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Interim Management Statement - LIM results and update
Publié le 19 août 2011
Anglesey Mining plc LSE:AYM
19 August 2011
LIM first quarter results and operational update
Interim Management Statement
Anglesey's major activity is its 33% share of Toronto-listed Labrador Iron
Mines Holdings Limited (TSX:LIM) which holds twenty direct shipping iron ore
deposits in western Labrador and north-eastern Quebec and is currently
mining the first of these to be developed at the James Mine.
Anglesey also has 100% of the Parys Mountain zinc-copper-lead deposit in
North Wales, UK with a total historical resource in excess of 7 million
tonnes at over 9% combined copper, lead and zinc.
Labrador
LIM reports that it has filed its unaudited financial statements and MD&A
for the first quarter of fiscal year ending March 31, 2012. The documents
are available under LIM�s profile at www.sedar.com and on
www.labradorironmines.ca.
Ore mining at the James Mine commenced in June 2011 and by the end of July a
total of 305,000 tonnes of ore had been mined and trucked to the Silver
Yards area for processing and transport to Port. LIM is very encouraged by
the grade of James ore which has been in excess of expectations � of the
total production to the end of July, some 170,000 tonnes of direct railable
ore at an average grade of around 65% iron had been mined and is being sent
directly to Sept-Iles without further processing.
The first ore train loaded with direct railing iron ore departed Silver
Yards for the Port of Sept-Iles on June 29, 2011. To the end of July, a
total of 50,000 tonnes had been railed to Sept-Iles and is stockpiled
awaiting shipment.
The Silver Yards processing plant is now operating satisfactorily, following
commissioning and start-up in June 2011, at the planned initial processing
rate of 6,000 tonnes per day, which will be incrementally increased to
10,000 tonnes per day. By the end of July, about 100,000 tonnes of material
had been fed to the plant yielding approximately 50,000 tonnes of high grade
lump and sinter fine product.
In August 2011, LIM signed an agreement with the Iron Ore Company of Canada
(IOC) for the sale and shipping of all of LIM�s 2011 iron ore production.
LIM believes that the benefits associated with this arrangement, together
with the benefits of the utilization of larger Cape Size Ocean going ships,
will ensure that the maximum possible tonnage of LIM�s 2011 iron ore
production will be efficiently shipped and sold during the remainder of
calendar 2011.
Iron ore will continue to be delivered to the port by train in increasing
volumes, and inventory stockpiles will be built to sufficient size to enable
shipping to the ultimate customers. It is expected that the first shipment
of iron ore from the James Mine, likely to China, will occur in late August
or early September.
For calendar 2011, it is estimated that a total of about 2.2 million tonnes
of ore will be mined from the James Mine and that approximately 750,000 to
1,000,000 tonnes of saleable product will be railed to the Port of Sept-Iles
before the end of the season. Actual tonnes railed and sold will depend on
the continued build up of rail shipments and the onset of winter
conditions. All of this product will be sold to IOC. In addition to these
sales, it is expected that approximately 1,200,000 tonnes of iron ore will
be held in inventory at Silver Yards and available for treatment and
shipping in calendar 2012.
Silver Yards Operations
The Silver Yards processing plant continues to ramp up. This has been
somewhat slower than planned due primarily to a larger percentage of fine
material than originally forecast. Much of this ultra-fine material is
currently passing through the secondary screens resulting in a lower than
anticipated level of iron recovery. A second phase expansion is currently
underway at the Silver Yards plant. When this next phase of expansion,
designed specifically for fine material, is commissioned in early September
it is expected that the throughput and recovery will improve.
Throughput to the plant for the remainder of calendar 2011 will be dependent
upon the continuation of the ramp up, on the scheduled commissioning of the
Phase II equipment, and upon the onset of winter when wet processing will no
longer be possible. It is now forecast that a total of about 800,000 tonnes
of iron ore will be fed to the plant before the onset of winter, which is
expected to yield around 550,000 tonnes of high grade saleable products.
Planning is now well advanced for the Phase III plant extension at Silver
Yards to increase production. This expansion is expected to be in place by
mid 2012, treating between 2.6 and 2.8 million tonnes of ore including
material from stockpiles yielding around 2.0 million tonnes of product in
calendar 2012.
Rail to Port
Iron ore from the James Mine is currently transported by rail from Silver
Yards, via the Tshiuetin Rail Transportation Inc. (TSH) railway and the
Quebec North Shore and Labrador (QNS&L) railway, to the Port of Sept-Iles
where the ore is unloaded and stockpiled adjacent to LIM�s Point-aux-Basques
dock facilities leased from the Port of Sept-Iles.
The buildup in rail shipments is slower than planned. LIM has purchased a
fleet of 400 previously used railcars of which about half have been
delivered to Sept-Iles where modifications to meet local operating
conditions are being carried out. This process has taken longer than
anticipated. LIM continues to move rail cars into the Sept-Iles to
Schefferville rail system. An additional 65 cars will be brought into the
system before the middle of September. LIM�s locomotives have now been
increased to four and this will permit the introduction of a second train by
the end of August. With the introduction of a second train and more
railcars, the tonnage being transported to the Port of Sept-Iles should
increase significantly.
During 2012, a third train will be introduced to enable approximately 2.5
million tonnes of iron ore, including both plant product and direct railing
ore, to be railed to Sept-Iles. TSH has commenced upgrade work on its
Menihek rail line following a cash investment by both LIM and Tata Steel
Canada and this work will need to be continued to ensure that the tonnages
planned for 2012 can be transported. This ongoing TSH rail upgrade will be
subject to some continuing cash investment by the mine operating companies
and potentially by governments.
Iron Ore Sale Agreement with IOC
LIM has entered into an agreement with the Iron Ore Company of Canada
(�IOC�), Canada�s largest iron ore producer, for the sale and shipping of
all of LIM�s calendar 2011 iron ore production. Under the confidential sales
contract with IOC, the iron ore will be delivered to Asian markets and
resold by IOC�s marketing organization on the spot market. The sale price
for iron ore sold to IOC will be based on the actual realized prices to
Chinese customers, less an allocation for handling, loading, shipping and
sales costs.
IOC owns 100% of the QNS&L railway and, at the Port of Sept-Iles, owns
established storage and ore handling facilities, including its ship dock
capable of taking ocean going vessels up to 240,000 (dwt) tonnes. LIM�s
agreement with IOC will enable utilization of Cape Size Ocean going ships,
where current freight rates are lower than for the alternative but smaller
Panamax vessels, for the shipment of LIM�s iron ore.
2011 Exploration Program
LIM commenced its largest ever exploration program on its Schefferville
Projects in early June 2011 aimed at confirming and extending the resources
at its Stage 1 and 2 deposits. A total of 14,500 metres of reverse
circulation drilling will be completed before the onset of winter. Two rigs
are now in operation with a third rig to be added shortly. By the end of
July about 2,800 metres had been drilled on a number of deposits with the
Houston deposit being the main focus. Ongoing exploration support programs,
including trenching and air-borne geophysics, will also be completed during
the current season.
Stage 2 Houston Deposit and Redmond Plant
LIM is evaluating the development of a new separate Stage 2 operation for
the Houston deposit including a dedicated processing plant to be located at
Redmond which, subject to environmental assessment, permitting and detailed
engineering, could be brought into production commencing in 2013 at an
eventual rate of 2.5 to 3 million tonnes per year. This would be in addition
to the existing processing plant at Silver Yards which, with planned
enhancements and additions, will have a similar design capacity.
Results of Operations
For the three months ended June 30, 2011, LIM reported a loss of $4.7
million, or $0.09 per share, compared to a loss of $0.9 million, or $0.02
per share, during the first quarter of the prior year. The variance in the
results of operations relates almost entirely to start-up expenses of
approximately $3.5 million incurred in the quarter relating to
non-refundable transportation expenses incurred prior to establishing full
scale transportation of iron ore to the port.
During the quarter, LIM made cash expenditures of approximately $21.2
million in property, plant and equipment, compared to approximately $4.9
million incurred in the first quarter of the prior year.
The average life of mine operating costs for the James and Redmond deposits
were estimated to be in the range of approximately $50 per tonne. The
calendar year 2011 is considered to be a short start-up and testing year and
initial unit operating costs for the fiscal year ending March 31, 2012 will
be higher than the anticipated life of mine average.
At June 30, 2011 LIM had $87.9 million in unrestricted and cash equivalents
and $7.5 million in restricted cash. LIM is in a strong financial position
that will allow it to fund its working capital requirements for 2011
production ramp-up and to fund its exploration and expansion plans.
About Labrador Iron Mines Holdings Limited (LIM)
LIM�s Schefferville Projects involve the development of twenty direct
shipping iron ore deposits in western Labrador and north-eastern Quebec near
Schefferville, Quebec. The properties are part of the historic Schefferville
area iron ore district where mining of adjacent deposits was previously
carried out by the Iron Ore Company of Canada from 1954 to 1982.
Labrador Iron Mines contemplates mining in stages. The first phase of Stage
1 comprises the James Mine and the Silver Yard processing plant which is
connected by a rail spur to the main Schefferville to Sept-Iles railway.
Full scale mining and processing operations commenced in June 2011 and the
first train departed LIM�s Silver Yards for Sept-Iles on June 29, 2011. To
the end of July, about 50,000 tonnes of direct railing iron ore had been
delivered to the Port of Sept-Iles where it is stockpiled awaiting shipment.
For further information, please view www.labradorironmines.ca.
Parys Mountain
Work on the detailed review of the resources and the development options for
Parys Mountain referred to in the recent annual report is now getting
underway. Proposals for various aspects of the work have been received from
consultants and a compilation of geological data and environmental reports
is being prepared. Work is also proceeding on the identification of drill
targets.
The review will include reappraisal of the previously proposed White Rock
mine which would target near surface resources as a first stage development
option, which would lead to the subsequent development of the deeper lying
resources.
About Anglesey Mining plc
Anglesey Mining with its LSE main board listing is primarily focused on its
33% interest in Labrador Iron Mines (TSX:LIM). In addition to any new
projects that may be brought forward the company owns 100% of Parys Mountain
in North Wales with an historical resource in excess of 7 million tonnes at
over 9% combined copper, lead and zinc.
For further information, please contact:
Bill Hooley, Chief Executive +44 (0) 1492 541981;
Ian Cuthbertson, Finance Director +44 (0) 1248 361333;
Samantha Harrison / Shaun Whyte, Ambrian Partners Limited +44 (0) 2076
344700;
Emily Fenton / Jos Simson, Tavistock Communications +44 (0) 20 7920 3155 /
+44 (0) 7788 554035.
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