21,306,613 2013 - audited Total comprehensive income for the period: Loss for the period - - - (3,208,886) (3,208,886) Total comprehensive - - - (3,208,886) (3,208,886) income for the period: Equity at 30 7,116,914 9,848,949 - 1,131,864 18,097,727 September 2013 - unaudited Comparative period Equity at 1 April 7,096,914 9,634,231 3,241,170 35,792,148 55,764,463 2012 - audited Total comprehensive income for the period: (Loss) for the - - - (7,396,989) (7,396,989) period Exchange difference - - 42,465 - 42,465 on translation of foreign holdings Total comprehensive - - 42,465 (7,396,989) (7,354,524) income for the period: Shares issued 20,000 220,000 - - 240,000 to discharge a liability Share issue costs - (5,282) - - (5,282) Equity-settled - - - 284,991 284,991 benefits credit: - associate Equity at 30 7,116,914 9,848,949 3,283,635 28,680,150 48,929,648 September 2012 - unaudited All attributable to equity holders of the company Notes to the accounts 1. Basis of preparation This half-yearly financial report comprises the condensed consolidated financial statements of the group for the six months ended 30 September 2013. 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 25 November 2013. 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 2013 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 2013 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 condensed consolidated financial statements are consistent with those set out in the annual report and financial statements for the year ended 31 March 2013. The following amendments to interpretations were effective in the current period and have been adopted: IAS 1 Presentation of Financial Statements: Amendments to revise the way other comprehensive income is presented; Issued - June 2011; Effective - Annual periods beginning on or after 1 July 2012. The amendments to IAS 1 require items of other comprehensive income to be grouped into those that will be subsequently reclassified to profit or loss and those that will not. The disclosures will be made in the group's financial statements for the year ended 31 March 2014. IFRS 13 Fair Value Measurement: Original issue; Issued - May 2011; Effective - Annual periods beginning on or after 1 January 2013. The application of IFRS 13 has not significantly impacted the fair value measurement of any financial assets or liabilities held by the group. IFRS 13 also requires additional disclosures at the interim period which have been incorporated into IAS 34 These disclosures are given in note 12. The adoption of the following 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. IFRS 11 Joint Arrangements: Original issue; Issued - May 2011; Effective - Annual periods beginning on or after 1 January 2013. IAS 19 Employee Benefits: Original issue; Issued - Amended June 2011; Effective - Annual periods on or after 1 January 2013. IAS 27 Separate Financial Statements (as amended in 2011): Original issue; Issued - May 2011; Effective - Annual periods beginning on or after 1 January 2013 IAS 28 Investments in Associated and Joint Ventures: Original issue; Issued - May 2011; Effective - Annual periods beginning on or after 1 January 2013 IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine; Effective - Annual periods beginning on or after 1 January 2013 Annual improvements 2009-2011: these amendments to IAS 1, IAS 16 and IAS 32 are effective for accounting periods beginning on or after 1 January 2013. 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 2013 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 2013 annual report - see note 1 above. 4. Statement of directors' responsibilities The directors confirm to the best of their knowledge that: (a) the condensed consolidated financial statements have been prepared in accordance 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 25 November 2013 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 £3.2 million (2012 loss £7.4m), by 160,608,051 (2012 - 159,328,270) - 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. Unaudited six months ended 30 Unaudited six months September 2013 ended 30 September 2012
UK Canada - Total UK Canada - Total
investment associate £ £ £ £ £ £ Expenses (196,480) - (196,480) (201,885) - (201,885) Loss on fair - (2,440,187) (2,440,187) - - - value of investment Exchange - (527,771) (527,771) - - - difference on loss above Share of - - - - (7,039,697) (7,039,697) loss in associate Loss on - - - - (133,913) (133,913) deemed disposals Investment income 14,267 - 14,267 27,075 - 27,075 Finance costs (57,149) - (57,149) (57,456) - (57,456) Exchange (1,566) - (1,566) 8,887 - 8,887 rate movements Loss for the (240,928) (2,967,958) (3,208,886) (223,379) (7,173,610) (7,396,989) period Unaudited 30 September 2013 Audited 31 March 2013
UK Canada - Total UK Canada - Total
investment associate £ £ £ £ £ £ Assets 15,584,948 4,996,574 20,581,522 15,791,041 7,964,532 23,755,573 Liabilities (2,483,795) - (2,483,795) (2,448,960) - (2,448,960) Net assets 13,101,153 4,996,574 18,097,727 13,342,081 7,964,532 21,306,613 8. Deferred tax There is an unrecognised deferred tax asset of £1.2 million (31 March 2013 - £ 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 2013) unclaimed and available. No deferred tax asset is recognised in the condensed financial statements. 9. Mineral property development Mineral development costs incurred by the group are carried in the condensed consolidated financial statements at cost, less an impairment provision if appropriate. The recovery of mineral development 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 £34,377 was incurred (six months to 30 September 2012 - £370,623). The 2012 expenditure included more drilling costs and the cost of terminating a net profits royalty agreement in respect of Parys Mountain. There have been no indicators of impairment during the period. 10. Investment - formerly interest in an associate Labrador Iron Mines Holdings Limited (LIM) is the 100% owner and operator of a series of iron ore properties in Labrador and Quebec, many of which were formerly held and initially explored by the group. On 6 November 2012 the group's holding in LIM was diluted from 26% to 15% as a result of LIM share issues to third party interests. From that date its accounting treatment has changed and LIM is now held as an investment. Unaudited 30 September 2013 31 March 2013
£ £ Value of investment upon recognition as a financial investment - 10,483,858 Value brought forward 7,964,532 - Addition to investment - 950,927 Loss on adjustment to fair value (2,440,187) (3,791,439) Exchange difference arising on adjustment above (527,771) 321,186 Amount carried in the group accounts 4,996,574 7,964,532
The published fair value of the group's investment in LIM at 30 September 2013 is £5 million (31 March 2013 - £8 million). The shares included above represent an investment in listed equity securities that present the group with opportunity for return through dividend income and trading gains. The group holds a strategic non-controlling interest. These shares are not held for trading and accordingly are classified as 'available for sale' which is deemed to be the most appropriate classification under IFRS. The fair values of all equity securities are based on quoted market prices. The above investment is measured subsequent to initial recognition at fair value as 'Level 1' AFS based on the degree to which the fair value is observable. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets.
11. Share capital
Ordinary shares of Deferred shares of Total
1p 4p Issued and Nominal Number Nominal Number Nominal fully paid value £ value £ value £
At 31 March 2012 1,586,081 158,608,051 5,510,833 137,770,835 7,096,914 Issued 11 July 2012 20,000 2,000,000 - - 20,000
At 31 March and 30 September 2013 1,606,081 160,608,051 5,510,833 137,770,835 7,116,914
12. Financial instruments
Available for sale Loans & Financial liabilities
Unaudited 31 March Unaudited 31 March Unaudited 31 March
30 Sep 13 2013 30 Sep 13 2013 30 Sep 13 2013
£ £ £ £ £
£ Financial assets Investment 4,996,574 7,964,532 - - -
- Deposit - - 122,454 122,204 -
- Other debtors - - 38,071 40,239 -
- Cash and cash equivalents - - 431,793 670,345 -
- - Financial liabilities - - Trade creditors - - - - (12,533) (33,860) Loans due to Juno - - - - (2,363,432) (2,306,283)
4,996,574 7,964,532 592,318 832,788 (2,375,965) (2,340,143)
13. Events after the reporting period
14. Related party transactions
John Kearney Chairman Bill Hooley Chief executive Danesh Varma Finance director David Lean Non executive Howard Miller Non executive Roger Turner Non executive Corporate office telephone: 01248 361333 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 020 7653 9881 Labrador Iron Mines TSX:LIM www.labradorironmines.ca Phone +1 647 728 4125 Registered office: Tower Bridge House, St. Katharine's Way, London, E1W 1DD Share registrars: Capita Registrars www.capitaregistrars.com Company registration number 1849957 END -0- Nov/25/2013 07:00 GMT