Chairman’s Statement & Management Report

The period ended 30 September has been very positive for both the minerals industry in general and for Anglesey Mining in particular. Most commodity prices have been well supported over the period, particularly copper and zinc which are the key metals expected to be produced from the Parys Mountain project. Iron ore prices almost halved from their record highs.

As previously announced, we appointed Jo Battershill as Chief Executive in August. His focus is to take Anglesey forward by securing funding to ensure that both the Parys Mountain and Grängesberg assets can be advanced to the next decision points. Subsequent to the end of the period, we raised £768,000 that will be used to undertake drilling and environmental studies at Parys Mountain and to fund a Preliminary Economic Assessment on the Grängesberg iron project.

As per our comments in the Annual Report, the impact of Covid-19 on the day-to-day running of Anglesey Mining has been quite limited. We believe that encouraging developments with vaccines will lead to stability in general economic and operating conditions and the inevitable stimulus relief and infrastructure programmes will bolster demand for all metals; in particular the electrification of the economy which is likely to lead to increased demand for copper, zinc and silver.

Commodity prices

Over the period, all the metals that would be produced from the Parys Mountain project have shown ongoing support from improving levels of economic activity and some global supply outages. Some of the world’s largest mines in Peru and Chile have seen reduced production from strike action and community blockades.

As with the previous period, continuing pressure on current operating mines in some countries because of Covid has created a shortfall in supply that is dominating the base metal markets. It is our belief that this is likely to continue for some time to come. This shortfall is accompanied by increasing demand from the major infrastructure and Covid relief programmes that continue to be announced by governments across the globe. In the US alone a $1 trillion infrastructure programme was approved subsequent to the end of the period.

Of particular importance to Parys Mountain is the price of copper which will be the mainstay of the project in the long term. Copper has continued to make steady gains over the period, hitting a 10 year high of around $4.90/lb in May and trading at over $4.00 per pound at the end of September. The current price of $4.38 per pound is 56 percent higher than the price of $2.81 per pound used in the 2021 PEA. Similarly, zinc climbed to $1.36 per pound at the end of the September period and peaked at $1.73 per pound in October, comfortably above the $1.20 per pound price used in the 2021 study.

Potential revenues from a mine at Parys Mountain would also benefit from gold and silver by-products, the prices of which appear to have stabilised around the $1,750 per ounce and $23 per ounce levels respectively – these are significantly higher than the $1,459 per ounce and $16.67 per ounce used in the 2021 study. The price outlook for these metals remains supported in the face of expected worldwide deficit spending by many governments and inflation that appears to be anything but transitory.

After a very strong 12 months that saw the iron ore 62% Fe benchmark price reach a record high of around $230 per tonne in May, the recent impact of potential defaults in the Chinese property development sector, which caused unease in the Chinese economy, has seen the price retrench significantly to around $100 per tonne. The Grängesberg project in Sweden is expected to produce a premium higher grade >68% Fe product that continues to be supported by the traditional premiums to the 62% Fe benchmark price.

We expect this support for all the commodities that are of interest to Anglesey to continue as the global stimulus programmes take effect.

Parys Mountain

During October, after the period end, we awarded a drilling contract to Irish Drilling to complete an initial 9-hole programme at the Parys Mountain copper, zinc, lead, gold and silver project located on the island of Anglesey in North Wales.

This aim of the drilling programme is twofold; firstly, to infill drill the upper section of the White Rock Zone to convert the bulk of the remaining Inferred resources to the higher confidence Indicated category and secondly to collect important geotechnical and metallurgical information. This information is expected to feed into further feasibility work in 2022.

Iron Ore

Grängesberg – Sweden

Anglesey continues to manage Grängesberg Iron AB (“GIAB”) which holds the Grängesberg iron ore project in Central Sweden where an indicated and inferred resource of 148 million tonnes at 41.3% Fe was identified in 2014. Anglesey holds 19.9% of the company directly, together with a right of first refusal on a further 50% holding.

Site activities have been kept at a low level but growing support for higher-grade iron ore like the premium product that Grängesberg would produce has encouraged us to now actively seek out alternative development and corporate strategies to move the project and GIAB forward. We believe that the superior geographic location of the Grängesberg deposit and its projected premium product specification of >68% Fe could enable such alternative approaches to be beneficial for the group in the coming periods.

Anglesey has recently engaged Micon International to undertake a Preliminary Economic Assessment on the re-opening of the Grängesberg iron ore project. This follows on from the Pre-Feasibility Study completed in 2012 which demonstrated an extremely robust development option based on annual production of 5.3Mtpa of ore, producing 2.5Mtpa of >68% Fe concentrate, equating to a mine life of c.16-years.

Labrador – Canada

The group continues to hold a 12% interest in Labrador Iron Mines Holdings Limited (LIM) which has a 52% interest in extensive iron ore resources in the Schefferville area of Labrador and Quebec in Canada. In line with the pullback in iron ore, the market price of LIM shares on the OTC Markets in the United States declined significantly from 29 cents on 31 March 2021 to 11.2 US cents on 30 September 2021, resulting in a mark to market change in fair value and charge to comprehensive income during the period of £2.5 million.

LIM holds direct shipping mineral resources of approximately 55 million tonnes at an average grade of 56.8% in the Houston project. In addition, LIM holds the Elizabeth Taconite Project which has a current inferred mineral resource estimated at 620 million tonnes at an average grade of 31.8% Fe.

In March 2021 LIM announced the results of a new updated independent PEA regarding LIM’s direct shipping Houston project located approximately 20 kilometres south of its previously mined James deposit. The projected financial results from the PEA were very encouraging with an after-tax NPV8 of CAD109 million, assuming an iron ore price for 62% Fe of US$90 per tonne. The Houston PEA assessed a production rate of 2 million tonnes of 62.2% Fe per annum, with an overall mine life of 12 years. Production would be expected to be 30% lump ore and 70% sinter fines.

LIM’s Elizabeth Project represents an opportunity to develop a major new taconite operation in the Schefferville region of the Labrador Trough which would produce a high-quality saleable iron ore product. This would attract premium prices in the current iron ore market.

Operations and financial

As with previous reporting periods, we have kept our corporate and operating costs at the lowest level consistent with maintaining our assets in good order. However, in gearing up for the future, recruiting a new chief executive and reinstating directors’ salaries and fees there have been increased expenses for this period. With the increase in activity at both assets there will also be an increase in investment in the properties.

The group had no revenue for the period. The loss for the six months to 30 September 2021 was £(298,055) (2020 £(152,882)) and the expenditures on the mineral property in the period were £42,412 compared to £27,827 in the comparative period. Net current assets at 30 September 2021 were £539,077 compared to £796,920 at 31 March 2021. The drop in value of our LIM shares resulted in a charge to other comprehensive income of £2.5 million and a total comprehensive loss for the period of £2.7 million.

The recent private placing has put Anglesey in a position to fund its planned operations for the next 12-months

Outlook

We continue to be encouraged by growing investor interest and a positive commodity price outlook resulting from decarbonisation of the global economy. A further favourable factor is the shift to cleaner energy enhanced by announced global infrastructure programmes as the world recovers from the Covid-19 slowdown.

We believe that the ongoing strong fundamentals that have driven commodity prices upwards will continue for the foreseeable future and will provide solid support for our projects. Metals are essential for electrification, copper for power generation, motors, transmission and energy storage, zinc for extending the lifespan of products, and lead for energy storage.

We look forward to sharing the results of the current Parys Mountain work programmes with investors over the coming months as the drilling is completed and assays returned. We also expect to be in a position to report the results of the PEA on Grängesberg early in the New Year.

All in all, we are confident of the way forward and positive on the outlook for Anglesey Mining for the remainder of 2021 and 2022.

I would like to thank shareholders for their continued and renewed support.

John F Kearney

Chairman

11th November 2021

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Sept 21 half yearly report