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Anglesey Mining - LIM Q3 results and outlook for first year of production
Anglesey Mining plc               LSE:AYM
Â
15 February 2011
_ _LIM Reports Third Quarter Results  and Outlook for First Year of
Production
Anglesey Miningâs 41% owned associate Labrador Iron Mines Holdings Limited
(TSX: LIM) is pleased to report that it has filed its unaudited financial
statements and MD&A for the third quarter and nine months ended December 31,
2010.  The documents are available under the Companyâs profile at
www.sedar.com and on LIMâs website at [1]www.labradorironmines.ca.
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During the quarter and nine months ended December 31, 2010, LIM invested
C$5,040,338 and C$8,334,887 respectively in its mineral property interests,
compared to C$1,607,373 and C$5,911,071 respectively in the prior year, the
increase relating to significant mine development activities in anticipation
of the commencement of production in 2011. For the same periods, LIM also
saw increased investment in property, plant and equipment of C$5,022,643 and
C$15,227,374, compared to C$2,598,817 and C$4,209,769 in the prior year, due
to the significant investment in processing plant equipment, rail spur line
and related construction costs.
LIM reported a loss of C$995,200 or C$0.02 per share in the quarter ended
December 31, 2010, compared to net income of C$2,356,601 or earnings of
C$0.06 per share for the same quarter in the prior year in which an income
tax recovery had been recognized.
At December 31, 2010, LIM had cash and cash equivalents of C$27,949,904 and
no debt. LIM had 43,927,514 common shares outstanding at December 31,
2010. Subsequent to the end of the quarter, LIM granted additional stock
options on 132,500 shares to new employees exercisable at C$11.65 per share
for a period of five years vesting over a two-year period.
Project Update and Outlook
Mining Activities Underway
Waste stripping at the James North deposit commenced in January 2011 and by
the second week of February about 300,000 tonnes of material had been
moved. Most of the James North pit area has now been stripped of
overburden and the orebody is exposed along the first production bench.
Development of the first mining bench in the north end of the James pit has
begun to prepare a mining face in the higher grade blue ore, which will be
the first ore to be mined, and some of which may be directly shipped with
only minimal crushing and without further processing. The waste rock has
proved to be free digging and mine development is currently ahead of
schedule.
The ore haul road from the James Mine to the Silver Yards processing site
has been completed and is operational. The various ore and waste rock
stockpile areas have been prepared, as have the temporary and permanent ore
storage pads.  Ore mined from the initial development, together with the
stockpiles of ore from previous bulk sampling programs, will be delivered to
the plant ahead of the primary crusher ready for processing.
The first James mine settling pond has been constructed to collect water
pumped from the pit.
Two additional dewatering wells will be drilled to
supplement the wells drilled in 2009.
Pump and piping installation and
dewatering of the James pit is to commence in the spring of 2011.
Site
clearing and grubbing at the James South pit is also being completed during
the winter months.
Full scale mining operations are planned to commence in April 2011, and will
continue for eight months until November, at an anticipated initial mining
rate starting at 6,000 tonnes of ore per day, increasing to over 10,000
tonnes of ore per day, using conventional open-pit mining methods and
eventually employing standard drilling and blasting operations as required.
Plant Commissioning on track for April 2011
The beneficiation plant and associated facilities were structurally complete
at the end of 2010. The remaining fabrication, piping, electrical and
other mechanical installation will be completed in the next few weeks.Â
Conveyor belts will then be run in readiness for commissioning. Once
installation of the plant is completed, dry run stockpiled ore will be fed
to the plant to allow commissioning to take place, which, subject to weather
conditions, is scheduled to begin in April 2011.
The accommodation camp at Bean Lake consisting of 72 units has been
completed and will be ready for occupation by the end of February.
Plant Upgrades and Expansion
The Silver Yards plant as currently installed has a design capacity to
process 10,000 tonnes per day and the equipment to crush, wash and screen to
recover about 65% of the contained iron in the blue ore, which will produce
two products, the first a coarse lump ore and the second a sinter feed. It
is expected that initially the lump ore will represent about one third of
the product.
Once the basic processing plant is commissioned, a series of plant upgrades
and expansions will be undertaken.
LIM plans to install a fines recovery
system during 2011. This will include installation of a hydrosizer and pan
filter.
This system will be installed during the summer months and is
expected to be operational by September 2011. The installation of this
system is expected to increase overall recoveries to about 75% and the plant
output by approximately 13% by the production of a third product â sinter
extra fines, which can be sold separately or blended with the coarse sinter
fines product.
As well an additional process to beneficiate the lower grade and -100 µm
ore is being considered for installation in the fall of 2011 towards
commissioning in the spring of 2012 to produce a fourth ultra-fine product
which would be sold as pellet feed. Installation of that additional
equipment would improve the grade of the lump and coarse sinter feed
products, while at the same time improving recoveries to over 80% and
increasing the capacity of the plant by approximately 6%.
The ore which contains the higher levels of silica will not be processed in
the first year of operations but will be stockpiled for treatment later when
the plant is expanded with the addition of a further processing line. Â
Subject to a planned metallurgical test program, this is expected to have an
approximate recovery of 67% of high silica ore and will increase the total
Silver Yards plant treatment capacity by an additional 1 million tonnes per
year to over 3 million tonnes per year. This expansion line is expected to
be in operation for the 2012 operating season.
2010 Exploration Program
The 2010 exploration program completed 4,500 metres of drilling and 1,400
metres of trenching at the Denault, Ruth 8, and Houston properties.
Exploration drilling at Houston during 2010 has significantly increased the
size of the resources to 19.49 million tonnes of measured and indicated
resources which represents a significant increase over previous
estimates.  The Houston deposits remain open along strike particularly to
the southeast and further drilling is planned on Houston 3 during 2011 - see
press release of 11 February 2011.
As a result of this significant increase, the Houston deposits are now of
sufficient tonnage that merits evaluation of a stand-alone operation. LIM
intends to evaluate the development of a new separate South Central Zone, as
Stage 2 of its Schefferville Area Projects, possibly with its own dedicated
processing plant which, subject to environmental assessment, permitting
and detailed engineering, could be brought into production in 2013 at aÂ
rate of 2 to 3 million tonnes of iron ore per year.
Drilling at Denault has indicated some extensions to that deposit which will
be incorporated into revised resource estimates for the Denault deposit when
the results have been analysed.
During the 2010 exploration season an airborne gravity and magnetic survey
was flown over four claim blocks of LIMâs Schefferville area properties
centred on the Howse, Houston/Redmond, Astray and Sawyer Lake areas. High
gravity anomalies associated with lower magnetism are considered prospective
for DSO deposits. In total 1895.7 line kms was flown for the gravity and
magnetic surveys. A total of 473.6 line kms were surveyed over the Howse
area, 851.8 kms over Houston/Redmond areas, 354.6 kms over Astray and 215.7
line kms over the Sawyer Lake area.
An interim interpretation and evaluation of the processed and plotted
airborne gravity gradiometer and magnetic data has confirmed the utility of
the survey in detecting and outlining iron deposits and identified a number
of new drill targets with the potential to expand currently known
resources. Several of the new targets identified will be tested in 2011
using reverse circulation or diamond drilling.
Rail Transportation
LIM is in advanced negotiations with each of the railroad companies that
will transport LIMâs ore to port with regard to the transportation of its
iron ore products in 2011 and future years. These consist of Tshiuetin
Rail Transportation (TSH) for haulage over the 130 mile main line track
between Schefferville and Emeril Junction; the Iron Ore Company of Canadaâs
Quebec North Shore and Labrador Railroad (âQNS&Lâ) for the remaining
approximately 225 miles to SeptâIles; and Wabush Mines-owned Arnaud Railway
(Chemin de fer Arnaud (CFA)) for the approximately 21 miles around the
Sept-Iles bay to the terminal at Pointe-Noire. To date LIM has not yet
concluded agreements with the relevant rail companies for the transportation
and handling of its planned production of iron ore.
LIM plans to lease rotary gondola ore cars each with a capacity of 100
tonnes with a car body suitable for a gross rail load of about 130 tonnes
(286,000 lbs). Three car sets, each consisting of 120 railcars, are
estimated to be required to transport LIMâs iron ore tonnage for the eight
month period in calendar 2011. The total LIM railcar fleet will range from
approximately 360 to 400 railcars. The total railcar cycle time from the
Silver Yards site to Pointe-Noire for the loaded movement and empty return
of a train is expected to be approximately 68 hours.
The locomotives between the Silver Yards and Emeril Junction will be shared
with TSH in a run through operation. These trains will be powered by two
SD40 locomotives equipped with Locotrol and proximity detection devices,
which locomotives will also be leased by LIM.
LIM has not yet concluded leasing agreements with the equipment leasing
companies for the leasing of railcars or locomotives.
Port â Shipping Facilities
In February 2010 LIM signed an agreement with the Sept-Iles Port Authority
for the use of the Pointe-Noire facilities at the Port to ship LIMâs iron
ore products.
LIM agreed to a base fee schedule with the Port Authority
regarding wharfage fees for iron ore loading for LIMâs shipping operations.
LIM is evaluating a number of different options for its Sept-Ãles operations
including use of the facilities of Wabush Mines or other facilities of the
Sept-Ãles Port Authority. LIM is in negotiations with Wabush Mines and
with the Sept-Iles Port Authority, and with other port operators, with
regard to transportation, storage, handling and loading of LIMâs iron ore
products at Pointe-Noire.
LIM has not yet concluded agreements with the relevant rail companies or
port operators for the transportation and handling of LIMâs planned
production of iron ore.
Marketing â iron ore markets
Marketing discussions have continued with potential customers, both in
Europe and in Asia.
Chinese consumers, in particular, are showing a growing
interest in seeking iron ore from Canada, driven by continued strong demand
and a desire to diversify from their traditional sources of supply.
LIM continues to review its options for marketing its planned iron ore
production and is evaluating the optimum route to achieve these sales, while
still maintaining maximum flexibility and independence.
In particular LIM
has had detailed discussions with a number of internationally recognized
commodity traders with specialist knowledge of the iron and steel industry
and expects to finalize marketing arrangements with one of these for the
sales of its initial 2011 ore production in the near term. To date, LIM
has not yet concluded any agreements for the sale of iron ore. It is
expected that iron ore products produced in 2011 will be sold into the spot
market on a âFOB Sept-Ilesâ basis.
As LIM nears commencement of production in the next quarter, the global iron
ore market remains very positive with recent prices for 62% Fe sinter fines
approaching US$190 per tonne CFR China. Despite efforts by the Chinese
government to slow down some aspects of growth of the Chinese economy,
demand for iron continues to grow. This demand, coupled with some
interruptions in supply from Australia and Brazil, has driven iron ore
prices to an all-time high.
The current increases in iron ore costs will inevitably lead to increases in
steel prices, which may lead to reduced levels in steel demand in subsequent
periods. In the short to medium term, demand is expected to remain strong
and prices are forecast to retract only marginally. In the longer term, as
major new production capacity comes online in Brazil and Australia, the
balance between supply and the continuing increasing demand is likely to
remain close.  The consensus of current forecasts is that iron ore supply
and demand will remain generally in balance until around 2015, with prices
only dropping 10-15% in that period, followed by a supply surplus with
prices declining somewhat thereafter.
LIM is of the opinion that iron ore
prices will remain strong for both calendar 2011 and calendar 2012.
Outlook
LIM believes it is on track to conclude the required rail transportation and
port related commercial agreements in the near term and to commence mining
and processing activities in April 2011, followed shortly thereafter by
sales into a robust iron ore market.  It is also actively working on
finalizing IBA agreements with the Innu Community of Matimekush-Lac John
(Schefferville) and with the Innu of Uashat (Sept-Iles), the two remaining
First Nations groups in which it does not already have IBA agreements.
LIM currently expects to mine in excess of 2 million tonnes of ore in 2011,
which is partially a construction/start-up year. Assuming satisfactory
plant commissioning and smooth start-up, and based on projected recoveries
(expected to start initially at about 65% and increasing to about 75% with
the installation of the fines recovery equipment), and assuming an operating
season of about 210 days, (subject to weather conditions) this is expected
to yield shipments of about 1.5 million tonnes of iron ore, prior to
seasonal shutdown of operations at the end of November 2011.
With the high level of iron ore prices currently prevailing, the progress
made to date in constructing the mine and beneficiation plant, and with mine
operations expected to commence in April 2011, the outlook for LIM is
positive. There are still a number of commercial agreements to be
concluded, including final rail and port arrangements.
Provided these
remaining agreements are resolved in a timely and satisfactory manner, LIM
can look forward to achieving commercial production around the middle of
calendar 2011.
About Labrador Iron Mines Holdings Limited (LIM)
LIMâs Schefferville Project involves 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 comprising the James and Redmond deposits, which are located in close
proximity to existing infrastructure, where construction is being completed
and mine start-up is planned to commence in April 2011.
For further information, please view LIMâs website at
www.labradorironmines.ca
About Anglesey Mining plc
Anglesey Mining with its LSE main board listing is primarily focused on its
41% 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
Emily Fenton / Charlie Geller,
          Tavistock Communications +44 (0) 20 7920 3155 / +44 (0)
7788 554035
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