Chairman's Statement

I am pleased to report that exploration drilling has started at the Parys Mountain property.

The objective of the new phase of exploration is to increase the overall geological resource at Parys Mountain. The new drilling programme will explore for further mineral resources in the newly defined Central Zone to the east of the shaft development area and will also explore for lenses of massive sulphide within a second range of rhyolite domes which are believed to lie further to the east in an area of the property largely unexplored to date.

The first hole of the new programme, located about 500 metres east of the shaft, is to test the Central Zone. The hole reached its target depth of 290 metres and samples from the core are now being examined and analysed. The second hole is located about 250 metres to the north of the first hole and has a target depth of 500 metres. It is not expected that this hole will be completed until January. A total of five to seven holes are planned in this programme which will take three to four months to complete.

Other geological activities at Parys Mountain have been proceeding well. The British Geological Survey has been working on a survey of the hydrothermal alteration characteristics of drill core samples using its new state of the art portable infrared mineral analyser. In addition the BGS is using its Vulcan computerised mine modelling programme to provide three dimensional modelling of the Parys Mountain deposits. Meanwhile lithogeochemical and stratigraphic studies are continuing in conjunction with Cardiff University of Wales.

There is nothing new to report on the litigation initiated against the company in Canada in late 1995 concerning the Parys Mountain property. The court case is, in essence, inactive.

At the Dolaucothi gold property near Lampeter in mid Wales, acquired by the company in late summer, initial work has been largely confined to reconnaissance and data gathering. However in conjunction with Cardiff University of Wales, a short hole is being drilled as part of the University's research and training programme. Because of the priorities at Parys Mountain, field work at Dolaucothi will not get underway until the new year.

Following the acquisition of Parys Mountain Mines Limited and Anglo Canadian Exploration Limited in August we are now required to prepare group accounts. An unaudited consolidated balance sheet forms part of this report. There is no profit or loss in respect of the subsidiaries which should be included in the group statements. The loss for the six months has increased over the equivalent period in the previous year mainly due to legal fees in respect of the acquisition of the two new subsidiaries and the purchase of the Parys Mountain property. In other respects there are no significant changes to the comparable period last year.

I am very pleased to announce two appointments to the company's board. Malcolm Burne, a company director with many years of experience in the financing and operation of mineral companies internationally, is joining the board as a non-executive director based in London. Ian Cuthbertson who has served as company secretary and been a valuable member of management since 1988, will become finance director.

The new phase of work at Parys Mountain marks the beginning of the re-emergence of Anglesey Mining as an active mining company. The recommencement of drilling heralds the first significant site development work since 1992 when, following completion of a positive feasibility study site operations were suspended primarily because of market conditions. The Parys Mountain property is the only known undeveloped polymetallic mineral deposit in the United Kingdom and contains an important geological resource of 6. 5 million tonnes at a combined average grade of over 10% zinc, copper and lead together with appreciable quantities of gold and silver.

We look forward to the coming months with enthusiasm.

On behalf of the board of directors

John F Kearney

Chairman 21 December 1997