Notes to the Accounts

1 Principal Accounting Policies

The accounts have been prepared 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.

Basis of accounting

The financial statements are prepared in accordance with the historical cost convention and 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.

As this is the first year of consolidation the comparative balance sheet and profit and loss account are in respect of the parent company only.

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 permanent diminution 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.

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 a permanent and significant decline 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

				1998		1997
	This is stated after charging/(crediting):
		Remuneration of the auditors (including expenses) : -
			Audit	6,250		3,500
			Non audit	-		7,100
		(Gain) on foreign exchange		-		(1,280)
		Depreciation		300		-
	Included in the amount capitalised is:
		Depreciation of owned fixed assets		588		1,167

All activities relate to the group’s principal activity which is the development of
the Parys Mountain Property. Further analysis is not therefore considered necessary.

3 Interest receivable and payable

	Interest payable
		Interest to Juno on loans	8,382		5,116
		Interest on bank overdraft	45		8
			8,427		5,124
	Interest receivable
		On bank and other deposits	9,427		3,718

4 Directors and Employees

The average monthly number of persons employed by the group (including directors)
during the year was:

	1998		1997
Technical	1		-
Administrative	2		5
Total	3		5

Non executive directors were counted in these numbers in 1997 but not in 1998.

The remuneration and associated costs of employees and directors were:

	1998			1997
Wages and salaries	34,791		67,209
Social security costs	3,353		2,653
Other pension costs	930		930
	39,074		70,792

Directors' aggregate emoluments (included above) were:

		1998		1997
		£		£
	Fees	-		-
	Other	7,777		20,000
		7,777		20,000

The group contributes to a defined contribution pension in respect of a director. These contributions are included in expenses in the year in which they arise and for this year amounted to £930 (1997 £930) of which the sum of £136 (1997 £136) was outstanding at the balance sheet date.

Most of the group’s technical activities are carried out using consultants. Details of directors’ share options are given in the directors’ report on page 14. 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 million at 31 March 1998 subject to agreement with the Inland Revenue.

6 Loss per ordinary share

		1998		1997
Loss per share - basic		(0.1) pence		(0.1) pence

The calculation of earnings per share on the net basis is based on the loss on ordinary activities after taxation of £102,451 (1997 loss £98,446) and on 106,407,694 ordinary shares (1997 64,937,681) being the weighted average number of ordinary shares in issue and ranking for dividend during the year.

7 Intangible fixed assets

	Parys Mountain	Dolaucothi	Group	Company
	£	£	£	£
At 1 April 1997	11,148,826	-	11,148,826	11,148,826
Additions - on acquisition	100,000	166,885	266,885	-
Additions - own expenditure	314,658	-	314,658	314,658
Transfer of development expenditure from a subsidiary	-	-	-	100,000
At 31 March 1998	11,563,484	166,885	11,730,369	11,563,484

The development expenditure shown above in respect of Parys Mountain is 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 the 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. In the directors’ opinion these circumstances justify their decision to defer the costs and not to treat them as a realised revenue loss. Operation of the mine is dependent on finance being available to fund mine development and mill construction (see note 1).

Intangible assets at Dolaucothi are shown at the value attributed to them by the directors of Anglo Canadian Exploration (Ace) Limited. This value is significantly less than original cost to Ace.

8 Tangible fixed assets

	Freehold	Plant &	Office	Vehicles	Total
	land and	Equipment	Equipment
Group & Company	property
COST	£	£	£	£	£
At 1 April 1997	65,102	52,719	16,547	6,100	140,468
Additions	120,000	-	349	1,200	121,549
Disposals	-	-	(4,441)	-	(4,441)
At 31 March 1998	185,102	52,719	12,455	7,300	257,576
DEPRECIATION
At 1 April 1997	-	52,083	15,748	6,099	73,930
Charge for the year	-	428	160	300	888
Disposals	-	-	(3,732)	-	(3,732)
At 31 March 1998	-	52,511	12,176	6,399	71,086
NET BOOK VALUE 1998	185,102	208	279	901	186,490
NET BOOK VALUE 1997	65,102	636	799	1	66,538

9. Financial fixed assets

1998 1997

Company

At cost:                                 1998              1997

Shares in subsidiaries

Opening                                      -                -

Acquired in the year          100,001              -

Closing                              100,001              -

The subsidiaries of the group at 31 March 1998 are as follows :

Name of company	Registered office and country of incorporation	Percentage owned	Principal activity at 31 March 1998
Anglo Canadian Exploration (Ace) Limited	Parys Mountain, Amlwch, Anglesey, UK	100%	Exploration of the Dolaucothi gold property
Parys Mountain Mines Limited	Suite 4220, Bay & Wellington Tower, 181 Bay Street, Toronto, Canada	100%	Dormant
Parys Mountain Mines (UK) Limited	Parys Mountain, Amlwch, Anglesey, UK	100%	Dormant

 

10 Debtors

 

11 Creditors

12 Share capital

	Equity Interests		Non Equity Interests		Total
	Ordinary shares		Deferred shares
	Nominal value £	Number	Nominal value £	Number	Nominal value £
Authorised capital
At 1 April 97 & 31 March 98 9981998	6,550,000	131,000,000	1,080,000	27,000,000	7,630,000
Issued and fully paid
At 1 April 1997	4,952,193	99,043,858	861,178	21,529,451	5,813,371
Issue to discharge a liability (a)	15,000	300,000	-	-	15,000
Acquisition of PMM Ltd (b)	100,000	2,000,000	-	-	100,000
Acquisition of Ace Ltd (c)	100,000	2,000,000	-	-	100,000
Placing for cash (d)	490,000	9,800,000	-	-	490,000
At 31 March 1998	5,657,193	113,114,858	861,178	21,529,451	6,518,371

(a) in satisfaction of rentals due in respect of the Parys Mountain property at 5 pence per share.

(b) part of the consideration in respect of the acquisition of Parys Mountain Mines Limited and its subsidiary Parys Mountain Mines (UK) Limited at 5 pence per share.

(c) shares issued at 5 pence per share to discharge indebtedness to QSR Limited a former parent of Anglo Canadian Exploration (Ace) Limited at the time of acquisition of that company.

(d) in respect of a placing made to Strategic Lines Asset Management Limited in August 1997 at 5 pence per share - market price on this day 2.5 pence

Since the year end 1,500,000 shares have been issued to Intermine Limited arising from the settlement of litigation.

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 :

Scheme	Number	Nominal Value £	Exercisable from	Exercisable until
Executive approved	1,000,000	50,000	30 November 95	30 November 2002
Unapproved	384,000	19,200	30 November 95	30 November 1999
Executive approved	200,000	10,000	23 October 96	22 October 2006
Unapproved	2,476,000	123,800	23 October 96	22 October 2003
Unapproved	500,000	25,000	22 December 97	22 October 2003
Special	1,000,000	50,000	25 April 97	22 October 2003
Total	5,560,000	278,000

 

13 Share premium

Group and Company

	1998	1997
	£	£
At 1 April 1997	5,743,056	5,792,731
Share issue expenses charged to share premium	(4,710)	(49,675)
At 31 March 1998	5,738,346	5,743,056

14 Reconciliation of movements in shareholders' funds

	1998	1997
	£	£
Opening shareholders' funds	11,240,871	8,335,605
Loss for the year	(97,551)	(98,446)
Share issues in year	705,000	3,053,387
Share issue expenses in year	(4,710)	(49,675)
Closing shareholders' funds	11,843,610	11,240,871

 

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

	1998	1997
	£	£
Operating loss	(98,551)	(97,040)
Increase/(decrease) in creditors	77,414	(19,287)
(Increase) in debtors	(391)	(408)
Bonus charged to profit and loss account, paid in shares	-	40,000
Depreciation charge	300	-
Profit on disposal of fixed assets	(20)	-
Net cash (outflow) from
operating activities	(21,248)	(76,735)

 

16 Reconciliation of net cash flow to movement in net debt

		1998			1997
	£	£		£	£
Increase in cash in the period	72,393			53,976
Cash (inflow) from increase in debt	-			(260,000)
Change in net debt resulting from cash flows		72,393			(206,024)
Other non cash items:
Capitalisation of debt to equity		-			2,679,905
Liabilities reclassified as debt		-			-
Movement in net debt in the period		72,393			2,473,881
Net debt at 1 April 97		54,033			(2,419,848)
Net funds at 31 March 98		126,426			54,033

 

17 Analysis of net debt

	At 1 April 1997	Cash flow	Other non cash changes	Exchange movement	At 31 March 1998
Cash at bank	54,033	72,393	-	-	126,426
	54,033	72,393	-	-	126,426

 

18 Loss attributable to Anglesey Mining plc

The loss after taxation in the parent company amounted to £97,551.

A separate profit and loss account for Anglesey Mining plc (the company) has not been prepared because the conditions laid down in Section 3(2) of the Companies (Amendment) Act, 1986 have been complied with.

19 Material non cash transactions

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

20 Acquisition of subsidiaries

On 27 August 1997 the company paid £1 to acquire the share capital of Anglo Canadian Exploration (Ace) Limited from an associate company and issued 2,000,000 new ordinary shares to discharge a liability of Ace to a former parent. On the same date the company issued 2,000,000 new ordinary shares to acquire Parys Mountain Mines Limited.

Details of these acquisitions, which are accounted for by the acquisition method, are as follows:

	Book value at acquisition	Fair value adjustment	Fair value to Group
	£	£	£
Intangible assets	166,885	-	166,885
Current assets	100,000	-	100,000
Creditors	(166,884)	-	(166,884)
Net assets acquired			100,001
Goodwill			-
			100,001
Satisfied by:
Non - cash items:
Issue of ordinary shares at a market price of 5p per share			100,000
Cash items:
Cash paid			1
			100,001

The loss of the companies acquired from their acquisition on 27 August 1997 to
31 March 1998 is £nil.

21 Commitments

There is no capital expenditure contracted which is not provided for in these accounts
(1997 - nil).

22 Contingent liabilities

As described in note 25 a court action which had been taken against the company and which was outstanding at 31 March 1998 was settled in accordance with an agreement dated 20 May 1998. There are no other contingent liabilities.

23 Related party transactions and ultimate parent company

Juno Limited ("Juno") which is registered in Bermuda is the ultimate parent company. The company has a controlling shareholder agreement with Juno dated September 1996, a working capital agreement with Juno of the same date and a further working capital agreement of June 1998. Apart from the working capital advances and the acquisition of Anglo Canadian Exploration (Ace) Limited described elsewhere in this report there were no transactions between the company and Juno and 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 Irish Marine Oil plc (and certain of its subsidiaries) in which Juno holds an interest of approximately 30%.

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 company 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 (see note 25 on post balance sheet events) the company makes payments of Can$50,000 (c.£22,000) 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 2002and otherwise terminates in 2011. Certain financial obligations relating to the lease have been guaranteed by the company.

25 Post balance sheet events

Litigation

On 28 May 1998 the company reached a comprehensive settlement with Intermine Limited, a private corporation incorporated in Ontario, Canada, which had filed a claim in the Ontario courts against the company. The claim arose under an agreement entered into in 1984 by which Intermine was entitled, together with Parys Mountain Mines Limited, to a royalty of 15% of net profits on production from the Parys Mountain mine and Anglesey had the right to purchase one half of that royalty. The company acquired Parys Mountain Mines Limited in August 1997. Under the settlement agreement, the company acquired from Intermine and Parys Mountain Mines Limited, their rights and claims to the old 15% royalty and issued to Intermine 1.5 million new ordinary shares.

Under a further new agreement Intermine will be entitled to a royalty of 4% of net profits from the operation of the Parys Mountain mine. Anglesey will have the option of buying out this royalty, initially for a price of Can. $1 million, increasing to Can.$2 million after five years or, if purchased after Anglesey has committed to put the mine into production, for the net present value of the royalty. Unless the royalty is bought out, Anglesey will make annual payments to Intermine of Can.$50,000 per annum (approximately £22,000) until the mine is in production.

New financing agreement

In June 1998 the company concluded a new financing agreement with Juno Limited, the company’s major shareholder which holds 50% of the company’s share capital. Under this agreement, which replaces a previous working capital agreement signed in September 1996, Juno will provide up to an additional £195,000 for the company’s continuing programmes at Parys Mountain. In addition existing indebtedness of £150,000 will be carried forward as part of the new facility.

The loans of up to £345,000 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.