They’ve been scratching the surface of Parys Mountain for copper in Anglesey for over 4,000 years. And for a while the island of Anglesey, off the north-west coast of Wales, was known as Y Deyrnas Gopr or ‘The Copper Kingdom’, as this corner of the principality experienced its own ‘rush’ similar to Yukon and California in the eighteenth and nineteenth centuries as prospectors flocked to the island to exploit its rich mineral wealth.
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Parys Mountain dominated global copper markets at the end of the eighteenth century, and became the world’s biggest copper mine, with most of the metal being lifted through open cast mining with around 16,500 tonnes (T) being extracted a year through the 1800s. But by the end of the nineteenth century the global copper price had declined and the easy ore at Parys Mountain had been worked out and extraction was becoming more difficult and expensive. From the thousands that had delved in the hills in Anglesey, by the start of the twentieth century there were only about 140 miners working the mine and in 1904 mining operations ceased on the mountain.
However, Anglesey Mining LON:AYM, the AIM-listed exploration company is trying to revive the mine, and has been at the site since 1984 after modern drillers, led by Canadian Industrial Oil and Gas and Cominco undertook extensive drilling operations in Anglesey. The modern exploration continued to the 1990s, but operations ceased in 1991 as a result of the early 1990s recession, which was especially severe in Canada.
Multi-commodity asset
However, work restarted at the turn of the century, and Anglesey Mining completed a Preliminary Economic Assessment on Parys Mountain, proving deposits of polymetallic zinc, copper, lead, silver and gold at the site and have over the past few years been conducting a programme of further exploration, infill drilling, and acquiring the relevant economic, regulatory and environmental permitting to move towards mining operations.
Anglesey Mining listed on AIM in 1988 and has two other projects; a 49.75% stake in Grängesberg Iron AB, which owns the Grängesberg Iron Ore Project in Sweden, a project which has the potential to be restarted as one of Europe’s largest individual producers of iron ore concentrates, and 11% interest in Labrador Iron Mines, which is engaged in the exploration and development of direct shipping iron ore deposits in Labrador and Quebec.
The company published its annual report today (25th September), and as the company is still in exploration, it has had no revenues from the operations of its properties and its loss before comprehensive income and after tax was just shy of GBP1m for the year – worsening from the loss the end-March 2022 of around GBP700,000.
Doubling-down on iron
The increased losses for the year to end-March 2023 were attributed to a 32% increase in investment income and finance charges to GBP695,545 and additional expenses relating to its Grängesberg operations, mainly due to Anglesey Mining increasing its shareholding by 29.8% in the Swedish iron ore project and initiating a feasibility study. Losses were compounded as the share price declined – as many other AIM-listed companies experienced.
The company total comprehensive loss for the year was GBP1.46m, down from GBP2.8m the year previously. The company’s mineral property assets were valued at GBP16.2m, up from GBP15.7m as supported by the PEA completed on Parys Mountain.
The exploration company completed a GBP0.5m placing in July, with the proceeds being applied to a new exploration drill site, the Northern Copper Zone at Parys Mountain. Funds will also be deployed to advance the permitting and Environmental Impact and Social Assessment of Parys Mountain and commence baseline studies for the Grängesberg Iron Ore Mine and general working capital purposes.
Part of the placement was used to convert debt held by Juno Finance to equity, reducing the working capital facility by about 3% to GBP3.4m.
The company’s management were upbeat, and given the increased interest in copper, due to the Transition to New Zero theme, and the need to significantly increase EV infrastructure globally, believes that the economics means that bringing Parys Mountain back to life was prescient.
The Parys Mountain mine isn’t just a copper play, Anglesey Mining’s exploration so far has unearthed commercial deposits of zinc, lead and gold and silver credits, which would offer the main copper project welcome diversification and a nice kicker from the other metals in situ.
Benign mining jurisdiction
The company puts its environmental credentials high up on the list of reasons to invest in the mine, along with a bit of patriotic flag-waving, arguing that developing a mine in the UK and avoiding imports from other jurisdictions of strategic transition minerals will ensure that the mine is developed to the highest environmental standards globally and closes the loop of dependence on resources imported from abroad.
The Parys Mountain project has a mineral resource estimate (as at January 2021) of 5.2 million tonnes (mT) at a base metal grade of 4.3% and equivalent copper grade of 2.4% with an Inferred Resource of 11.7mT at a 2.8% base metal grade and equivalent copper grade of 2%. The Indicated figure was upgraded from 2.8mT in 2017.
Anglesey Mining said it is still undertaking scoping and mine construction studies with three possible mine options that range from a 5.5mT/1,500 tonnes per day (Tpd) scenario, to a best-case scenario of 11.4mT/3,000Tpd development. The latter promises a GBP408m cash surplus operation over a 12-year life-of-mine (LOM), which would equate to (on a 12-year LOM) an IRR of 26% with a pre-tax NPV of in excess of GBP96m.
However, with all exploration plays, this is jam tomorrow, today the company is looking for bread.
The company was also talking up Grängesberg Iron in a similar vein, where pre-feasibility has been initiated and combined with the Labrador project, Anglesey Mining could become a valuable multi-commodity base metal producer in the next decade.
Base camp, looking up
The priority remains Parys Mountain however, and the PFS mountain on this project has yet to be scaled, with PEA in hand, Anglesey Mining finds itself at base camp with some hard trekking on the road ahead. This starts with further infill drilling at the Northern Copper Zone to buffer its resource categorisation and produce a mineral resource estimate (MRE) in the next year. To develop a world-class environmentally friendly mine still requires a lot of permissions, report writing and permitting.
It is a critical year for Anglesey Mining, as the work it completes in the next twelve months will decide whether it is ready to go all-in on Parys Mountain. Progress at Grängesberg is slowly moving forward and should move from PFS to fully-blown Feasibility with Environmental Baseline Studies and Resource Estimates in the next twelve months.
Hurdles on the road ahead
It’s always hard to recommend an exploration miner, AIM is littered with explorers who never end up producing any resources. Parys Mountain has legacy, and the PEA that Anglesey Mining has published is encouraging (however metals prices have come off a bit since the PEA was completed). It’s not a good time to be seeking financing and permitting, especially in a highly-regulated economy like the UK with an active civil society, can be time-consuming and expensive.
That said, the demand for base metals isn’t going go away in the coming years. Parys Mountain has a significant base metal resource added to Anglesey Mining’s other iron ore assets creates a significant strategic metal portfolio in benign and transparent jurisdictions. The current UK government (and probably the next one, whatever rosette it wears) is flailing around to show it has an industrial strategy and is buckling under the net zero commitments it set itself, and a project like Parys Mountain, in a economically-depressed corner of the country can be spun as a win-win.The next twelve months are critical for Anglesey Mining. The explorer opened the week at 1.33p. Over one year its shares have seen a -51.6% decline in price, and over the year-to-date have fallen -39.5%. The share price is really in the gutter, around the lowest it has ever been. But does this offer the chance of a cheap buy, or can the company still plumb new depths? Anglesey Mining has a market cap of GBP5.6m, however its is worth considering the assets it owns are assessed as at least GBP16m.
This could be a cheap punt, a high-risk, high-reward investment. The company has the potential to be very profitable, but there are also some significant risks involved. Investors should carefully consider their investment horizon and risk tolerance before investing in the company.
