Anglesey Mining (LON:AYM) is weathering the storm of difficult trading conditions across the resources sector, chairman John Kearney said in the group’s annual report.
The company will see through the rest of current downturn, he adds.
Anglesey owns a 15% stake in Toronto listed Labrador Iron Mines (TSE:LIM) as well as a mine development project in North Wales.
“All mining stocks are suffering in the current marketplace and both Labrador Iron and Anglesey Mining have been part of this severe downturn.
“We hope that as LIM demonstrates its current production capability, and with the benefit of a price protection programme in place to guard against any repeat of last year's low prices, that the market will recognise the inherent value in LIM which should be reflected in the Anglesey share price.
“There is undoubtedly pressure on commodity prices largely as a result of some reduction in the growth rate in China; however, we do not support the notion that there will be a return to the levels of the early years of this century.
“Iron ore prices have come off from their all-time highs but remain relatively strong and it is far from certain that the forecast increase in supply will actually occur since many of the previously announced large undeveloped projects are likely to find financing impossible to obtain.
“Meanwhile base metals, which have slipped from their highs, also remain firm and with limited new production coming on line or even planned, we look for significant improvement in the middle term.”
Anglesey’s strategy, Kearney says, is to weather these turbulent times, retain cash where possible and maintain its stake in LIM, which is currently worth around £7mln.
The company will then be ‘ready and able’ to move forward when metal prices and capital markets are more positive.
Meanwhile, the company also highlights that at Parys Mountain, the company’s own project, in North Wales, has very low on-going cash commitments and it remains well within the company’s financial capability.
A scoping study was underway for the project, but, due to prevailing market conditions Anglesey has decided to review and evaluate the options for moving the project forward.
Anglesey said it remains confident that zinc, copper and lead prices will improve and the project will be advanced at an appropriate time.
During the year, to March 31 2013, Anglesey reported a large loss of £31.4mln, versus £19.3mln profit in 2012, though the company highlights that both figures relate to non-cash changes from deemed disposals of its equity stake in LIM - as the Canadian firm issues new capital and dilutes Anglesey’s stake.
In the financial year Anglesey’s holding reduced from 26%.
Financially, Anglesey ended the period with cash of £670,345. It spent £398,428 on operating and administrative costs.
“We are in a period in which patience will be a great virtue. We certainly need to see how LIM develops during 2013 but with its current year production plan well under way and with autumn prices protected we remain comfortable that an improvement is ahead.
“At Parys Mountain we do have the benefit of time if needed and we will take that opportunity to develop the most rational approach available under current and predicted price and market scenarios.”