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I previously commented on fully-listed Anglesey Mining (LSE:AYM) late last month – concluding that the shares, at just over 7p, were not for the risk-averse, but that the upside potential was sufficient for me to rate them a ‘speculative buy’. They had previously soared from the 11.75p at which I recommended them in October 2009 on t1ps – the website I founded in 2000 and edited until leaving this September to set up the Nifty Fifty offering – but fell all of the way back to sub 7p as the company’s current key value driver, Canada-listed Labrador Iron Mines, was heavily impacted by very significant falls in the iron ore price. Now with an 8.5p share price and following news today that Labrador has, in 2012, successfully completed its largest ever exploration programme, the following takes a renewed look at the Anglesey Mining investment proposition…
Click here to read my previous update on Anglesey Mining
Labrador Iron Mines holds twenty direct shipping iron ore deposits in western Labrador and north-eastern Quebec, Canada, and its 2012 exploration field programme totalled 14,000 metres of drilling as well as other work such as ground magnetometer and gravity surveys over several main targets. The programme and the resultant new mineral intersections returned are anticipated to see “several” updated and new formal resource estimates on the company’s deposits completed by the end of the fiscal year to end March. It was also noted that mine planning will now be better informed following the recovery of core samples and that the surveys undertaken “confirmed the validity of airborne gravity anomalies, located the extensions of known ore bodies and suggested the presence of new exploration targets”.
Anglesey’s shares are 9% higher on the back of the announcement – capitalising the company at a current £13.7 million. Meanwhile, at a present Canadian$0.90 share price, Anglesey’s 19,289,100 shares in Labrador are valued at Canadian$17.4 million (circa. £10.9 million). Anglesey also has the Parys Mountain base metals project in Wales, on which a new JORC-compliant resource estimate was published at the close of last month and for which a scoping study is due shortly.
With Labrador’s operating season not scheduled to resume, after the winter period, until April and next-stage decisions still to be made by Anglesey on Parys Mountain, shares in Anglesey look to currently remain a somewhat speculative proposition, dependent on the iron ore price. This has recently improved and, with the industry’s marginal cost of production widely accepted as being comfortably more than $100 per tonne, I continue to believe there will be the opportunity down the line to bank a significant profit from current share price levels here. My stance would remain speculative buy.
Tom Winnifrith is a keynote speaker at the top UK Investor Show, UKInvestor Show. He is joined on stage by Mark Slater, Nigel Wray, Nick Leslau, Evil Knievil, Nigel Farage MEP, Dominic Frisby and a host of other stars. To get more details of this event on April 13th and to book a free ticket click HERE.
