Anglesey
Mining plc, a UK mining company
Projects:
100% ownership of
the Parys Mountain
underground copper-zinc-lead-silver-gold
deposit in
North Wales, UK where an
independent Preliminary Economic Assessment announced in
January 2021
showed:
-
a
financial model for an expanded case at 3,000 tpd with a pre-tax
NPV10% of US$120 million, (£96
million), 26% IRR and 12-year mine life
During the year,
Anglesey released an updated resource estimate of 1.3 million
tonnes of Measured resources, 4.0 million tonnes of Indicated
resources together with 11.7 million tonnes of Inferred
resources
A 49.7% interest
in the Grängesberg Iron
project in Sweden, up from 19.9%
last year. Anglesey has management rights and a right of first
refusal to increase the Group’s interest to 100%. At Grängesberg,
an independent Pre-Feasibility Study announced on 19 July 2022 showed:
-
Probable
Ore Reserves of 82.4 million tonnes of supporting a 16-year mine
life with annual production of 2.5 million tonnes of concentrate
grading 70% iron ore
-
Post-tax
NPV8% of US$688 million with an IRR
of 25.9% after tax
A 12% shareholding
in Labrador Iron
Mines Holdings Limited which holds Direct
Shipping Ore (DSO) deposits of iron in Canada where an independent Preliminary
Economic Assessment of its Houston
project published in March 2021
showed:
-
Potential
for production of 2 million dmt of DSO per year, with an initial
12-year mine life, for total production of 23.4 million dmt of
product at 62.2% Fe over the life of the mine
-
NPV8%
CAD109 million at a conservative base
case iron ore price with a 39% IRR and a 12-year mine
life
Chairman's
Letter
To
Anglesey Shareholders
The past
year has seen a continuation of global uncertainty generated by the
ongoing conflict in Ukraine and
other potential flashpoints. Globally, inflation has also remained
stubbornly high leading to a ‘cost-of-living’ crisis in many
countries across the world. Meanwhile, economic growth has been
slow, even in China, which placed
a cloud over metal prices.
Despite
the global macro uncertainty, very encouraging progress was made at
both our Parys Mountain copper-zinc-lead-silver-gold project and
our iron ore project in Sweden.
While equity markets remained very challenging for junior
companies, we successfully raised £865,000 in May 2022, attracting new institutional investor
support, and a further £1.5 million in new financings in May and
July 2023.
Review
of Activities
The
momentum from the previous year was maintained at Parys Mountain.
Strong assays were received from the White Rock/Engine Zone infill drilling
programme, which fed into the mineral resource update that was
completed in April 2023. Importantly,
92% of the White Rock and Engine
Zone resources are now in the Measured and Indicated categories,
which represents a significant increase in confidence – a very
important aspect that will feed into the next round of mine design
and optimisation work.
From a
permitting perspective, modern mines are required to place
significant emphasis on the management and disposal of tailings.
The original planning permissions for Parys Mountain were based on
a conventional valley fill, wet tailings disposal. Modern best
practice required a rethink of this method with Knight Piésold
completing the conceptual design for a dry-stack tailings
management facility in the valley to the south of the mine
infrastructure. This conceptual design highlighted that this
location has the potential to store almost 7.0 million tonnes of
dry-stacked tailings, more than sufficient to support the expanded
production scenario evaluated in the 2021 Preliminary Economic
Assessment.
Environmental
baseline studies continued at Parys Mountain, and the required
Pre-Application Report was submitted to the North Wales Minerals
and Waste Planning Service, marking the formal commencement of the
consent process. This was followed up with the initial
Pre-Application Consultation meeting between Anglesey Mining and
statutory consultee groups, including Natural Resources Wales, Cadw
and multiple Council departments.
In
Sweden, a Pre-Feasibility Study
Update for the Grängesberg Iron Ore Project was completed in
July 2022 following which discussions
commenced with environmental consulting groups to start planning
the baseline environmental studies as recommended in the
Pre-Feasibility Update and a requirement for the Bankable
Feasibility Study. During the year, we increased our stake in
Grängesberg Iron Mines AB, the holding company, to 49.7% through
the acquisition of a 29.8% stake for a value of £525,000 from our
local partner, Roslagen Resources AB. Meanwhile, in Canada, Labrador Iron Mines continued to
advance its Houston direct
shipping iron ore project toward production.
Further
details on these operational activities may be found in the
Strategic Report.
Sudden
passing of Howard Miller,
Non-Executive Director
It was
with great sadness that we reported the death of our esteemed
colleague, Howard Miller, in
December 2022. Howard had been a
Non-Executive Director of Anglesey since 2001, serving as Lead
Independent Director from 2013 until his passing. Howard had a
wealth of knowledge and experience across all legal, financial and
management areas, and provided wise counsel and sound advice to the
Anglesey Board and company management. He will be sadly and fondly
missed.
Corporate
activity
In
May 2022, a Placing and Subscription
was successfully completed, raising gross proceeds of £864,416 with
institutional and other investors, including the Chairman and the
Chief Executive, at a price of 3.4
pence per share. After the financial year end, a further
£1,500,000 was successfully raised in May and July 2023 at a price of 1.5p per share, which
included a 1 for 2 attaching warrant with an exercise price of 2.5p
per share and an expiry of November
2024. The Chairman and the Chief Executive also participated
in this round of funding.
Metal
prices
While base
metal prices softened over the last year, particularly zinc,
commodities are showing some overall resilience. Demand for metals
that are critical to the global climate transition and clean energy
technologies remains strong, and when combined with the apparent
lack of investment on the supply side, will likely lead to future
deficits and higher prices. As a board, we retain our confident
view that the outlook for minerals, particularly for the copper and
zinc minerals at Parys Mountain, and for iron ore where we hold
significant investments, is very encouraging.
In
July 2022 the UK Government published
the first-ever UK Critical Minerals Strategy, setting out its
approach to accelerating domestic capabilities, collaborating with
international partners and enhancing international markets. The
strategy, refreshed in March 2023,
aims to improve the security of supply of critical minerals to
safeguard British industries now and in the future, deliver our
clean energy transition and protect national security and defence
capability. “Modern society relies on critical minerals- from
phones to wind turbines, from cars to fighter jets”. “Almost
everything we do to communicate, to get around, to work and to
play, is increasingly based, directly or indirectly, on minerals
extracted from the ground many thousands of miles away”.
Environmental
and social focus
The
purpose and objective of Anglesey Mining is to create value for
shareholders in an environmentally, socially, and ethically
responsible manner which is also to the benefit of all
stakeholders. We place a high priority on environmental, social and
governance (ESG) matters, and we are committed to being a
responsible mining company, which maintains mutually beneficial
long-term relationships with key stakeholders and the local
community. Readers are invited to refer to the report on Corporate
Governance.
Outlook
The
results from the work completed at Parys Mountain over the last
year provide extremely encouraging support to the 2021 Preliminary
Economic Assessment, which demonstrated that a significant
copper-zinc-lead-silver-gold mine can be developed at Parys
Mountain with very positive financial returns.
In the
current year, we are maintaining the previous momentum on all the
required elements of project development. Infill drilling of the
large Northern Copper Zone is scheduled to start in October,
targeting conversion of a portion of that zone from the inferred
resource category to the higher confidence indicated
category.
Permitting
activities continue ongoing with the feedback from the
Pre-Application Consultation fine-tuning the Environmental Impact
and Social Assessment work programmes. Metallurgical test work is
underway on a trade-off study of pre-concentration methods which
will be taken into the next round of studies and design.
Additionally, the metallurgical test work will determine the
environmental parameters of the tailings product, which forms a
critical aspect of the preliminary tailings design.
All of
these activities are required to move the Parys Mountain project
into the next stage of study, prior to a fully committed decision
to proceed to production. Completion of each of these stages is a
key requirement for securing the necessary finance to move the
project towards production. While all this work will require some
time to complete, it should ensure continuous progress over the
course of the year.
At
Grängesberg, we expect to commence the environmental baseline
studies during the year, as recommended in the 2022 Pre-Feasibility
Study. Discussions with potential partners are expected to continue
as we determine the most appropriate route to progress the
Grängesberg development opportunity.
In closing
I wish to recognise the dedication and enthusiasm of our small
management team, led by Jo
Battershill, for the significant progress made over the past
year, and thank our board of directors for their leadership, as
well as consultants and advisors for their contribution. Finally, I
should welcome our new shareholders and thank them, and all our
shareholders, for their continued support.
John F. Kearney
Chairman
of the Board
22 September 2023
Strategic
report
Despite
the global geopolitical instability highlighted in the Chairman’s
report, we are very pleased to report that the recommencement of
work at Parys Mountain has delivered very positive results over the
course of the year. In addition, significant progress was made at
our iron ore project in Sweden
during the reporting period.
Parys
Mountain continues to gain momentum
The
Parys Mountain Cu-Zn-Pb-Ag-Au Project on the Isle of Anglesey hosts
a significant polymetallic deposit with an updated resource
estimate of 16.1Mt grading 1.3% Zn, 1.0% Cu, 0.7% Pb, 15g/t Ag and
0.2g/t Au. The site has a head frame, a 300m deep production shaft, is connected to grid
power, located only 20 miles from the port of Holyhead and is well
advanced towards permitting for an operation. We have freehold
ownership of the minerals and much of the surface land on the
western portion of the property where all the current resources are
located. Access to infrastructure is good, political risk is low
and the project enjoys the support of local people and
government.
An
independent Preliminary Economic Assessment (PEA) was completed in
January 2021, using the three-year
trailing metal prices as of September
2020 – US$2.81/lb Cu,
US$1.20/lb Zn, US$0.95/lb Pb, US$16.67/oz Ag and US$1459/oz Au. Three separate development cases
or scenarios were evaluated as part of the PEA, utilising planned
mine tonnages ranging from 5.5Mt at 1,500tpd, to 11.4Mt at 3,000tpd
in an expanded case.
The
expanded case produced the most attractive financial returns,
indicating a total cash operating surplus of more than £408 million
over a 12-year mine life, which translated to a pre-tax net present
value discounted at 10% of over £96 million with an IRR of
26%.
While
the Parys Mountain Project has a long history and a substantial
amount of data, much of this needs to be updated as an integral
part of a Pre-Feasibility Study. The work conducted over the last
year, and much of that planned for the current year, is to bring
the data to a sufficient level of confidence to complete the
Pre-Feasibility Study.
Resource
update lifts confidence
A series
of 10 drill holes for 2,750m were
completed early in 2023. These holes were designed to infill drill
both the White Rock and Engine
Zones, collectively referred to as the Morfa Du Zone, and upgrade
the resource categories across the deposits.
After
receiving the assay results from the drilling and conducting a
robust review of the geology, the resource interpretation was
updated internally resulting in tighter geological constraints
being applied. 
Micon
International Limited were then engaged to complete an independent
mineral resource estimate.
The
updated mineral resource estimate completed in March 2023 introduced the first Measured resource
to the Parys Mountain mineral inventory. Overall, the combined
Measured and Indicated categories now account for 92%, or 5.3
million tonnes, of the Morfa Du Zone – including a Measured
resource of 1.3 million tonnes. Prior to the drilling programme,
78% of the Morfa Du Zone was in the indicated category.
The
importance of lifting the resource confidence should not be
underestimated. Advancing the project from the 2021 Preliminary
Economic Assessment through a Pre-Feasibility Study and subsequent
Bankable Feasibility Study will require additional mine design
optimisations. The higher confidence category will ultimately
reduce the level of uncertainty through the mine design
process.
The
updated mineral resource estimate for the Morfa Du Zone comprises
5.72Mt at 0.36% Cu, 2.30% Zn, 1.24% Pb, 28/t Ag and 0.28g/t Au
(2.0% CuEq or 5.6% ZnEq), as set out in the table below. On a
like-for-like basis, the previous resource estimate of the Morfa Du
Zone was 6.9Mt at 0.44% Cu, 2.70% Zn, 1.40% Pb, 30g/t Ag and
0.24g/t Au (2.2% CuEq or 6.2% ZnEq).
|
Morfa
Du – Mineral Resource Estimate (March 2023)
|
|
|
|
Grades
|
Contained
Metal
|
|
Classification
|
Tonnes
|
Cu
|
Zn
|
Pb
|
Ag
|
Au
|
Cu
|
Zn
|
Pb
|
Ag
|
Au
|
|
|
(Mt)
|
(%)
|
(%)
|
(%)
|
(g/t)
|
(g/t)
|
(kt)
|
(kt)
|
(kt)
|
(Moz)
|
(koz)
|
|
Measured
|
1.30
|
0.33
|
2.32
|
1.28
|
33
|
0.43
|
4.3
|
30.4
|
16.7
|
1.38
|
18.3
|
|
Indicated
|
3.98
|
0.37
|
2.39
|
1.29
|
27
|
0.23
|
14.7
|
95.3
|
51.4
|
3.44
|
29.7
|
|
Inferred
|
0.45
|
0.40
|
1.41
|
0.65
|
25
|
0.25
|
1.8
|
6.4
|
2.9
|
0.36
|
3.6
|
|
Total
|
5.72
|
0.36
|
2.30
|
1.24
|
28
|
0.28
|
20.4
|
131.7
|
70.9
|
5.17
|
51.3
|
Table 1 –
Morfa Du Mineral Resource Estimate (March
2023)
Notes to
table:
-
Mineral
Resources are based on JORC Code definitions
-
Operating
costs for mining, processing and G&A were modelled at
US$45.15/t of mill feed
-
An Average
Value operating cut-off of US$45.15/t
has been applied
-
Payability
varies depending on metal (from 70% up to 97.5%)
-
Metal
prices used in the NSR and CuEq calculations were based on
US$3,350/t for Zn, US$2,292/t for Pb, US$9,523/t for Cu, US$25.50oz for Ag and US$1850/oz for Au
-
Recoveries
used in the NSR were based on historical metallurgical testwork and
the 2,000t bulk sample processed in 1991 (80% to 82% for Zn, 48% to
80% for Cu, 68% to 78% for Pb, 72% for Ag and 25% for Au to
concentrate and 40% for Au to gravity)
-
Dilution
allowance of 5% included
-
CuEq –
Copper equivalent was calculated using the formula set out
below:
CuEq = (Cu
grade % x Cu Recovery) + (Zn grade % x Zn recovery % x (Zn price /
Cu price)) + (Pb grade % x Pb recovery % x (Pb price / Cu price)) +
(Ag grade g/t / 31.103 x Ag recovery % x (Ag price / Cu price)) +
(Au grade g/t / 31.103 x Au recovery % x (Au price / Cu
price))
-
It is the
opinion of Anglesey Mining and the Competent Persons that all
elements and products included in the metal equivalent formula have
a reasonable potential to be recovered and sold
-
Density
values were calculated using a linear regression of density versus
the combined Cu, Pb, and Zn grade
-
Rows and
columns may not add up exactly due to rounding
The
tighter geological constraints removed previous zones of inferred
material that were supported by limited drilling leading to a
reduced overall resource estimate however, it is important to note
that these areas still represent key target zones for future
drilling.
The
resource estimates for the Northern Copper Zone, Garth Daniel and Deep Engine Zone were not
updated and will be the target for the next round of resource
work.
Technical
work streams well advanced – Geotechnical, Metallurgy and Tailings
Management
The 2023
drilling was also designed to provide samples for both geotechnical
domain modelling within the Morfa Du Zone and provide a suitable
sample to complete confirmatory metallurgical test work. From a
geotechnical perspective, the drill holes were surveyed with an
acoustic televiewer, a downhole tool that measures and models all
the discontinuities within the surrounding rock. This data was then
confirmed through the geotechnical logging of orientated drill
core. All of this data was then utilised in the geotechnical
assessment.
During
the reporting period, Knight Piésold, one of the world’s leading
geotechnical consultants, completed the geotechnical assessment of
the Morfa Du Zone, which highlighted that the assumptions used in
the 2021 Preliminary Economic Assessment were appropriate for the
selected stoping method and confirmed the potential mining spans.
This data will feed into the next round of underground designs and
optimisation process.
Subsequent
to the geological and geotechnical logging of the drill core, we
dispatched a 340 kg sample to our retained mineral processing
consultancy firm, Grinding Solutions Limited (“GSL”), comprising a
blend of White Rock and Engine
Zone with a combined head-grade of 0.42% Cu, 3.60% Zn, 3.08% Pb,
49g/t Ag and 0.7g/t Au (3.4% CuEq). The blend as delivered to GSL
is 3.3 (White Rock) to 1.0 (Engine
Zone), similar to the contribution that is expected to be delivered
from the mine in the early years, prior to production from the
Northern Copper Zone commencing.
The
metallurgical testwork is designed to update results from testwork
conducted in 2007, which demonstrated that Dense Media Separation
(DMS) would upgrade the feed into the comminution circuit with a
mass rejection of around 40% and between 3 and 5% associated metal
losses. The current round of testwork will also complete a
trade-off study between DMS and X-Ray based ore-sorting technology
which is now utilised across many mines around the
globe.
If the
Parys Mountain ore is suitable for pre-concentrating, the benefits
will be significant. Should the testwork confirm the previous 40%
mass rejection and associated metal losses, the designed milling
rate could be significantly smaller than the mining rate with the
rejects going back underground to be used as road base for the
decline or stope-fill. Additionally, the 40% mass rejection would
significantly reduce the amount of mine tailings. Both benefits
would also lower the capital requirements of mine development.
Ultimately, the decision on whether to include a pre-concentration
process or not will be decided through economic trade-off analyses
during the Pre-Feasibility Study.
Knight
Piésold also completed the conceptual design of a dry stack
tailings management facility. The historical planning permissions
for Parys Mountain assumed a conventional tailings slurry storage.
However, the preferred method would now be a dry stack tailings
management facility, which is aligned with the recommendations from
the Global Industry Standard on Tailings Management.
To
integrate the filtered stack facility with the valley to the south
of the mine, the stack has been designed in 10 m lifts and modelled against existing slopes
at the north. Under the expanded case development proposal, the
filtered stack facility would require a capacity of 6.5 million
tonnes over the proposed 12-year mine life, while also protecting a
Special Site of Scientific Interest, related to a lichenological
interest, located nearby.
The
conceptual configuration, size and cross-section of the tailings
area are presented below.
Figure 1 –
Conceptual design for filtered, dry stack tailings management
facility
Environmental
assessment and permitting
The
permitting process has changed significantly since 1988. While we
have existing planning permissions that relate to the proposed
development of the mine, processing plant and tailings storage
facility, these need to be updated to meet today’s more stringent
requirements.
Environmental
and permitting activities have continued at Parys Mountain over the
course of the period.
Up to
the end of March 2023 the following
surveys had been completed:
-
Habitat
mapping and Habitat suitability
-
Pond water
testing
-
Over-wintering
and nesting birds
-
Reptiles
and great crested newts
-
Invertebrates
(aquatic and terrestrial)
-
Soils and
agricultural land quality
Work has
also commenced on the following surveys:
-
Groundwater
testing, which will feed directly into both the infrastructure
foundation designs and the dry-stack tailings engineering
studies
-
Air
quality, including noise and vibration surveys
-
Landscape
and
-
Heritage
As a
former operating mine, the project is classified as a Dormant Site,
which requires a Pre-Application Inquiry submission to the North
Wales Mineral Planning Authority. This Pre-Application Inquiry was
submitted in 2022. A Pre-Application Inquiry meeting with the
Mineral Planning Authority and a number of statutory consultees was
held on site and in Amlwch in April
2023. The attendees included Natural Resources Wales, Cadw,
Anglesey County Council Departments (Environmental Health, Highways
& Transportation, Ecology & Environment and Heritage),
Archaeological Planning Services, local councillors and members of
both Westminster and Welsh
governments.
The
planning process allows for the statutory consultees to respond to
the proposal with any comments or queries regarding the project
details. A number of responses have now been received and will be
used to define the limits of the Environmental Impact and Social
Assessment for Parys Mountain.
Bringing
the Northern Copper Zone into play
The
design, planning and logistics for the first round of infill
drilling into the Northern Copper Zone since 1974 has now been
completed.
The NCZ
was discovered in 1962 after testing an Induced Polarisation
geophysical target. The zone is interpreted as the downdip
extension of the historical open pit mined at Parys Mountain and
appears as a wedge-shaped block with the thin edge (15m wide) starting around 200m below surface that extends down to the
thicker end (over 100m width) at a
depth of around 525m below surface.
It remains open both along strike to the east and at depth. The
locations of the historical drilling intersections are shown
below:
Figure 2 –
Existing intersections within the Northern Copper Zone and
Garth Daniel (long
section)
The
Northern Copper Zone has a 2012 resource estimate of 9.4Mt at 1.27%
Cu, plus minor Au, Ag, Zn and Pb credits (1.6% CuEq) – although
very few holes were assayed for all the metals. The internal
resource estimate from the early 1970’s was >30Mt at 0.81% Cu -
excluding any by-products – which should not be considered
compliant with any modern JORC or CIMM methodologies or NI43-101
reporting requirements.
While
very few of the holes drilled before 1980 were assayed for gold, it
was recognised that the Northern Copper Zone contains gold with
minor silver, zinc and lead. Preliminary metallurgical testwork
completed in 1969 at Lakefield Research in Ontario demonstrated recoveries of up to 93.3%
producing a copper concentrate grading 23.2% Cu – but no testing
was conducted on the recovery of any other metals.
The
proposed drilling programme of 6 holes, for 3,750m, could potentially provide multiple pierce
points across the Northern Copper Zone, the Garth Daniel Zone and
the Central Zone, based on current interpretations. Examples of
historical intersections from these zones are detailed in the
tables below.
|
Historical
High-grade Intersections
|
|
Historical
Lower-grade Intersections
|
|
Hole
ID
|
Depth
|
Width
|
Grade
|
|
Hole
ID
|
Depth
|
Width
|
Grade
|
|
|
(m)
|
(m)
|
CuEq
(%)
|
ZnEq
(%)
|
|
|
(m)
|
(m)
|
CuEq
(%)
|
ZnEq
(%)
|
|
AMC15
|
562.7
|
5.2
|
13.5
|
37.4
|
|
H34
|
349.9
|
146.3
|
1.2
|
3.3
|
|
A29
|
351.9
|
3.8
|
8.6
|
24.0
|
|
H30
|
297.6
|
80.9
|
1.5
|
4.3
|
|
AMC17
|
397.7
|
11.4
|
5.9
|
16.5
|
|
AMC19
|
313.4
|
13.6
|
2.4
|
6.6
|
|
A53
|
561.8
|
4.8
|
5.4
|
15.2
|
|
H31
|
398.7
|
50.9
|
1.2
|
3.3
|
|
H3
|
284.7
|
1.8
|
11.7
|
32.3
|
|
H17A
|
419.4
|
87.0
|
0.9
|
2.5
|
Table 2 –
Historical drilling intersections – high-grade intersections from
Garth Daniel and Central Zone, lower
grade intersections from Northern Copper Zone.
Lifting
the resource confidence category for the Northern Copper Zone,
which is currently all in the Inferred category, is a key target
over the next year. The Northern Copper Zone is projected to
contribute almost 40% of the mill feed over the 12-year mine life
as proposed by the expanded case in the 2021 Preliminary Economic
Assessment.
Base
metal prices soften, but fundamentals remain
supportive
It is
now well understood that the energy transition currently underway
will significantly increase demand for metals used in the
manufacturing of electric vehicles (EVs) and renewable power
generation facilities. Ultimately, this will require a vast supply
response over the next two decades and a step change in investments
from miners. However, mining projects have long lead times and
require large investments. Based on data from the International
Energy Agency (IEA), lead times from resource discovery to
production now averages 17-years, which includes 12.5-years from
discovery to feasibility and 4.5 years for planning and
construction, which is likely to have a significant impact on the
timing of any supply response. In addition, some established,
well-funded mining companies have recently demonstrated a
preference to ‘buy-versus-build’, which potentially implies there
are limited development options around.
Both EVs
and renewable generation are more metal-intensive than fossil
fuel-based alternatives, which will continue to support metals
demand as the world transitions towards a carbon-free economy.
According to the International Bar Association, wind and solar
installations require between 8 and 12 times more copper than coal
and gas generation capacity and EVs require 3 to 4 times more of
the base metal than internal combustion engine vehicles.
The IEA
suggests this transition will lead to a six-fold increase in demand
for minerals by 2050 compared to current levels. While the growth
rates for each metal will vary and will depend on technologies
chosen for batteries and power generation and environmental
policies, the underlying direction of travel for the industry has
been set. We continue to remain very confident that the outlook for
most minerals, particularly for the copper and zinc minerals at
Parys Mountain, is very encouraging.
Base
metal prices were generally weaker throughout the course of the
reporting period. While copper and lead were around 13% lower
year-on-year, zinc fell almost 35%. The highs for most of the base
metals complex were seen in April
2022. Over the same time frame, precious metals were flat.
The entire commodity suite saw lows for the year in September 2022, bought on by underlying financial
and economic indicators pointing to an extended period of weakness
across all major geographies and a pending recession. Consumer
confidence in China and
the United States declined rapidly
and purchasing managers indices for construction and manufacturing
all pointed to a drop in future orders.
The base
case economic model in the PEA utilized three-year trailing metal
prices of $2.81/lb copper,
$1.20/lb zinc, $0.95/lb lead, $16.67/oz silver, and $1,459/oz gold, with an exchange rate of
£1.00/$1.25. We continue to believe
that the base case three-year trailing metal prices used in the PEA
are a very conservative starting point. The three-year trailing
metal prices to the end of 2022 were US$3.67/lb copper (31% above the price used in
the 2021 PEA), US$1.32/lb Zn (+10%),
US$0.93/lb lead (-2%), US$22.57/oz silver (+35%) and US$1790/oz gold (23%) with an exchange rate of
£1.00/US$1.30
(+4%).
Prices
at 14 September 2023, the last
practicable date before the publication of this report, were
$3.78/lb copper, $1.16/lb zinc, $1.02/lb lead, $22.63/oz silver and $1908/oz gold, with the exchange rate at
£1.00/$1.24. Using these commodity
prices, the expanded case pre-tax NPV10% increases from
US$120 million to US$228 million, with pre-tax IRR of 36%, which
clearly demonstrate the sensitivity and leverage of a mine at Parys
Mountain to higher metal prices.
At these
September 2023 metal prices, copper
production from a Parys Mountain mine would represent 50% of the
net smelter revenue under the expanded case while zinc and lead
would represent 27% and 18% respectively. The PEA indicates
production of 75,000 tonnes of copper, 166,000 tonnes of zinc,
80,000 tonnes of lead, over 5 million ounces of silver and 30,000
ounces of gold over the project’s 12-year mine life, this equates
to an average copper equivalent production rate of 14,000 tonnes
per year over the proposed life of the operation.
Grängesberg
iron ore - a strategic iron ore asset in Europe
On
9 February 2023 the group acquired a
further 29.8% of the share capital of Grängesberg Iron AB (GIAB) –
the company that owns the Grängesberg Iron Ore Project, thereby
increasing its holding in GIAB to 49.7%. This was effected through
the purchase of a 29.8% stake in GIAB from Roslagen Resources AB
(“Roslagen”) and the assignment to Anglesey of 40% of the
outstanding subordinated debt (nominal value £335,000) owed to
Roslagen by GIAB for a total consideration of £525,000, satisfied
by a cash payment of £87,000 and the issue to Roslagen of
14,544,827 ordinary shares of Anglesey at a price of 3.0 pence per share to be held in escrow for
twelve months from the date of issue. See Note 14 to financial
statements.
In
addition to the 49.7% holding, Anglesey also has management rights
of GIAB and a reciprocal right of first refusal over the remaining
50.3%.
The
Grängesberg project, located about 200 kilometres north-west of
Stockholm, is a substantial iron
ore asset located in a very favourable jurisdiction. Prior to its
closure in 1989, due to then prevailing market conditions, the mine
had produced around 180 million tonnes of iron ore.
In late
2021, we commissioned an updated Pre-Feasibility Study on the
development of the Grängesberg project, which was completed in
July 2022. The study demonstrated a
very robust project with production of 2.3 - 2.5 million tonnes per
annum of iron ore concentrate grading 70% Fe over an initial
16-year life, generating strong economic returns, including a NPV8%
of US$688 million post-tax. The study
assumed an iron ore price of US$120/t
(62% Fe benchmark, CFR China) with sensitivities indicating a
long-term price of US$80/t required
to achieve a positive return at a discount rate of 8%.
The
study confirmed the previous probable ore reserve estimate of 82.4
million tonnes, which would support the proposed 16-year mine life
at a throughput of 5.3 million tonnes per annum for production of
between 2.3 and 2.5 million tonnes per annum of 70% Fe
concentrate.
Micon
concluded that the Grängesberg Project demonstrates an economically
viable project using the stated price assumptions, cost estimates
and technical parameters generated by the PFS, with the sensitivity
analysis indicating positive returns can be achieved even with
using a 30% lower underlying iron ore price.
|
Key
Metric
|
Unit
|
2022
Updated PFS
|
|
Ore to
Mill
|
Mt
|
82.3
|
|
Life of
Mine
|
Years
|
16.0
|
|
Contained
Fe
|
Mt
|
30.6
|
|
Recovery
|
%
|
85
|
|
Recovered
Fe
|
Mt
|
26.0
|
|
Outgoing
Concentrate
|
Mt
|
37.2
|
|
Concentrate
Grade
|
%
Fe
|
70
|
|
Average
Annual Concentrate Output
|
Mt
|
2.3
|
|
Cash
Cost *
|
US$/t
Conc
|
53.60
|
|
All-in
Sustaining Cost **
|
US$/t
Conc
|
57.80
|
|
Pre-production
Capital
|
US$m
|
399
|
|
Post-tax
NPV8%
|
US$m
|
688
|
|
Post-tax
Internal Rate of Return
|
%
|
26
|
|
Project
Payback
|
Years
|
3.6
|
|
Average
Annual Post-tax Operating Cashflow
|
US$m
|
130
|
Table 3 -
Key financial metrics from the updated 2022 PFS
* Cash
costs are inclusive of mining costs, processing costs, site
G&A, transportation charges to port and royalties
** All-in
Sustaining Cost includes cash costs plus sustaining capital and
closure cost
***
Post-tax Operating Cashflow based on iron ore price forecast of
US$120/t China CFR 62% Fe
benchmark
In early
2023, a Memorandum of Understanding (MOU) was signed with Mine
Storage International to investigate the potential for Grängesberg
to be converted into a Pumped Hydro-Storage project at the end of
the mine’s producing life.
Pumped-Hydro
Storage is a green-energy storage solution that utilises water and
gravity to store electrical energy. An underground mine can provide
a closed-loop solution using proven, pumped hydro-power technology.
Essentially, the system involves water being gravity fed through
pipes down a shaft into the turbines, which produce electricity for
supply to the grid and also pump the water back to surface. The
mine storage system has a high round-trip efficiency of 75-85% and
proven durability.
The MoU
with Mine Storage could lead to
numerous future benefits including:
-
A potential
long-term revenue stream from the Grängesberg Mine to enhance the
cashflow
-
Enabling
the Circular Economy with existing technology turning a depleted
mine into a power storage asset ensuring generational
benefits
-
A well
credentialled Swedish partner and potential exposure to
Scandinavian investors
The next
stage of work for the Grängesberg project is the commencement of
environmental baseline surveys to feed into an Environmental Impact
and Social Assessment, which is a requirement to getting both the
environmental permits and development consent. Grängesberg has the
potential to be restarted as one of Europe’s largest individual
producers of iron ore concentrates. When combined with the
high-grade nature of the concentrate and proximity to European
steel mills, the asset clearly demonstrates highly strategic
positioning.
Iron
Ore - Grade is King
Demonstrating
some similarities with the previous year, the price of iron ore
exhibited significant volatility over the course of the year.
During the first half of 2022, iron ore prices displayed upward
momentum buoyed by the potential for Chinese construction activity
to increase after the initial Covid restrictions were lifted,
China accounts for about
two-thirds of seaborne iron ore demand. However, the second part of
the year told a different story for iron ore, which saw prices cut
by almost 50% by October. The weakness was driven by renewed
worries over COVID-19 restrictions in China, plus concerns over the country’s
property sector and cooling global economic growth.
Iron ore
prices averaged US$121 per tonne (62%
Fe CFR delivered to China) in
2022, down from an average of US$162
per tonne in 2021.
A report
from the Institute for Energy Economics and Financial Analysis
(IEEFA) highlights that decarbonising the steel industry will
require a significant lift in both high-grade iron ore production
and improved beneficiation techniques. To reach a targeted net zero
emissions by 2050, global steelmakers must switch production
methods from blast furnaces that consume coal to green
hydrogen-based direct reduced iron (DRI) processes. However, DRI
technology is based on Electric Arc Furnaces (EAFs) and requires a
higher grade of iron ore than blast furnaces – typically at least
67%.
DRI-based
production of steel emits less carbon dioxide than the traditional
blast furnaces and enables the production of high-quality products
in the EAF. High-quality products require the highest quality of
steel scrap; but if scrap is limited, the use of DRI is necessary
to guarantee specific qualities. The board continues to believe
that demand for high-grade Fe concentrate will continue to rise,
which could potentially support the development of the Grängesberg
Iron Ore Project.
The
opportunity is now to advance the Grängesberg project through to a
Financial Investment Decision. This could be completed along with
securing a strategic investor, offtake partner, separate listing,
or a combination of these options.
Labrador
Iron Mines
Labrador
Iron Mines Holdings Limited (LIM), in which we hold a 12% interest,
continues to progress plans to develop its Houston Project in the
Labrador trough. LIM published a
PEA on its Houston Project in February
2021 which supports its plan to resume iron ore production
and demonstrated an initial 12-year mine life with production of 2
million dmt of per year, for total production of 23.4 million dmt
of product at 62.2% Fe over the life of the Houston mine.
The PEA
estimates the Houston Project will generate an undiscounted net
cash flow of CAD$234 million and an
after-tax net present value at an 8% discount rate of CAD$109 million, and an after-tax internal rate
of return of 39%, under the base case $90/dmt benchmark pricing model. The PEA notes
that using a spot price of $160/dmt
would increase the after-tax NPV8% to CAD$459 million and the after-tax IRR to
209%.
Anglesey
holds 19.29 million LIM shares which on 31
March 2023 were valued in total at $1.7 million, or approximately £1.4 million (2022
- £1.9 million) on the OTC Market in the
United States. This value had not changed significantly at
22 September 2023.
Financial
results and position
There
are no revenues from the operation of the properties.
The loss
before other comprehensive income for the year ended 31 March 2023 after tax was £961,288 compared to
a loss of £693,242 in the 2022 fiscal year. The administrative and
other costs excluding investment income and finance charges were
£696,545 compared to £528,045 in the previous year. This increase
is due to additional expenses in relation to Grängesberg including
the administrative expenses in connection with the acquisition of
an increased shareholding this year and feasibility study
costs.
The
value of the group’s holding in LIM is reported in other
comprehensive income and effectively is based on its share price.
This year there is a loss of £0.5 million as the share price
declined. The outcome is a total comprehensive loss for the year of
£1,462,670, compared to a loss of £2,826,957 in the previous
year.
During
the year there were no additions to fixed assets (2022 - nil) and
£460,118 (2022 - £394,410) was capitalised in respect of the Parys
Mountain property as mineral property exploration and evaluation,
as the programme of geological and environmental work as well as
drilling continued as described in this Strategic
report.
At
31 March 2023 the mineral property
exploration and evaluation assets had a carrying value of £16.2
(2022 - £15.7) million. These carrying values are supported by the
results of the 2021 Preliminary Economic Assessment of the Parys
Mountain project.
At the
reporting date, as detailed in note 10, the directors considered
the carrying value of the Parys Mountain exploration and evaluation
assets to determine whether specific facts and circumstances
suggest there is any indication of impairment. They carefully
considered the positive results of the resource update completed in
March 2023, the independent PEA and
the plans for moving the project forward. Consequently, the
directors concluded that there were no facts and circumstances
which materially changed during the year which might trigger an
impairment review and that there are no indicators of
impairment.
On
17 May 2022 a placing to
institutional investors for cash of 22,829,705 shares at
3.4 pence per share raising £864,416
gross was completed. These funds will be used for ongoing work on
the Parys Mountain project, as well as for general corporate
purposes.
Also in
May 2022 a new Investor Agreement was
concluded with Juno Limited to replace the controlling shareholder
and consolidated working capital agreements. In the new Investor
Agreement Juno agreed to participate in any future equity
financing, at the same price per share and on the same terms as the
arm’s-length participants, to maintain its percentage, with the
subscription price to be satisfied by the conversion and consequent
reduction of debt, and the company agreed to pay Juno in cash ten
percent of the net proceeds of any such equity financing in further
reduction of the debt. The interest rate on the outstanding debt
was reduced from 10% to 5% p.a. from 1 April
2022. In addition, Juno was granted certain nomination and
reporting rights, including the right to nominate two directors to
the board, so long as Juno holds at least 20% of the company’s
outstanding shares and one director so long as Juno holds at least
10% of the company’s outstanding shares. This renegotiation was
approved by an independent board committee responsible for
reviewing and approving any transactions and potential transactions
with Juno. The family interests of Danesh
Varma have a significant shareholding in Juno.
The net
effect of the new agreement with the May
2022 financing was that the debt due to Juno was reduced by
£305,499, of which £78,345 was paid in cash and the balance by
conversion of debt.
The cash
balance at 31 March 2023 was
£247,134, compared to £922,177 at 31 March
2022.
At
31 March 2023 there were 295,220,548
ordinary shares in issue (2022 – 248,070,732), the increase being
due to the financing events referred to above. At 12 September 2023 there were 420,093,017 ordinary
shares in issue.
Subsequent
to the year-end two placings of equity were completed raising £1.5
million gross. See note 29.
Performance
The
Group holds interests in exploration and evaluation properties and,
until a mine is placed into production, there are no standardised
performance indicators which can usefully be employed to gauge
performance. The publication of the independent PEA on the Parys
Mountain project in January 2021,
which built upon the optimisation studies successfully completed
over the previous two years, and included a new expanded mineral
resource estimate, with a financial model for an expanded case at
3,000 tpd which indicated a pre-tax NPV10% of US$120 million and a 26% IRR, demonstrated a
significant improvement on previous studies and steady
progress.
The
updated mineral resource estimate for the Morfa Du Zone completed
in 2023 has increased the confidence in the geological model, which
underpins the PEA. Additionally, several other technical reports
have been completed over the last year that support the findings
from the PEA. These include the geotechnical assessment of the
underground area, the proposed dry stack tailings design and
numerous environmental baseline surveys.
The
completion of the independent updated PFS on the Grängesberg
project demonstrates a very robust project with production of 2.3 -
2.5Mtpa of iron ore concentrate grading 70% Fe over an initial
16-year life, generating strong economic returns, including a NPV8%
of US$688 million post-tax using the
stated price assumptions, cost estimates and technical
parameters.
The
external factors affecting the ability of the Group to move its
projects forward are primarily the demand for metals and minerals,
levels of metal prices, and the market sentiment for investment in
mining and mineral exploration companies. These are discussed
above, and risks and uncertainties are dealt with below.
Other
activities
The
Directors continue to review new properties suitable for advanced
exploration or development that would be complementary to or
provide synergies with the existing projects and would be within
the financing capability likely to be available. A number of base
metals projects have been identified as potentially attractive and
further early-stage opportunities continue to be
evaluated.
Environmental
and Social Focus
The
purpose and objective of Anglesey Mining is to create value for
shareholders in an environmentally, socially, and ethically
responsible manner which is also to the benefit of all
stakeholders. Our current principal activity is to achieve this by
developing, building and operating a producing mine at Parys
Mountain and to progress the Grängesberg Iron Ore project in
Sweden through to a decision to
mine.
There
has been an increasing investor focus on ESG matters. These are
areas on which we have always placed high importance, although we
have not attempted quantitative measurements, particularly as
having the social licence to operate, and operating in an
environmentally responsible manner, are critical for the successful
operation of any mining project. In Anglesey Mining we place a high
priority on sustainability, and on environmental, social and
governance (ESG) matters, and we are committed to being a
responsible mining company, maintaining mutually beneficial
long-term relationships with key stakeholders and the local
community. Readers are invited to refer to the report on Corporate
Governance.
The
Directors, both individually and collectively, believe, in good
faith, that throughout the year and at every meeting of the Board
and management when making every key decision, they have acted to
promote the success of the Group for the benefit of its members as
a whole, as required by Section 172 of the Companies Act 2006,
having regard to the stakeholders and matters set out in section
172(1) of the Companies Act 2006. The Directors’ Section 172
Statement follows.
Section
172 of the Companies Act is contained in the part of the Act which
defines the duties of a director and concerns the “duty to promote
the success of the Company”. Section 172 adopts an ‘enlightened
shareholder value’ approach to the statutory duties of a company
director, so that a director, in fulfilling his duty to promote the
success of the company must act in the way he considers, in good
faith, would be most likely to promote the success of the Company
for the benefit of its members as a whole, and in doing so have
regard to other specified factors insofar as they promote the
Company’s interests.
The
Board of Anglesey Mining recognises its legal duty to act in good
faith and to promote the success of the Company for the benefit of
its shareholders and with regard to the interests of stakeholders
as a whole and having regard to other matters set out in Section
172. These include the likely consequences in the long term of any
decisions made; the interest of any employees; the need to foster
relationships with all stakeholders; the impact future operations
may have on the environment and local communities; the desire to
maintain a reputation for high standards of business conduct and
the need to act fairly between members of the Company.
The
Board recognises the importance of open and transparent
communication with shareholders and with all stakeholders,
including landowners, communities, and regional and national
authorities. We seek to maximise the operation’s benefits to local
communities, while minimising negative impacts to effectively
manage issues of concern to society. Shareholders have the
opportunity to discuss issues and provide feedback at any
time.
The
application of the Section 172 requirements can be demonstrated in
relation to the Group’s operations and activities during the past
year as follows.
Having
regard to the likely consequences of any decision in the long
term
The
Group’s purpose and vision are set out in the Chairman’s Letter and
in this Strategic Report. The Board oversees strategy and is
committed to the long-term goal of the development of the Parys
Mountain Project. The activities towards that goal are described
and discussed in the Strategic Report. The Board remains mindful
that its strategic decisions have long-term implications for the
Parys Mountain project, and these implications are carefully
assessed.
In
evaluating alternatives or opportunities the likely consequences of
any decision in the long-term are always considered, together with
the potential impact on long-term shareholder value, including key
competitive trends, supply and demand of metals, potential impact
on the environment and climate change considerations, all of which
were considered in the preparation of the PEA and in the past year
in the design of the proposed drystacked tailings management
facility.
Having
regard to the need to foster business relationships with
others
This is
a mineral exploration and development business, without any regular
income and is entirely dependent upon new investment from the
financial markets for its continued operation. The benefits of
maintaining strong relationships with key partners, contractors and
consultants are valued. This is discussed in more detail elsewhere
in the annual report. As a mine development company, the we
understand that a range of third parties - regulators, contractors,
suppliers and potential customers for the concentrates that would
be produced from a mine at Parys Mountain are relevant to the
sustainability of the business.
Having
regard to the interests of the employees
The
Group currently has two full-time and one part-time employee and is
managed by its directors and a small number of associates and
sub-contract staff. All suggestions together with the views and
interests of employees are considered in all
decision-making.
Having
regard to the desirability of maintaining a reputation for high
standards of business conduct
The
Board is committed to high standards of corporate governance,
integrity, and social responsibility and to managing our affairs in
an honest and ethical manner, as further discussed in the Corporate
Governance Report. We strive to apply ethical business practices
and to conduct business in a responsible and transparent manner
with the goal of ensuring that Anglesey Mining plc maintains a
reputation for high standards of business conduct and good
governance.
Having
regard to the impact of operations on the community and the
environment
A broad
range of stakeholder considerations are taken into account when
making decisions and careful consideration is given to any
potential impacts on the local community and the environment. We
strive to maintain good relations with the local community,
especially with local businesses in North
Wales. For example, in connection with its plans for the
advancement of Parys Mountain, discussions and consultations have
been held with the North Wales Minerals and Waste Planning Service
and with local Councils. In connection with the Pre-Application
Inquiry submission to the North Wales Mineral Planning Authority a
meeting with the Mineral Planning Authority and a number of
statutory consultees was held on site and in Amlwch in April 2023. The attendees included Natural
Resources Wales, Cadw, Anglesey County Council Departments
(Environmental Health, Highways & Transportation, Ecology &
Environment and Heritage), Archaeological Planning Services, local
councillors and members of both Westminster and Welsh governments.
The
Corporate Governance Report discusses how the Directors engage with
and have had regard to the community in which we operate. Further
discussion of these activities can be found in this Strategic
Report.
As a
mine development company, the Board understands that recognising
and having regard to the potential impact our operations may have
on the community and the environment, is essential to underpinning
the social licence necessary to operate. In making decisions about
the development of a mine at Parys Mountain, we seek to maximise
the benefits to the local community, while minimising negative
impacts, and to effectively manage issues of concern to society. By
aligning future operations to environmental, social and governance
performance the Group will seek to deliver on its purpose to create
value through responsible and sustainable mining.
Having
regard to the need to act fairly as between members of the
Company
The
Company has only one class of share in issue and all shareholders
benefit from the same rights, as set out in the Articles of
Association and as required by the Companies Act 2006. Since 1996
agreements have been in place with Juno Limited, the largest
shareholder, which provide that Anglesey will maintain an
independent board and that any transactions between Juno and
Anglesey will be at an arm’s length basis. Effective 31 March 2022, as a further step to strengthen
its financial position and reduce debt, Anglesey entered into a new
Investor Agreement with Juno Limited, to amend and replace the
Controlling Shareholder Agreement and the Consolidated Working
Capital Agreement. This renegotiation was approved by an
independent board committee responsible for reviewing and approving
any transactions and potential transactions with Juno.
The
Board recognises its legal and regulatory duties and does not take
any decisions or actions, such as selectively disclosing
confidential or inside information, that would provide any
shareholder with any unfair advantage or position compared to the
shareholders as a whole.
Risks and uncertainties
The
Directors have carried out an assessment of the principal risks
facing the Group, including those that would threaten its business
model, future performance, solvency or liquidity. In conducting its
business, the Group faces a number of risks and uncertainties, the
more significant of which are described below. The board believes
the principal risks are adequately disclosed in this annual report
and that there are no other risks of comparable magnitude which
need to be disclosed.
Mineral
exploration and mine development is a high-risk, speculative
business and the ultimate success of Anglesey Mining will be
dependent on the successful development of a mine at Parys
Mountain, which is subject to numerous significant risks, most of
which are outside the control of the Board.
In
reviewing the risks facing the Group, the members of the Board
consider they are sufficiently close to operations and aware of
activities to be able to adequately monitor risk without the
establishment of any formal process. There may be risks against
which it cannot insure or against which it may elect not to insure
because of high premium costs or other reasons. However, there are
also risks and uncertainties of a nature common to all mineral
projects and these are summarised below.
General
mining risks
Actual
results relating to, amongst other things, results of exploration,
mineral resources, mineral reserves, capital costs, mining
production costs and reclamation and post closure costs, could
differ materially from those currently anticipated by reason of
factors such as changes in expected geological or geotechnical
structures, general economic conditions and conditions in the
financial markets, changes in demand and prices for minerals that
are expected to be produced,
legislative, environmental and other judicial, regulatory,
political and competitive developments in areas in which the Group
operates, technological and operational difficulties encountered in
connection with activities, labour relations, costs and changing
foreign exchange rates and other matters.
The
mining industry is competitive in all of its phases. There is
competition within the mining industry for the discovery and
acquisition of properties considered to have commercial potential.
We face competition from other mining companies in connection with
the acquisition of properties, mineral claims, leases and other
mineral interests as well as for the recruitment and retention of
qualified employees and other personnel and in attracting
investment and or potential joint venture partners to our
properties.
Exploration
and development
Exploration
for minerals and development of mining operations involve risks,
many of which are outside our control. Exploration by its nature is
subject to uncertainties and unforeseen or unwanted results are
always possible.
Mineral
exploration and development is a speculative business,
characterized by a number of significant risks including, among
other things, unprofitable efforts resulting not only from the
failure to discover mineral deposits but also from finding mineral
deposits that, though present, are insufficient in quantity and
quality to return a profit from production.
Substantial
expenditures are required to develop the mining and processing
facilities and infrastructure at any mine site. No assurance can be
given that a mineral deposit can be developed to justify commercial
operations or that funds required for development can be obtained
on a timely basis and at an acceptable cost. There can be no
assurance that the Group’s current development programmes will
result in profitable mining operations. Current operations are in
politically stable environments and hence unlikely to be subject to
expropriation but exploration by its nature is subject to
uncertainties and unforeseen or unwanted results are always
possible.
Financing
and liquidity risk
The
Group has relied on equity financing to fund its working capital
requirements and will need to generate additional financial
resources to fund all future planned exploration and development
programmes. Developing the Parys Mountain project will be dependent
on raising further funds from various sources. There is no
assurance that such additional financial resources and/or positive
cash flows or profitability will be forthcoming.
There
can be no assurance that we will be successful in obtaining any
additional required funding necessary to conduct operations on our
properties. Failure to obtain additional financing on a timely
basis could cause planned activities and programs to be
delayed.
If
additional financing is raised through the issuance of equity or
convertible debt securities, the interests of shareholders in the
net assets of the Group may be diluted.
Metal
prices
The
prices of metals fluctuate widely and are affected by many factors
outside our control. The relative prices of metals and future
expectations for such prices have a significant impact on the
market sentiment for investment in mining and mineral exploration
companies. Metal prices are usually expressed and traded in US
dollars and any fluctuations may be either exacerbated or mitigated
by currency fluctuations which affect the revenue which might be
received in sterling.
Foreign
exchange
LIM is a
Canadian company; Angmag AB and GIAB are Swedish companies.
Accordingly, the value of the holdings in these companies is
affected by exchange rate risks. Operations at Parys Mountain are
in the UK and exchange rate risks are minor. Most of the cash
balance at the year-end was held in sterling.
Permitting,
environment, climate change and social
Operations
are subject to environmental legislation and regulations which are
evolving in pursuit of national climate change objectives and in a
manner where standards are becoming more stringent. Mineral
extraction and processing can have significant environmental
impacts. Mining operations require approval of environmental impact
assessments and obtaining planning permissions. We hold planning
permissions for the development of the Parys Mountain property, but
further environmental studies and assessments and various approvals
and consents will be required to carry out proposed activities and
these may be subject to various operational conditions and
reclamation requirements.
There
can be no assurance that all permits, licences, permissions and
approvals that may be required for our activities will be
obtainable on reasonable terms or on a timely basis.
Employees
and personnel
We are
dependent on the services of a small number of key executives,
specifically the chairman, chief executive and finance director.
The loss of these persons or the inability to attract and retain
additional highly skilled and experienced employees for any areas
which might be undertaken in the future may adversely affect those
businesses or operations. A discussion on the composition and
assessment of the Board of Directors is included in the Report on
Corporate Governance.
Group Prospects
Recognition
of potential opportunities
The
recommencement of activities at Parys Mountain is the first stage
of bringing the asset back into the focus of mainstream investors,
both retail and institutional. The economics of the project under
the current commodity pricing environment make the progression of
Parys Mountain through to a financial investment decision an
obvious milestone.
Development
of a new mine at Parys Mountain, producing copper, zinc and lead
with gold and silver credits, can deliver economic growth in the
UK, regional jobs for the community and business opportunities for
local service providers. Importantly, these critical and strategic
metals, essential for the decarbonisation of the economy, are
primarily imported into the UK currently. This creates a unique and
timely opportunity, both for Anglesey Mining and for the UK, to
develop a new, modern, mine at Parys Mountain in an environmentally
sustainable manner.
A
similar view can be held for the Grängesberg Iron Ore Project,
where with the Pre-Feasibility Study update now complete, we have a
clear view on the requirements to enable us to advance through to
the Feasibility stage. When combined with the Labrador Mines
assets, Anglesey Mining has a very valuable and strategic set of
iron ore assets that should be progressed with the greatest speed
possible, but within the constraints of the resources
available.
Outlook
The
potential for a mine development at Parys Mountain remains very
strong with results from work programmes over the last year
supporting the outcomes from the 2021 PEA. Therefore, we will
continue to advance the project through additional programmes to
enable the commencement of a detailed Pre-Feasibility
Study.
The work
programmes approved by the Board for the current year include the
following:
-
Commence
infill drilling of the Northern Copper Zone to improve the resource
confidence categories
-
Update the
Northern Copper Zone mineral resource estimate
-
Complete
the metallurgical testwork for the Morfa Du Zone, including the
trade-off study between DMS and XRT pre-concentration
methods
-
Continue
with the environmental and permitting activities
Other
work streams to be factored in at Parys Mountain throughout the
year include:
-
Re-optimise
the underground development with initial focus on the Morfa Du
Zone;
-
Include
results of ongoing metallurgical testwork into the preliminary
engineering designs, with a particular focus on selecting the
preferred pre-concentration method;
-
Preliminary
engineering designs for the proposed dry-stack tailings management
facility;
-
Preliminary
engineering designs for the process plant; and,
-
Updating
the site infrastructure plans including decline portal location,
temporary mining waste storage location and supply of
utilities.
All of
these activities are required to enable the Parys Mountain
copper-zinc-lead-silver-gold project to move from the PEA to a full
committed decision to proceed to production. As has been said
before, these steps do take some time to reach fruition and are key
requirements to securing the necessary finance to move the project
towards production.
At
Grängesberg, the Pre-feasibility Study Update has provided a series
of recommendations to progress the project through to the
commencement of a Feasibility Study. The initial work programmes
include the following:
-
Commencement
of the environmental baseline surveys;
-
Updating
the resource estimate to include domaining of the apatite zones
that could produce a valuable by-product stream; and,
-
Updating
the reserve estimate to incorporate the proposed alternative mining
method (sub-level open stoping with back fill instead of sublevel
caving), which would reduce the risk of any potential movement on
the Export Fault zone.
At a
general corporate level, the board will continue to review other
opportunities within the global metals and mining
sector.
At the
end of March 2023, the group had cash
resources of £247,134 and at 12 September
2023 cash resources of £985,413. Subsequent to the year-end
two placings of equity were completed raising £1.5 million. See
note 29.
This
report was approved by the board of directors on 22 September 2023 and signed on its behalf
by:
Jo Battershill
Chief
Executive
LEI: 213800X8BO8EK2B4HQ71