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Anglesey Mining plc: THE INVESTMENT CASE

Anglesey Mining moving ahead nicely at Parys Mountain

The latest economic study at Parys Mountain has delivered some encouraging numbers against a backdrop of rising base metals prices
copper tubes
INVESTMENT OVERVIEW: AYM The Big Picture
There is are significant copper resources in the ground at Parys Mountain

Anglesey Mining plc (LON:AYM) has been listed on the main board of the London Stock Exchange for longer than any of its comparable peer group, on the strength of an asset that’s been around for more than two thousand years.

In recent times the company’s Parys Mountain copper-lead-zinc project on Anglesey hasn’t been mined as metals prices haven’t quite been able to support an economic case for a restart, but a continuing focus on refining the resource and getting the envisaged costs down mean that there is now a good chance metal will come out of Parys before too long.

READ: Anglesey studies now modelling reduced costs and increased output at Parys Mountain

In the meantime, Anglesey has been active in the market in acquiring stakes in other projects overseas, including a 6% stake in the Grangesberg iron project in Sweden and the Labrador Iron Mines project in Canada

Parys Mountain economic study demonstrates viability

Economic modelling by Micon has shown that Parys Mountain could be mined at the rate of 1,000 tonnes per day to produce an average annual output of 14,000 tonnes of zinc concentrate grading 57% zinc, along with 7,200 tonnes of lead concentrate at 52% and 4,000 tonnes of copper concentrate at 25%.

The mine life would be eight years, based around the existing indicated resource, and the overall net smelter return of that production would likely to amount to more than US$270 mln at the forecast metals prices used in Micon’s modelling.

If higher metals prices are envisaged the internal rate of return for the mine could run as high as 33%.

What’s more, the project has planning permission so once the financing is in place the path to production looks pretty clear.

Chief executive upbeat about prospects

“We are very pleased with the results of the scoping study which demonstrate a viable mine development at Parys Mountain and a healthy financial internal rate of return,” says chief executive Bill Hooley.

“The base case economic model at 1,000 tonnes per day indicates a robust project at consensus forecasts for the long-term prices of zinc and copper. This is the first detailed economic study of the Parys Mountain project for a number of years and, based on the current availability of reconditioned process plant, the estimated pre-production capital cost for the project is at a level that could be financeable.”

Metal price environment increasingly favourable

The global economy continues in growth mode in spite of ongoing political uncertainty, and base metals prices have recently hit four-year highs. This means that there’s likely to be increasing appetite in markets to stump up the US$53 mln that Micon estimates will be required to put Parys into production.

Not only do the newly improved prices make for better-looking financial models, but they also render it more likely that the 4 mln tonne inferred resource at Parys could be brought into the picture.

Iron ore portfolio coming to life too

The iron ore price has been in the doldrums in recent years, but is now enjoying something of a renaissance.

That is likely to mean that Anglesey’s 6% interest in Grangesberg Iron in Sweden and its 11.9% of Labrador Iron Mines assume a greater significance, although Labrador Iron is currently going through the final stages of a financial reconstruction.

 

 

 

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