Anglesey Mining moving forward on several fronts as metal prices rally

2021-04-08 13:59:00
Labrador has published a PEA for its Houston deposit
Parys has good copper and zinc content
Significant potential at Parys Mountain copper-zinc project Joint venture in place Labrador Iron restarts exploration


What it owns

The Parys Mountain copper-zinc asset in Wales

A 12% stake in Labrador Iron, which has assets in Canada

The Grangesburg iron ore asset in Sweden

What's the plan?

At Parys Mountain, The recently established collaboration between QME Group of Navan and Anglesey Mining plc (LON:AYM) already looks set to pay off handsomely for both parties.

As it stands, Parys Mountain is known to contain 2.1mln tonnes of ore in the indicated category, grading 0.58% copper, 2.18% lead, 4.11% zinc, 46 grams per tonne silver, with a little bit of gold thrown in.

The inferred portion is exponentially larger however, ringing in at 4.1mln tonnes at 1.46% copper, 1.2% lead, 2.4% zinc, with silver and gold credits too.

Note the higher copper grade in the inferred section, which is only partially offset by the lower lead and zinc grades, albeit that the price assumptions used then are a little bit out of date.

But even without the better copper grade, the inclusion of some or all of the inferred material into an updated economic model is clearly going to have a positive impact.

Under the terms of the deal between QME and Anglesey, QME will carry out a detailed review of Parys Mountain with a view to developing the optimum mining plan. In return for undertaking this work, QME will then receive rights over development contracts as well as a 30% direct interest in the mine once it has reached the point of first production.

So, Anglesey is handing no cash over to QME at any stage, and will not be diluted at the company level either.

A PEA published in January indicated that for a spend of just over US$70mln, the study shows that Parys would deliver net smelter revenues of US$478mln over a 12-year life, generating operating cash flow of US$226mln, and an internal rate of return of 19.6% before tax.

For a lower spend of just over US$57mln, the project looks likely to generate an operating cash flow of US$219mln and, across a mooted 11-year life, shows an internal rate of return of 26.4%.

However, using a higher capital spend of US$99.6mln, Parys looks likely to generate more than US$1bn in net smelter revenues over a 12-year life, with operating cashflows ringing in at just over US$511mln. The IRR on that model works out at 26%-flat.

What's the latest?

In March, Anglesey announced that its investee Labrador Iron Mines Holdings Limited has released the details of a Preliminary Economic Assessment (PEA) on the Houston Project.

Anglesey has a 12% stake in Labrador Iron Mines, which owns 52% of the iron ore mine, located in Canada.

The PEA suggests a production time frame of 12 years after an 18-month construction period. 

The firm said iron ore production would amount to 2mln tonnes per annum of 62% iron lump and sinter direct shipping ore.

Initial capital cost including contingency is forecast at US$65mln, which Anglesey said is relatively low.

From the chief executive

Bill Hooley, Chief Executive stated about Parys: “We believe it’s now very much a project that should be developed.

“But what’s the best way to get there? We’ve got to look at the right business model.”