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15.3% of Labrador Iron Mines in Canada
100% of Parys Mountain in Wales
Anglesey holds 15.3% of Toronto-listed Labrador Iron Mines Holdings Limited (TSX:LIM) which is producing high grade hematite from its James pit, one of LIM’s twenty direct shipping iron ore deposits in western Labrador and north-eastern Quebec. Production is...Read more
Anglesey Mining: LIM signs new iron ore sales deal for 2012 - UPDATEFebruary 15 2012, 1:00pm
---Adds comments from broker Ambrian and details from LIM's Q3 results---
Anglesey Mining (LON:AYM) today told investors that a new marketing deal has been signed for the Schefferville iron ore production.
The company’s 33 per cent owned associate Labrador Iron Mines (TSE:LIM) owns the mining operation.
Through the deal Rio Tinto’s Iron Ore Company of Canada (IOC) will again facilitate the sale of LIM’s iron ore into Asian markets. Around 412,000 tonnes of iron ore was sold on LIM’s behalf through a similar arrangement last year.
Under the terms of the 2011 agreement LIM received the gross price less IOC’s charges for handling, loading, shipping and sales costs.
The IOC ships LIM’s ore to Asia using its existing transport infrastructure. And through its marketing organization it sells the iron to customers in the spot market.
One advantage of the agreement, from LIM’s point of view, is that it utilises Cape Size Ocean going ships which have lower freight costs than the alternative Panamax vessels.
“This is excellent news for Anglesey and LIM, and we expect the market to view this extremely favourably,” Ambrian Partners mining analyst Duncan Hughes said in a note to clients.
“We believe Anglesey’s share price has been hampered by concerns over long-term sales contracts; this development removes a significant level of risk from the company as production is now secured for 2012.
“Pricing is confidential, but we expect the terms to be along the lines of the 2011 contract, where ore was sold by LIM at spot less a handling charge by IOC.”
Ambrian repeated a ‘buy’ recommendation and an 81p price target for Anglesey Mining shares today.
This afternoon Anglesey relayed LIM’s third quarter results to investors in London.
LIM revealed that it received iron ore sale proceeds of C$26 million from two shipments and it had invested C$30 million into the continued development of the James mine. Overall the group made a C$1.7 million loss during the three month period.
The company also confirmed that the output from the mine is still considered, in the accounts, as pre-commercial production.
“Mining will continue at the James North and James South deposits in 2012, with planned total ore mined of between 2.5 to 3.0 million tonnes, together with approximately 3.5 million tonnes of waste,” LIM said.
Anglesey says that operations in Labrador have continued to proceed satisfactorily.
LIM began producing iron ore from the James mine in June. The mine forms part of the Schefferville group of mines in northern Canada.
Currently 178,000 tonnes of iron ore is stockpiled at the port of Sept-Iles, awaiting shipping in the spring. LIM has a life-of-mine rail contract with the Quebec North Shore and Labrador railway so that the ore can be transported to the port.
Last month LIM revealed that 1.2 million tonnes of iron ore was mined and trucked to the port ahead of processing and shipping, during the period ending December 31 2011.
In total, 440,000 tonnes of direct railing ore was produced, at an average grade of 64.9 per cent iron, during the period. Of that, 340,000 tonnes were railed directly to the port of Sept-Iles without further processing.
Around 572,000 tonnes of ore was fed to the Silver Yards plant. This yielded around 232,000 tonnes of lump and sinter fine products.
The iron was sold in three separate shipments - with gross sales prices of US$176, US$121 and US$137 respectively. Each of the shipments was sold in the spot market.