Chairman's Statement 1997

I am pleased to report that as a result of developments during the past year Anglesey Mining is back on the road to again becoming a viable and active mining company.  The year has been one of many milestones and significant progress for the company.

Financial Restructuring

At an Extraordinary General Meeting held in October 1996, shareholders overwhelmingly approved a financial restructuring whereby almost £3 million of the company's debt was eliminated by the issue of new ordinary shares.  This placed the company on an essentially debt free basis for the first time in over five years and provided it with the necessary working capital to continue its operations during the past year.  I was very gratified and encouraged by the co-operation and support shown by the company's creditors and shareholders in the financial restructuring.

Controlling Shareholder

As a result of the financial restructuring Juno Limited became Anglesey's controlling shareholder holding in excess of 50% of the company's shares.  Juno has entered into a Controlling Shareholder Agreement with the company and has agreed to maintain Anglesey as an independent company and ensure that a majority of the directors of the company are independent of Juno. Juno has also agreed not to compete with Anglesey within the United Kingdom and that any transactions or dealings between the company and Juno must be at arm's length, on a normal commercial basis and approved by an independent committee of the board of Anglesey.  The ongoing support of Juno has been of great benefit to the company.

Parys Mountain Property

In August 1997 the company announced a number of new developments which, although completed since the financial year end, were being worked on continuously during the past twelve months.  Most importantly, perhaps, is that the company has secured its ownership of the Parys Mountain property by:

• purchasing the freehold including the land and minerals (subject to a royalty) of the major part of the Parys Mountain property including the area containing all the identified reserves and resources and the site of the proposed mill complex;
• obtaining a new head lease of the land and minerals over the remainder of the Parys Mountain property and;
• acquiring Parys Mountain Mines Limited, the original lessee of the Parys Mountain mining lease and the owner of a residual nets profits interest under the lease. 

These transactions have reduced the annual rent on the property from approximately £36,000 to £18,000.  The company already holds the beneficial leasehold interest in the mining lease on the property.  The acquisition of the freehold, the new lease and Parys Mountain Mines Limited further strengthens and improves the company's title to and rights over the Parys Mountain property.

Acquisition of Dolaucothi Gold Property

Subsequent to the year end the company announced that it has acquired the Dolaucothi gold property near Lampeter in mid Wales. The property is held under a mining lease from the Crown for gold and silver over an area of about 11,000 acres. The Dolaucothi property contains the former producing Ogofau gold mine which was worked in Roman times but was recently mined in the period 1931 to 1939.  The acquisition of the Dolaucothi property is an exciting new initiative which presents the company with opportunities in an area with past production and good gold exploration potential.  The new project is complementary to Anglesey's existing polymetallic property at Parys Mountain and is an important first step in diversifying the asset base of the company.

Progress at Parys Mountain

The complete geological reassessment of the Parys Mountain property which has been carried out by the company over the past two years has resulted in the development of an exciting new geological model which indicates that there is potential for the discovery of substantial additional mineral resources at Parys Mountain. A new exploration programme was recently launched, which is expected to include about 2,500 metres of diamond drilling during the remainder of 1997.  An initial five holes are planned in unexplored areas east of the already identified resource.  The objective of the new exploration programme is to develop a significantly larger mineral deposit at Parys Mountain.

Litigation

Unfortunately I cannot report that the litigation which was initiated against the company in the Canadian courts in 1996 is behind us.  However, I can report important progress during the past year.  As a result of an application brought by the company in the Canadian courts, the court ruled that it did not have the jurisdiction to hear the plaintiff's claim for a declaration that Anglesey's right to the Parys Mountain property had terminated or for possession of the property.  Although the plaintiff has appealed this decision to the Ontario Court of Appeal on the grounds that the High Court Judge erred in law on five points in finding in favour of Anglesey, the favourable ruling of the High Court dismissing three of the Plaintiff's claims leaves the claim for damages as the only issue to be decided by the Court.  The directors continue to believe that the plaintiff has not suffered any damage and has no valid claim for breach of contract.  The company will continue to strongly defend the action.

New Financing

To provide the funding for its ongoing activities, subsequent to the year end the company completed a private placing of 9.8 million shares at a placing price of 5 pence per share to raise net proceeds of £485,000.  Some of the proceeds of the placing were used to complete the purchase of the freehold of the Parys Mountain property and to pay current liabilities.  The balance will be used to continue exploration and development at Parys Mountain, commence exploration on the new Dolaucothi gold property, undertake diamond drilling scheduled for both properties for late 1997 and for general corporate purposes.

Outlook

The next year promises to be particularly exciting for Anglesey; we are once again an active company and we shall press ahead with the development of Parys Mountain with renewed enthusiasm.  Exploration programmes will be continuing and important drilling will be undertaken.  We are looking forward to commencing exploration at the Dolaucothi gold property.  We will also be seeking appropriate new projects in order to diversify the asset base of the company. I look forward to being able to report further progress next year and in the meantime would like to thank all the shareholders, creditors, directors, management, and the growing list of the company's employees, consultants and advisors for all their support, effort and enthusiasm.

John F. Kearney

Chairman

29 September 1997