Final Results
Anglesey Mining plc LSE:AYM
Final results 2009
A UK mining company listed on the London Stock Exchange with -
A 50% ownership in Labrador Iron Mines Holdings Limited, a TSX quoted Canadian
company developing the Labrador Iron Ore properties which are scheduled for
commercial production in 2010. A historic resource of 90 million tons of
partially developed iron ore in Western Labrador. Development activities
fully funded - £19.8 million cash equivalent available at 31 March 2009
Parys Mountain - An important copper-lead-zinc deposit in North Wales, UK with a
total historical resource of 7.76 million tonnes at 9.3% combined copper, lead
and zinc, currently held awaiting development
**********
Chairman's Statement
Along with the majority of companies in the resources sector, indeed in almost
all business sectors, Anglesey Mining has felt the effects of the global
economic and financial crisis that struck the world in the second half of 2008.
The low point occurred towards the end of 2008 with some improvement having been
seen since.
With the global economic downturn, the price of Anglesey shares has fallen
dramatically during the last year. This reflected a similar fall in the share
price of our 50% owned Canadian associate Labrador Iron Mines Holdings Limited
(LIM).
LIM ended its financial year at 31 March 2009 with cash and current assets of
Canadian $35.7 million (£19.8 million) and is in a healthy financial and
operational condition to carry out its planned programmes to move its direct
shipping iron ore project in Western Labrador into production.
Anglesey shares are currently trading at less than half of the implied value of
its shareholding in LIM. We believe that the commencement of iron ore shipments
in 2010 will encourage the market to reflect the real value of this project in
the share prices of both LIM and Anglesey Mining.
Labrador Iron Project
During 2008 major exploration drilling and bulk mining programmes were completed
accompanied by a programme of detailed testwork. This work is continuing and
will lead to the final design and ordering of the infrastructure, mining and
beneficiation plant and contracts required for the planned commencement of
commercial production during the second quarter of 2010.
The highlight of the metallurgical testwork was the demonstration that high
grade products of both lump ore and sinter fines can be produced. In addition to
the high grades the testwork demonstrated a low level of impurity in all the
critical elements and compounds. Based on these results marketing discussions
were initiated with European steel mills and, despite the generally negative
sentiment prevailing as a result of significant downturns in orders for semi-
finished steel products in Europe, the level of interest being shown for LIM's
expected product is very encouraging.
The negotiation of benchmark iron ore prices for 2009 between the major iron
producers and the large steel mills is still ongoing though some settlements
have occurred. These settlements whilst lower than the high levels achieved in
2008 are still the second highest level ever achieved.
We remain very pleased with the way that Labrador Iron Mines has progressed.
Current activities are accelerating to prepare for commercial production in 2010
and we look forward to this investment in our associate company becoming an even
more valuable asset for the group in the future.
Parys Mountain Mine
As we reported previously, negotiations with Western Metals Limited in Perth,
Australia for the potential sale of the Parys Mountain mine were terminated in
October 2008. The termination was a result of failure to agree terms and
conditions during the rapidly declining financial and commodity price
environment that was developing at that time. We have received a considerable
quantity of data and analysis generated by Western Metals and its consultants
during its due diligence process which is now being reviewed.
Following termination of these discussions, and with metal prices at low levels,
the Parys Mountain surface facilities were put into care and maintenance with
expenditures being kept to a minimum. A previously commissioned geological
report was delivered in January 2009. This reviews much prior geological
exploration and analysis and makes some recommendations for future exploration.
These recommendations will be closely considered when the exploration programme
recommences.
Since the end of the year base metal prices have seen some healthy recovery and
copper in particular, which is the major source of revenue under the Parys
financial model, now appears to be showing strength. The forecasts of that
financial model are encouraging and we will continue to review the development
options for Parys Mountain.
Financial Results
The result for the year was a loss of £129,014 compared to a profit last year of
£10.2 million. The profit in 2008 resulted largely from the flotation of the
Labrador Iron project in Canada.
At 31 March 2009 the group balance sheet showed total assets of £27.9 million,
with total liabilities of only £2.4 million. With this strong balance sheet and
the support of our major shareholder we believe we can handle our current
working capital requirements without difficulty.
Outlook
We go forward as a group in the fortunate position of being well-funded and
close to production. China remains the most important factor in the future
outlook for all metal prices. There are encouraging signs of build up in the
Chinese economy which seems to be partly driven by government internal stimulus
packages that are now beginning to take effect. This build up will of course
result in increased demand for metals and higher metal prices.
Despite the difficulties of this past year, Anglesey is well positioned with its
50% shareholding in Labrador Iron Mines and can look forward to recognition of
that value as Labrador Iron moves into production in 2010. We believe Anglesey
is well placed to weather the economic storms and to take advantage of the
anticipated upturn.
John F. Kearney
Chairman
20 July 2009
Consolidated income statement
Notes Year ended Year ended 31
31 March March 2008
2009 represented
All operations are continuing £ £
Revenue - -
Administration expenses (224,737) (399,331)
Equity-settled employee benefits (271,112) (142,723)
Share of (loss)/profit in associate (254,069) 10,449
Investment income 7,118 21,970
Finance costs (84,535) (67,326)
Profit on deemed disposal - 11,427,730
Parys properties fair value adjustments 698,321 (698,321)
(Loss)/profit before tax 3 (129,014) 10,152,448
Tax - -
(Loss)/profit for the year (129,014) 10,152,448
Earnings per share
Basic - pence per share 4 (0.1) 6.8
Diluted - pence per share 4 (0.1) 6.7
Consolidated balance sheet
31 March 31 March 2008
2009
Notes £ £
Assets
Non-current assets
Mineral property development 5 13,616,749 -
Property, plant and equipment 6 204,687 -
Interest in associate 7 13,821,013 12,068,276
Deposit 119,549 -
27,761,998 12,068,276
Current assets
Other receivables 2,915 4,519
Cash and cash equivalents 150,431 217,968
153,346 222,487
Assets classified as held for sale - 13,069,019
Total assets 27,915,344 25,359,782
Liabilities
Current liabilities
Trade and other payables (608,682) (63,819)
(608,682) (63,819)
Net current (liabilities)/assets (455,336) 158,668
Non-current liabilities
Loan (1,760,529) (1,475,993)
Long term provision (42,000) -
(1,802,529) (1,475,993)
Liabilities directly associated with - (464,741)
assets classified as held for sale
Total liabilities (2,411,211) (2,004,553)
Net assets 25,504,133 23,355,229
Equity
Share capital 8 7,036,414 7,036,414
Share premium 8,092,423 8,092,423
Currency translation reserve 1,832,844 (2,718)
Retained profits 8,542,452 8,229,110
Total shareholders' equity 25,504,133 23,355,229
The financial statements were approved by the board of directors and
authorised for issue on 20 July 2009 and were signed on its behalf by:
John F. Kearney, Chairman
Ian Cuthbertson, Finance Director
Statements of changes in equity
Group Share Share Currency Retained Total
capital premium translation profits
reserve
£ £ £ £ £
At 1 April 2007 6,898,914 7,189,359 (48,179) (2,066,061) 11,974,033
Equity-settled benefits - - - 142,723 142,723
Shares issued for cash 137,500 962,500 - - 1,100,000
Share issue expenses - (59,436) - - (59,436)
Exchange differences on - - 45,461 - 45,461
translation of foreign
operations
Profit for the year - - - 10,152,448 10,152,448
At 31 March 2008 7,036,414 8,092,423 (2,718) 8,229,110 23,355,229
Equity-settled benefits:
- associate - - - 171,244 171,244
- company - - - 271,112 271,112
Exchange differences on - - 1,835,562 - 1,835,562
translation of foreign
holdings
Loss for the year - - - (129,014) (129,014)
At 31 March 2009 7,036,414 8,092,423 1,832,844 8,542,452 25,504,133
Consolidated cash flow statement
Year ended Year ended 31
31 March March 2008
2009
£ £
Operating activities
(Loss)/profit for the year (129,014) 10,152,448
Adjustments:
Investment revenue recognised (7,118) (18,959)
in profit or loss
Investment revenue recognised - (3,011)
in discontinued operations
Finance costs recognised in profit or loss 84,535 67,326
Equity-settled benefits 271,112 142,723
Share of (loss)/profit in associate 254,069 (10,449)
Profit on deemed disposal - (11,427,730)
Parys properties fair value adjustments (698,321) 698,321
(224,737) (399,331)
Movements in working capital
Decrease/(increase) in receivables 22,775 (12,168)
Increase/(decrease) in payables 122,122 (203)
Cash utilised by operations (79,840) (411,702)
Interest paid - -
Net cash used in operating activities (79,840) (411,702)
Investing activities
Interest received 4,492 19,121
Mineral property development (192,189) (445,763)
Payments for land and buildings - (19,585)
Net cash used in investing activities (187,697) (446,227)
Financing activities
Proceeds from issue of shares - 1,040,564
Loans 200,000 -
Net cash generated from financing activities 200,000 1,040,564
Net (decrease)/increase in cash and cash equivalents (67,537) 182,635
Cash and cash equivalents at start of year 217,968 34,003
Exchange rate changes on foreign cash and cash equivalents - 1,330
Cash and cash equivalents at end of year 150,431 217,968
Notes to the accounts
1 General information
Anglesey Mining plc is incorporated in the United Kingdom under the Companies
Act 1985. The nature of the group's operations and its principal activities are
set out in note 3 and in the business review section of the directors' report.
These financial statements are presented in pounds sterling because that is the
currency of the primary economic environment in which the group has been
operating. Foreign operations are included in accordance with the policies set
out in note 2.
The financial information set out in the results announcement does not
constitute the group's financial statements for the year ended 31 March 2009,
but is derived from those financial statements.
The auditors have reported on the financial statements for the year ended 31
March 2009, their report was unqualified and did not contain a statement under
section 237(2) or (3) of the Companies Act 1985 but included the following
emphasis of matter:
"In forming our opinion, which is not qualified, we have considered the adequacy
of the disclosures in the financial statements concerning the basis of
preparation, the valuation of intangible assets of
£13,616,749 in the Group financial statements and the valuation of investment
in subsidiary undertakings of £14,081,396 in the Company financial
statements. The financial statements and related notes have been prepared based
on the validity of the following:
· The successful development of Parys Mountain mineral property;
· The raising of new finance to exploit mineral reserves; and
· The ability of the company to trade profitably in the future.
No adjustments have been made to the balance sheet and related notes to reflect
changes to these assets' carrying values that might be necessary should the
above conditions not be met."
The auditors have reported on the financial statements for the year ended 31
March 2008; their report was unqualified and did not contain a statement under
section 237(2) or (3) of the Companies Act 1985. The financial information for
the year ended 31 March 2008 is derived from the financial statements for that
year.
The directors do not propose a dividend in respect of the year ended 31 March
2009 (2008: £nil).
The directors approved the financial statements for the year ended 31 March 2009
on 20 July 2009.
2 Significant accounting policies
Basis of Accounting
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union and
therefore the group financial statements comply with Article 4 of the EU IAS
Regulation.
The financial statements have been prepared on the historical cost basis. The
principal accounting policies adopted are set out below.
Going concern
The financial statements are prepared on a going concern basis. The validity of
the going concern concept is dependent on finance being available for the
continuing working capital requirements of the group and finance for the
development of the group's projects becoming available. Based on the assumption
that such finance will become available, the directors believe that the going
concern basis is appropriate for these accounts. Should the going concern basis
not be appropriate, adjustments would have to be made to reduce the value of the
group's assets, in particular the intangible fixed assets - mineral property
development, to their realisable values.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the company and entities controlled by the company (its subsidiaries) made up to
31 March each year. Control is achieved where the company has the power to
govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities.
On acquisition, the assets and liabilities and contingent liabilities of a
subsidiary are measured at their fair values at the date of acquisition. Any
excess of the cost of acquisition over the fair values of the identifiable net
assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair values of the identifiable net assets acquired (i.e.
discount on acquisition) is credited to profit and loss in the period of
acquisition. The results of subsidiaries acquired or disposed of during the year
are included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
the group.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Segmental analysis
The group's primary format for segmental reporting is geographical segments
which also correspond with the nature of the different projects being
undertaken. The group has two segments: (i) the United Kingdom, which comprises
the Parys Mountain base metal project and the much smaller Dolaucothi gold
project and (ii) the Labrador Iron project in Canada, which from 3 December 2007
ceased to be carried in a subsidiary of the company and is not included in the
segmental analysis from that date.
Property, plant and equipment
The group's freehold land is stated in the balance sheet at cost. The directors
consider that the estimated residual value of buildings, based on prices
prevailing at the date of acquisition, is such that any depreciation would not
be material. The carrying value is reviewed annually and any impairment in value
would be charged immediately to the income statement.
Plant, equipment, fixtures and motor vehicles are stated in the balance sheet at
cost, less depreciation. Depreciation is charged on a straight line basis at the
following annual rates: plant and equipment 25%, fixtures and fittings 20% and
motor vehicles 25%.
Intangible assets - mineral property development costs
Intangible assets are stated in the balance sheet at cost, less amounts written
off and provisions for impairment.
Costs incurred prior to obtaining the legal rights to explore a mineral property
are expensed immediately to the income statement. Mineral property development
costs are capitalised until the results of the projects, which are usually based
on geographical areas, are known. Mineral property development costs include an
allocation of administrative and management costs as determined appropriate to
the project by management.
Where a project is successful, the related exploration costs are written off
over the life of the estimated mineral reserve on a unit of production basis.
Where a project is terminated, the related exploration costs are written off
immediately. Where no internally-generated intangible asset can be recognised,
development expenditure is recognised as an expense in the period in which it is
incurred.
Impairment of tangible and intangible assets
Mineral properties are written down when any impairment in their value has
occurred and are written off when abandoned. Where a provision is made or
reversed it is dealt with in the income statement in the period in which it
arises.
Investment in associates
An associate is an entity over which the group exercises, or is in a position to
exercise, significant influence, but not control or joint control, through
participation in the financial or operating policy of the investee. In
considering the degree of control, any options or warrants over ordinary shares
which are capable of being exercised at the period end are taken into
consideration.
Where material, the results and assets and liabilities of associates are
incorporated in the financial statements using the equity method of accounting,
except when these associates are classified as held for sale. Investments in
associates are carried in the balance sheet at cost adjusted by any material
post-acquisition changes in the net assets of the associates, less any
impairment of value in the individual investments.
New accounting standards
The group and company have not applied the following IFRSs and IFRICs that have
been issued and are applicable but are not yet effective: IAS1 Presentation of
Financial Statements - Revised (effective 1 January 2009); IAS 27, Consolidated
and Separate Financial Statements, revised 2008 (effective 1 July 2009); IAS 32,
Financial Instruments: Presentation, revised 2008 (effective 1 January 2009);
IFRS2 Share-based Payments - Vesting Conditions and Cancellations (effective 1
January 2009) and IFRS 8, Operating Segments (effective 1 January 2009). The
group is evaluating the impact that these standards will have on the group's
financial statements, if any.
Judgements made in applying accounting policies and key sources of estimation
uncertainty
The following critical judgements have been made in the process of applying the
group's accounting policies:
(a) The directors' believe, after careful consideration, that the group does
not, as a matter of fact, control the activities and operations of Labrador Iron
Mines Holdings Limited (LIM), and that the correct accounting treatment of this
interest is to account for it on an equity basis as an associate company. In any
event, although the group currently has a 50.1% ownership share in LIM, there
are outstanding exercisable warrants and options which if exercised would reduce
the group's voting control to approximately 40% and under these circumstances
the directors believe that the use of equity accounting is appropriate.
(b) In determining the treatment of exploration, evaluation and development
expenditures the directors are required to make estimates and assumptions as to
future events and circumstances. There are uncertainties inherent in making such
assumptions, especially with regard to: ore resources and the life of a mine;
recovery rates; production costs; commodity prices and exchange rates.
Assumptions that are valid at the time of estimation may change significantly as
new information becomes available and changes in these assumptions may alter the
economic status of a mining unit and result in resources or reserves being
restated. Operation of a mine and the receipt of cashflows from it are dependent
on finance being available to fund the development of the property.
(c) In connection with possible impairment of assets the directors assesses each
potentially cash generating unit annually to determine whether any indication of
impairment exists. The judgements made when doing so are similar to those set
out above and are subject to the same uncertainties.
(d) Significant assumptions are made in determining the amount of any
restoration provision, including judgements concerning uncertainties such as
changes to the legal and regulatory framework, magnitude of possible
contamination and the timing, extent and costs of required restoration and
rehabilitation activity.
3 Business and geographical segments
All activities relate to the group's principal activity which is the exploration
and development of mining properties. The geographical and operational segments
in which these activities are carried out coincide and are shown below. The
direct property expenses in the UK are in respect of the Parys Mountain base
metal project and in Canada they are in respect of the Labrador Iron project
prior to its flotation in Toronto on 3 December 2007, after which it became an
associated company investment.
Direct property expenses capitalised
Parys Labrador Total Parys Labrador Total
Mountain Iron Mines Mountain Iron Mines
2009 2009 2009 2008 2008 2008
£ £
£ £ £ £
Site labour and support 39,005 - 39,005 72,778 - 72,778
Geology & drilling 14,123 - 14,123 106,006 58,471 164,477
Feasibility reports 9,018 - 9,018 55,650 75,004 130,654
Property rentals and 130,043 - 130,043 78,183 - 78,183
charges
Travel - - - - 24,366 24,366
Currency translation - - - - 59,054 59,054
difference
Total capitalised 192,189 - 192,189 312,617 216,895 529,512
Income statement analysis
United Canada Total United Canada Total
Kingdom Kingdom
Investment income (2,718) - (2,718) (3,011) - (3,011)
Rentals (8,839) - (8,839) (10,457) - (10,457)
Corporate salaries 107,626 - 107,626 185,994 - 185,994
Audit fee 55,580 55,580 20,439 - 20,439
Other corporate costs 70,370 - 70,370 179,774 23,581 203,355
222,019 - 222,019 372,739 23,581 396,320
Unallocated items:
Equity-settled employee 271,112 142,723
benefits
Share of loss/(profit) in associate 254,069 (10,449)
Investment income (4,400) (18,959)
Finance costs 84,535 67,326
Profit on deemed -
disposal (11,427,730)
Parys properties fair value (698,321) 698,321
adjustments
Loss/(profit) for the year 129,014 (10,152,448)
Assets and liabilities
Assets 14,094,331 13,821,013 27,915,344 13,291,506 12,068,276 25,359,782
Liabilities (2,411,211) - (2,411,211) (2,004,553) - (2,004,553)
Net assets 11,683,120 13,821,013 25,504,133 11,286,953 12,068,276 23,355,229
The group does not have any revenues. A proportion of the salary and
corporate costs in the UK are in respect of investigating other mineral
development opportunities.
In accordance with the group's accounting policy, mineral property
development expenses are capitalised. All other expenses are expensed in
the income statement.
4 Earnings per ordinary share
2009 2008
£ £
Earnings
Loss/profit for the year (129,014) 10,152,448
Number of shares 152,558,051 148,387,969
Weighted average number of
ordinary shares for the
purposes of basic earnings per
share
Shares deemed to be issued for - 2,529,054
no consideration in respect of
employee options
Weighted average number of 152,558,051 150,917,023
ordinary shares for the
purposes of diluted earnings
per share
Basic earnings per share (0.1)p 6.8p
Diluted earnings per share (0.1)p 6.7p
As the group has a loss for the year ended 31 March 2009 and the effect
of the outstanding options is anti-dilutive, diluted earnings per share
are the same as basic earnings per share.
5 Intangible assets - group
Mineral property development costs
Parys Mountain Labrador Dolaucothi Total
Cost £ £ £ £
At 1 April 2007 13,111,943 543,757 194,065 13,849,765
Additions - own expenditure 312,617 275,949 - 588,566
Transfer to associate company - (760,652) - (760,652)
Reclassification as assets held (13,424,560) - - (13,424,560)
for sale
Currency translation difference - (59,054) - (59,054)
At 31 March 2008 - - 194,065 194,065
Additions - own expenditure 192,189 - - 192,189
Reverse reclassification as 13,424,560 - - 13,424,560
assets held for sale
At 31 March 2009 13,616,749 - 194,065 13,810,814
Impairment provision
At 1 April 2007 - - (194,065) (194,065)
At 31 March 2008 - - (194,065) (194,065)
At 31 March 2009 - - (194,065) (194,065)
Carrying amount
Net book value 2009 13,616,749 - - 13,616,749
Net book value 2008 - - - -
The Labrador assets were reclassified to associate company status
following the flotation of Labrador Iron Mines Holdings Limited on the
Toronto stock exchange on 3 December 2007.
Potential impairment of mineral properties
Accumulated development expenditure in respect of each project is
carried in the financial statements at cost, less an impairment
provision where there are grounds to believe that the discounted present
value of the future cash flows from the project is less than the
carrying value or there are other reasons to indicate that the carrying
value is unsuitable. Each project or cash generating unit is reviewed
separately in order to make a determination of whether any impairment of
its value has occurred.
Parys Mountain
At Parys Mountain, impairment provisions were made over the financial
years 2001 to 2003 in recognition of the decline in prices of the metals
to be produced from the mine. However in 2007 these provisions were
reversed since the result of re-estimating the discounted cash flows of
the Parys Mountain project was a value significantly higher than the
carrying value. The basis for these calculations was the directors'
estimates of future metal prices (in practice current spot prices were
used) and capital and operating costs, and a discount rate of 10% (which
had also been used in the previous calculations which gave rise to the
impairment).
This year the directors carried out an impairment review with an
effective date of 13 March 2009. As in previous years, this review was
based on an estimate of discounted future cash flows from the
development and operation of the Parys Mountain project. The directors
have used past experience and an assessment of future conditions,
together with external sources of information, to determine the
assumptions which were adopted in the preparation of a financial model
used to estimate the cashflows.
The key assumptions utilised were:
The mine will be developed largely as envisaged in the Kilborn
Feasibility Study prepared in 1991, except where management has
determined otherwise.
All the resources, both historical (including inferred resources) and
those more recently estimated under JORC codes, will be developed and
produced except that the tonnage of those classified as inferred in the
1991 Feasibility Study will be reduced by 20%.
Capital costs will be estimated at current costs when the expenditure is
planned to be incurred; neither revenues nor operating costs will take
into account any inflation.
The net present value is at 31 March 2009 and based on the assumption
that mine development commences three years after that date.
Base metal prices are based on the forward rates quoted on the London
Metal Exchange at 13 March 2009; the exchange rates used are those of
the same day; gold and silver prices are spot rates on 13 March 2009;
these rates and prices are tabulated below.
The following principal smelter terms have been estimated by the
directors: zinc $185 pt treatment with a basis price of $1190 pt and a
+10% / -7% variance; copper $45 pt treatment, $0.45 pt produced refining
charge, lead $120 pt.
The discount rate of 10% applied to future cashflows is one which
reflects the directors' current market assessment of the time value of
money and any risk factors which have not been adjusted already in the
preparation of the forecast.
Table of assumptions significantly affecting the discounted
net present value of Parys cashflows:
Parameter Value Unit Sensitivity
Factor*
Zinc price $1353 $/tonne 27 months -47%
forward
Copper $3843 $/tonne 27 months -37%
price forward
Lead price $1320 $/tonne 27 months -
forward
Silver $13.11 Spot -
price
Gold price $928 Spot -
Exchange 1.3973 LME rate 13 Mar 09 +23%
rate £/$
Capital +94%
expenditure
Operating +40%
costs
Discount 10% +58%
rate
All $ figures are in US dollars.
* The sensitivity factor is the percentage change in each specific
assumption which would, on its own, result in a net present value equal
to the carrying value of the intangible asset in the accounts.
Parys summary
The estimated net present value of the Parys Mountain project calculated
by the directors and based on their estimates of all the required
parameters, the principal of which are set out above, is US$49 million,
equivalent to £35 million. The carrying value of the Parys Mountain
project is £13.5 million.
Estimates of the net present value of any project, and particularly one
like Parys Mountain, are always subject to many factors and wide margins
of error. The directors believe that the estimates and calculations
supporting their conclusions have been carefully considered and are a
fair representation of the projected financial performance of the
project.
The calculations above have been repeated using the spot metal prices
and exchange rates of 5 June 2009 (major factors: exchange rate 1.60,
zinc price $1555 and copper price $5555) and the net present value at
10% on this basis was $76 million, equivalent to £48 million.
Based on the review set out above the directors have determined that no
impairment provision is required in the financial statements at 31 March
2009 in respect of the carrying value of the Parys property. Operation
of the mine and the receipt of cashflows from it are dependent on
finance being available to fund the development of the property.
A Parys properties fair value adjustment of £698,321 made in relation to
the potential sale, which did not proceed, of the Parys Mountain project
in the balance sheet and income statement for the year ended 31 March
2008 is no longer required or appropriate and has been reversed in the
year to 31 March 2009.
Dolaucothi impairment
The group has no active plans to develop the Dolaucothi project in the
near future and made a full impairment provision against the carrying
value of the Dolaucothi expenditure in 2006.
6 Property, plant and equipment
Group Freehold land and Plant & Office Total
property equipment equipment
Cost £ £ £ £
At 1 April 2007 185,102 17,434 5,487 208,023
Additions 19,585 - - 19,585
Reclassified as held for (204,687) (17,434) (5,487) (227,608)
sale
At 31 March 2008 - - - -
Reverse reclassification as 204,687 17,434 5,487 227,608
held for sale
At 31 March 2009 204,687 17,434 5,487 227,608
Depreciation
At 1 April 2007 - 17,434 5,487 22,921
Reclassified as held for - (17,434) (5,487) (22,921)
sale
At 31 March 2008 - - - -
Reverse reclassification as - 17,434 5,487 22,921
held for sale
At 31 March 2009 - 17,434 5,487 22,921
Carrying amount
At 31 March 2009 204,687 - - 204,687
At 31 March 2008 - - - -
7 Investment in associate
Labrador Iron Mines Holdings Limited (LIM), a company registered in
Ontario, Canada, is the holder of the group's interests in the Labrador
properties, formerly held by the 100% owned subsidiary Labrador Iron
Mines Limited.
At 31 March 2009 the group had a 50.1% ownership interest in LIM,
however since there are warrants and options outstanding and exercisable
at that date, the group's diluted interest is less than 50% and
consequently LIM is treated as an associate for the purposes of these
group financial statements.
31 March 2009 31 March 2008
£ £
Values in group financial statements:
Value brought forward from previous year 12,068,276 -
Historic cost of interest at disposal date - 630,097
Profit on deemed disposal - 11,427,730
Group's share of (losses)/profits, adjusted to eliminate any (254,069) 10,449
fair value uplift and related taxation in associate's accounts
Group's share of equity-settled benefits transferred to 171,244 -
reserve
Exchange rate adjustments 1,835,562 -
Amount carried in the group accounts - being the value of 13,821,013 12,068,276
group's share of net assets of the associate without any fair
value adjustment in respect of mineral properties
Fair value of group's interest based on market price of 10,996,622 43,344,944
associate's quoted shares at the year end
Fair value of group's interest based on market price of 12,861,702
associate's quoted shares at 20 June 2009
The group's interest in LIM is held in these financial statements at
original cost to the group, adjusted by any material post-acquisition
changes in the net assets of the associate, less any impairment of value
in the individual investments. It is adjusted to reflect the exchange
rate current at the balance sheet date.
The published fair value of the group's investment in LIM of £11.0
million (2008 - £43.3 million) is derived by valuing the group's
shareholding in LIM at the LIM share price quoted in Toronto on 31 March
2009 of Canadian $1.05 (2008 - $4.75) per common share. At 8 July 2009
the published fair value of the group's investment in LIM was £12.9
million based on a share price of Canadian $1.30 per common share at
that date. These values have fallen significantly since last year in
line with similar large falls in the quoted market values of many other
mineral companies.
The directors have considered whether there has been any impairment to
the carrying value of the group's investment in LIM; although the
group's carrying value is more than the year end market value of the
shares owned in LIM, the directors believe that this is a temporary
situation. Furthermore the directors' believe that the value in use will
significantly exceed the carrying value.
Values as shown in the published accounts of the associate (100%) £ £
including a fair value uplift in respect of mineral properties,
after conversion into sterling:
Total assets 100,048,329 86,210,124
Total liabilities (20,699,563) (17,787,265)
Total net assets 79,348,766 68,422,859
2009 2008
Revenues - -
(Loss)/profit for the year (184,163) 977,758
Reconciliation of values shown in the associate's published
accounts with the group accounts
Shareholders' equity in associate $140,923,409 $139,466,310
Less: fair value uplift net of tax - see note below $(91,899,196) $(89,946,158)
$49,024,213 $49,520,152
Group share - 50.069% (2008 - 50.008%) $24,546,121 $24,764,103
Group carrying value after conversion to sterling £13,821,013 £12,068,276
In the financial statements of LIM for the period to 31 March 2009, the Labrador
mineral properties are recognised at fair value as indicated by the value
ascribed to the Labrador companies in the December 2007 Canadian flotation after
subsequent adjustments. If the group were to use a similar basis for its
accounts, its share of this fair value uplift, net of tax, would add
approximately £26 million (2008 - £22 million) to the group net assets.
The associated undertakings of the company at 31 March 2009 were as follows:
Name of company Country of Percentage Principal activity
incorporation owned
Labrador Iron Mines Holdings Canada 50.1% Holding company for
Limited (LIM), an associated Labrador Iron Mines
company from 3 December 2007 Limited (100%)
Labrador Iron Mines Limited, an Canada 50.1% Development of
associated company, a 100% Labrador Iron
owned subsidiary of LIM property
LabRail Inc, a 100% owned Canada 50.1% Transport operations
subsidiary of LIM
7056605 Canada Inc, a 100% Canada 50.1% Property holding
owned subsidiary of LIM
The group holds its interest in these associated companies through Labrador Iron
plc, a 100% owned subsidiary. The fully diluted interest of the group in these
companies at 31 March 2009 was 38.8%; on 3 June 2009 following the expiry of
certain LIM warrants the group's fully diluted interest rose to 39.5%.
8 Share capital
Ordinary shares of Deferred shares Total
1p of 4p
Nominal Number Nominal Number Nominal
value £ value £ value £
Authorised share capital
At 1 April 2007 1,840,000 184,000,000 7,320,000 183,000,000 9,160,000
Created 30 November 2007 400,000 40,000,000 - - 400,000
At 31 March 2008 & 31 March 2,240,000 224,000,000 7,320,000 183,000,000 9,560,000
2009
Issued and fully paid
At 1 April 2007 1,388,081 138,808,051 5,510,833 137,770,835 6,898,914
Issued 20 July 2007 137,500 13,750,000 - - 137,500
At 31 March 2008 & 31 March 1,525,581 152,558,051 5,510,833 137,770,835 7,036,414
2009
The deferred shares are non-voting, have no entitlement to dividends and have
negligible rights to return of capital on a winding up. Following a share issue
in respect of an option exercise on 23 April 2009 the number of ordinary shares
in issue increased to 152,858,051.
9 Related party transactions
Juno Limited
Juno Limited ("Juno") which is registered in Bermuda holds 37.9% of the
company's issued ordinary share capital. The group has the following agreements
with Juno: (a) a controlling shareholder agreement dated September 1996 and (b)
a consolidated working capital agreement of 12 June 2002. There were no
transactions between the group and Juno or its group during the year other than
a loan of £200,000 from Juno to the group and the accrual of interest due to
Juno. Danesh Varma is a director and, through his family interests, a
significant shareholder of Juno.
Labrador Iron
John Kearney is chairman of Labrador Iron Mines Holdings Limited (LIM), Bill
Hooley is a director and chief operations officer and Danesh Varma is chief
financial officer. All three are shareholders of LIM, are entitled to
remuneration from LIM and have been granted options over the shares of LIM.
During the year the parent company charged LIM with £122,889 (2008 - nil) in
respect of remuneration and associated social security costs. There are no other
transactions between LIM and the group which are required to be disclosed.
There are no other contracts of significance in which any director has or had
during the year a material interest.
10 Post balance sheet events
There are no post balance sheet events to be disclosed.
*********
Contact addresses
Parys Mountain
Amlwch, Anglesey, LL68 9RE
Phone 01248 361333
Fax 01248 361419
mail@angleseymining.co.uk
London office
Painter's Hall Chambers
8 Little Trinity Lane,
London, EC4V 2AN
Labrador Iron - Toronto
220 Bay Street, Suite 700
Toronto, Ontario, M5J 2W4, Canada
Phone +1 647 728 4107
Registrars Capita Registrars
Northern House, Woodsome Park
Fenay Bridge, Huddersfield, HD8 0LA
Phone 0871 664 0300
Calls cost 10p per minute plus network extras
From overseas +44 208 639 3399
Fax 01484 600911
Registered office
Tower Bridge House,
St. Katharine's Way, London, E1W 1DD
Web site www.angleseymining.co.uk
Company registered number 1849957
Shares listed The London Stock Exchange - LSE:AYM
www.angleseymining.co.uk
www.labradorironmines.ca
For further information:
Bill Hooley, Chief Executive +(44) 1492 541981
Ian Cuthbertson, Finance Director +(44) 1248 361333
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