Notes to the Financial Statements

1        Principal Accounting Policies

Basis of accounting
The financial statements have been prepared under the historical cost convention and in accordance with applicable Accounting Standards in the United Kingdom. A summary of the more important accounting policies, which have been applied consistently, is set out below.
Going concern
The financial statements are prepared on a going concern basis. As explained in the directors' report the validity of the going concern basis is uncertain. However based on the assumption that finance will become available for the development of the group's intangible fixed assets, 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, to their realisable values.
Consolidation
The consolidated financial statements include the financial statements of the parent company and its subsidiaries made up to the end of the financial year. Where a subsidiary is acquired or disposed of during the financial year, the consolidated financial statements include the attributable profit from or to the date of acquisition or disposal.
Tangible fixed assets
The group's freehold property is stated in the balance sheet at cost. The directors consider that the useful life of the premises is so long and their estimated residual value, 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 profit and loss account.
Plant, equipment, fixtures, fittings 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%; motor vehicles - 25%.
Intangible fixed assets
Intangible fixed assets are stated in the balance sheet at cost, less amounts written off. Details are included in note 7 to the accounts.
The group follows the method of accounting for its mineral properties whereby all costs related to acquisition, exploration and development, including associated technical and specific administrative expenses, are capitalised by property. The exemption in respect of exploration costs capitalised pending determination, from the application of Financial Reporting Standard 11 on impairment of fixed assets, is applied.
No gains or losses are recognised on the sale of mineral properties except when there is a material disposition of reserves. All other proceeds are credited against the cost of the related property. On the commencement of commercial production, net costs are charged to operations on the unit-of-production method by property, based upon estimated recoverable reserves.
Mineral properties are written down when an impairment in their value has occurred and are written off when abandoned.
Deferred taxation
Deferred taxation arises when items are recognised for tax purposes in periods that differ from the periods in which the items are recognised for accounting purposes. The group provides for deferred taxation using the liability method on timing differences only where it can be reasonably demonstrated that a corporation tax liability will arise in the foreseeable future. Deferred tax assets are not recognised in the financial statements.
Foreign currencies
Profit and loss account transactions in foreign currencies are translated at the rates of exchange ruling at the date of the transaction, or where forward currency contracts have been arranged, at the contracted rates.
All foreign exchange differences arising on transactions in the year are taken to the profit and loss account in the year in which they arise.
Assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the end of the financial year or at a contracted rate if applicable. Differences on exchange are taken to the profit and loss account.

2        Loss on ordinary activities before taxation

Included in the amount capitalised is: 

All activities are in the United Kingdom and relate to the group's principal activity which is the exploration and development of mining properties. Further analysis is not therefore considered necessary.

3        Interest receivable and payable

Interest receivable

4        Directors and Employees
The average monthly number of persons employed by the group
during the year was:

The remuneration and associated costs of employees and directors were:

Most of the group's technical activities are carried out using consultants. Details of directors' remuneration and share options are given on page 12. No options were exercised in the year.

5        Taxation
Development of the Parys Mountain property during the year has generated trading losses for taxation purposes which may be offset against investment income and other revenues. Accordingly no provision has been made for Corporation Tax. The group had losses available to be carried forward for tax purposes of c.£2.6 million at 31 March 2000 subject to agreement with the Inland Revenue.

6        Loss per ordinary share
The calculation and reporting of basic and diluted earnings per share are in accordance with FRS 14. Basic earnings per share is computed by dividing the profit or loss after taxation for the year available to ordinary shareholders by the sum of the weighted average number of ordinary shares in issue and ranking for dividend during the period. Diluted earnings per share is computed by dividing the profit or loss after taxation for the year by the weighted average number of ordinary shares in issue, each adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.

Basic and diluted loss per share is the same as the effect of the outstanding
share options is anti-dilutive and is therefore excluded.

7        Intangible fixed assets           Development costs

The development expenditure shown above in respect of Parys Mountain is stated at cost. As in previous years the directors have given careful consideration to the value at which this development expenditure should be shown. The balance sheet value may exceed that which could be obtained were the Parys Mountain property to be offered for sale. However the results of the independent feasibility study conducted in 1990 and other studies since that date, taken together with the directors' reasonable forecast of metal prices during the projected life of a mine, continue to demonstrate that this development expenditure, together with other expenditure required to bring the mine into production, will be recovered by the operation of the mine. Consequently no provision or write down in the value of intangible fixed assets has been made.
The directors have applied the exemption in respect of exploration costs capitalised pending determination, from the application of Financial Reporting Standard 11 on impairment of fixed assets. In the directors' opinion the circumstances set out above justify the policy of capitalising exploration and development costs and not treating them as a realised revenue loss. Operation of the mine is dependent on finance being available to fund mine development and mill construction.
Intangible assets at Dolaucothi are shown at cost to the group on acquisition in 1997, plus expenditures since then at cost. This aggregate value is less than the original cost to Ace which was in excess of £280,000.

8        Tangible fixed assets

The directors estimate that freehold land and property should be
analysed as to £140,000 for land and £45,102 for property.

9.        Investments

The subsidiaries of the group at 31 March 2000 are as follows :

10        Debtors

11        Creditors

The loans from Juno are denominated in sterling, unsecured, carry interest at 10% and are repayable from any future financing undertaken by the company.
In accordance with the company's Controlling Shareholder Agreement with Juno the terms of the facility were approved by an independent committee of the board.

12        Share capital

1. Issued to Intermine Limited in satisfaction of advance rental due in respect of the Parys Mountain property on 20 May 1999.
   
2. Issued to Intermine Limited in satisfaction of advance rental due in respect of the Parys Mountain property on 20 November 1999.
   
   The deferred shares are non-voting, have no entitlement to dividends and have no preferential right to return of capital on a winding up.
   A summary of options over the company's share capital, all of which are over the ordinary 5 pence shares, is as follows :
   

13        Reserves

14        Reconciliation of movements in shareholders' funds

15        Reconciliation of operating loss to net cash outflow
from operating activities

16 Reconciliation of net cash flow to movement in net debt

17    Analysis of net debt

18        Loss attributable to Anglesey Mining plc
The loss after taxation in the parent company amounted to £164,169 (1999 - £111,450).
A separate profit and loss account for Anglesey Mining plc (the company) has not been prepared, as permitted by section 230 of the Companies Act 1985.

19        Material non cash transactions
All material non cash transactions are described in note 12 on share capital.

20        Commitments
There is no capital expenditure authorised or contracted which is not provided for in these accounts (1999 - nil).

21        Contingent liabilities
There are no contingent liabilities.

22        Risk management
The group's financial instruments comprise cash balances, a loan from the parent company and various items such as trade debtors and trade creditors which arise directly from trading operations. The group does not enter into derivative transactions and it is the group's policy that no trading in financial instruments be undertaken.
The main risks arising from the group's financial instruments are currency risk and interest rate risk. The board reviews and agrees policies for managing each of these risks and these are summarised below.
Interest Rate Risk
The group finances its operations through a mixture of equity and loans from its parent, Juno Limited. The group borrows from the parent at a fixed rate of interest of 10% per annum and as a result is not exposed to interest rate fluctuations
Liquidity Risk
As regards liquidity risk, the group's policy has been to ensure continuity of funding through a mixture of fresh issues of shares and extending the working capital agreement with its parent. Further details regarding the working capital agreement are set out in the director's report.
Currency Risk
The functional currency of the group is pounds sterling and the loan from the parent is denominated in pounds sterling. As a result, the group has no currency exposure in respect of this loan. All the remaining financial assets and liabilities of the group are short term debtors and creditors as defined by FRS 13, Derivatives and Other Financial Instruments. The group has, as permitted by FRS I 3, excluded all short-term debtors and creditors from the disclosures and hence no numerical disclosures are required.

23        Related party transactions and ultimate parent company
Juno Limited (“Juno”) which is registered in Bermuda is the ultimate parent company. The group has the following agreements with Juno: (a) a controlling shareholder agreement dated September 1996, (b) a working capital agreement of the same date and (c) further working capital agreements of June 1998, December 1998 and December 1999. Interest payable to Juno is shown in note 3 and the balance due to Juno is shown in note 11. Apart from the working capital advances there were no transactions between the group and Juno or its group during the year. Danesh Varma is a director and, through his family interests, a significant shareholder of Juno. John Kearney is a director and shareholder of Minco plc, formerly Irish Marine Oil plc, in which Juno holds an interest of approximately 28%.
There are no other contracts of significance in which any director has or had during the year a material interest.

24        Mineral leases
(a) Under lease and royalty agreements dated September 1997 the company makes an annual index linked lease payment of c.£18,000. A royalty of 6% of net profits from mining production at Parys Mountain is also payable. The lease may be terminated at 12 months notice and otherwise expires in 2070.
(b) Under a mining lease from the Crown dated December 1991 the group makes an annual lease payment of £1,000. A royalty of 4% of gross sales of gold and silver from the lease area is also payable. The lease may be terminated at 12 months notice and otherwise terminates in 2020.
(c) Under a royalty agreement with Intermine Limited the company makes payments of Can$50,000 (c.£21,000) per annum until production commences at the Parys Mountain mine. At the company's option this payment may be made in shares. A royalty of 4% of the company's net profits (as defined after various deductions) generated from production at the mine is also payable. The company has an option to buy out the royalty and advance payments. The agreement may be terminated at 12 months notice on abandonment of the property.
(d) Under a mining lease from the Crown dated August 1997, a subsidiary makes lease payments of £2,500 per annum. A royalty of 4% of gross sales of gold and silver from production at the Dolaucothi mine is also payable. The lease may be terminated at 12 months notice after May 2002 and otherwise terminates in 2011. Certain financial obligations relating to this lease have been guaranteed by the company.

25        Post balance sheet events
There are no significant post balance sheets events to report.