Report of the Auditors
to the members of Anglesey Mining plc

We have audited the financial statements on pages 17 to 26.

Respective responsibilities of directors and auditors

As described on page 12 the company's directors are responsible for the preparation of financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you.

Basis of opinion

We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Fundamental uncertainties

In forming our opinion we have considered the adequacy of the disclosures in the financial statements concerning the basis of preparation; the recoverability of development and exploration expenditure; and the possible outcome to litigation against the company.

The financial statements have been prepared on a going concern basis, the validity of which depends on:

• the company's ability to continue its operations
• the raising of new finance to develop the mine
• the viability of the operation of the mine, and
• the ability of the company to trade profitably in the future.

The financial statements do not include any adjustments that would result should the above conditions not be met. Details of the circumstances relating to this fundamental uncertainty are described in the directors' report on page 12 and in note 1 to the financial statements on page 20.

The financial statements disclose the directors' assumption that the development and exploration expenditure, included in the balance sheet at £11,148,826, will be recovered by the operation of the mine. The validity of this assumption depends upon the viability of the operation of the mine, the ability of the company to raise the funding referred to above and the ability of the company to trade profitability in the future. Details of the circumstances relating to this fundamental uncertainty are described in note 7 to the financial statements on page 22.

In addition, the financial statements disclose, as a contingent liability, the possible outcome to litigation against the company for alleged breach of agreement. If the action were to be decided against the company, there could be a materially adverse effect on the financial position disclosed in the financial statements. Details of the circumstances relating to this fundamental uncertainty are described in the directors' report on pages 11 and 12 and in note 19 to the financial statements on page 26.

Our opinion is not qualified in respect of the above fundamental uncertainties.

Opinion

In our opinion the financial statements give a true and fair view of the state of the company's affairs at 31 March 1997 and of its loss and cashflows for the year then ended and have been properly prepared in accordance with the Companies Act 1985.

Coopers & Lybrand
Chartered Accountants and Registered Auditors
Liverpool, 29 September 1997