Final Results for the Year Ended 31 December 2013

RNS Number : 8450J

Connemara Mining Company plc

18 June 2014

 



18^th June 2014

Connemara Mining Company

("Connemara" or "the Company")

Final Results for the Year Ended 31 December 2013

Connemara Mining Company today announces its results for the year ending 31 December 2013.

Ends

Enquiries:

Connemara Mining Company Plc
John Teeling, Chairman	[phone]
Jim Finn, Director
Westhouse Securities Limited
Richard Baty	[phone]
Hugo Rubinstein
Blytheweigh	[phone]
Tim Blythe	[phone]
Halimah Hussain	[phone]
Camilla Horsfall	[phone]
Pembroke Communications
Natalie Tennyson	[phone]
Alan Tyrrell	[phone]

www.connemaramining.com

Statement Accompanying the Final Results

Connemara is an Irish based zinc and gold explorer with good ground, good prospects and good partners.  The value of the Company languishes on the Stock Exchange and in the board's opinion the market capitalisation of £1.5 million does not reflect the embedded value in the exploration assets, the potential of future discoveries or the fact that almost all of our exploration projects are funded by our partners.  These are hard times for explorers with no investor interest, but we remain confident that the cycle will turn.

Ireland is a very prospective location, particularly for zinc.  For many years the big Navan zinc mine was the largest in the world.  Today, almost 40 years after opening, it supplies more than 25% of Europe's zinc demand.  The Lisheen zinc mine in Tipperary is the twelfth largest zinc producer in the world.  In recent years there have been a number of zinc discoveries, notably the Glencore discovery at Pallasgreen in Limerick which reported a 42 million ton deposit at a combined 8% zinc/lead.  On the adjacent ground Connemara/Teck have the Stonepark discovery spread over three zones.  First discovered in 2007 the early promise has not been fulfilled though Teck continue to rate the discovery as promising.  In recent years up to 20 companies have been exploring for zinc in Ireland.

Gold is the second mineral being sought actively in Ireland.  The Wicklow/Wexford area has been known as a prospective gold producer since the first discovery in Avoca in 1796.  Despite extensive work no commercial source has been found to date.  Connemara and others are actively working from Avoca in Wicklow south to the Wexford border.  We will drill there this year.  Extensive gold mineralisation has been discovered in the Monaghan/Fermanagh area but the most advanced and exciting project is in Tyrone where Dalradian, a Canadian company, has reported a deposit in excess of 2.7 million ounces.  The Connemara licence block in Donegal, not far from Tyrone shows many of the same characteristics as the Tyrone discovery.

Apart from zinc and gold a couple of less well known minerals are being sought.  An English company, Tynagh Iron Mines Ltd, is exploring the former Tynagh zinc mine.  They believe that they have discovered up to 100 million tons of iron ore.  A Chinese company is reported as exploring for tungsten in the Wicklow Hills.

We are active explorers in Ireland.  Teck, the large Canadian mining company, has partnered with Connemara in both the Limerick and Oldcastle areas.  After outstanding drilling success in Limerick in 2007 and subsequent years, where they discovered a new zinc/lead deposit, they pulled back on drilling in 2013 to focus on evaluating six years of data.  They have a limited budget with no drilling projected in2014.

Our second Teck joint venture is the Oldcastle area of Meath where we believe there is potential for a Navan zinc mine type deposit.  Here too, constraints of one type or another have meant that progress toward drilling specific targets is slower than we would like though we expect drilling this year.  As well as the two zinc joint ventures with Teck we have a wholly owned zinc project in the Thurles area of Tipperary, close to the Vedanta owned Lisheen zinc mine.  We have spent time and money on the three licences re-analysing data including data from holes we drilled.  We believe there is potential in the block so we renewed the licences.

We have two active gold exploration projects - the Hendrick joint venture on our ground in Wicklow/Wexford and our recently acquired wholly owned block of ten licences in Donegal.  Over the past two years Hendrick, a private Canadian company, has conducted extensive fieldwork on our five licences in Wicklow/Wexford.  They believe they now understand the geology.  They are preparing their 2014 programme which will involve drilling on at least two of the licences.

We were awarded ten licences in Donegal in 2013.  We have analysed all secondary exploration data available as well as having soil samples analysed which were collected as part of the Tellus Survey.  We identified areas with anomalous gold readings and sampled them again.  Results are mixed.

Strategy

The Connemara strategy is simple and clear.  Stretch exploration euros as far as possible on the best available ground in the most prospective country.  We have done this well to date.  We believe we have very good ground in Ireland.  We persuaded companies to farm into most of this ground whereby they spend all of the exploration money while we retain an equity interest.  We were very pleased to joint venture with Teck in zinc and with Hendricks in gold.  Teck is one of the biggest and best mining companies in the world with unrivalled experience in zinc.  Dale Hendrick, the principal of Hendrick Resources is a world class gold explorer with multiple discoveries to his name.

Teck spent the necessary funds, millions, to earn a 75% stake in our Limerick ground and are spending €1.35 million to earn a 75% interest in the Oldcastle block.  Teck is operator in each, which presents a challenge, as operator they can do as they like in terms of exploration and once they have earned their 75% interest we must put up our 25% share of the budget or be diluted.

Multinationals have different agendae and time scales to juniors.  They can and do take a very long view of projects.  They carry big overheads and are prepared to try out new technologies which can be expensive.  Teck has a worldwide portfolio of projects and Ireland fights for a budget allocation.  Budgets carry two overheads, the local overhead and a share of the corporate overhead.  Local exploration programmes are decided on by teams of experts whose experience of the Irish base metal ground would not match that of the Connemara team as new techniques are tried out even though they have limited relevance to the Irish conditions.

The experienced Connemara technical team would have chosen a different exploration programme for Stonepark in Limerick.  However as the junior partner we cannot demand that our programmes are taken into account.  The current programme has no drilling but still has a very significant overhead element.  In the circumstances we cannot justify putting very scarce Connemara funds into this so we have diluted our interest.

There are also issues with the Teck programme in Oldcastle where a new to mining/exploration technique has been used.  This technique is very expensive and made up a significant part of the Teck earn in programme.  We hope the results are positive in the long run as Connemara would have been cautious about use of new techniques early on in the work programme.  Remember Oldcastle is not costing Connemara money as Teck is spending €1.35 million to earn a 75% interest after which we will have to pay our share or dilute.  We hope that Teck will drill in 2014.

Our gold partner, Hendrick, covers all exploration expenditure on our Wicklow/Wexford block.  They must spend €500,000 to gain a 50% interest and a further €500,000 to increase their interest to 75%.  To date they have spent about €350,000.  Expenditure this year could push them to a 50% interest.  The exploration programme is being conducted entirely by Hendrick personnel.  They expect to drill this year.

We had expected to farm out our Thurles zinc ground but despite interest it has not happened.  Growing realisation of an imminent shortage of zinc will make drilling ready targets more attractive.  The Donegal project is at an early stage.

Has the Connemara strategy worked?  On balance yes.  We have had millions spent by others on our ground but we have lost control of our licences.  Multinational do things their way and in their time without considering the needs of their junior partners.  Hendrick, as a private Canadian group, is more in tune with our needs and tries to accommodate us.  In bad markets for junior exploration shares delays hit the market hard.  The lack of drilling by Teck on Stonepark has been very badly received by the market.  A falling share price and apparent lack of activity led to shareholder dissent which has proven costly and time consuming.  This further exacerbated the fall in the share price.

A further consequence of this is an inability to raise new funds.  In the past year Connemara has raised sufficient funds mainly from family and friends.  A further small financing will most likely be required again this year, financed most likely from the same sources.

Future Strategy

Gold and zinc have excellent long term fundamentals.  There is an emerging shortage of zinc and primary gold production does not match consumption.  Ireland is a good place to explore for both minerals.  We have good ground, good partners and interesting discoveries

The directors are considering ways to create shareholder value.  We believe there is potential in Irish zinc and gold.  We have attempted to gain control of the Stonepark zinc discovery but Teck would not engage.  We look forward to the Oldcastle drilling.  There will be gold drilling later in the year.

We have also considered expanding our activities outside of Ireland both in zinc and gold.  We are constrained by finance.  There has been, and remains, interest by unconnected parties to invest in Connemara and to "redirect strategy into new resource areas".  We are encouraging this interest.

John Teeling

Chairman

17 June 2014

__________________________________________________________________________________

CONNEMARA MINING COMPANY PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2013

	2013	2012
	€	€
CONTINUING OPERATIONS
Administrative expenses	(348,697)	(324,083)
OPERATING LOSS	(348,697)	(324,083)
Investment revenue	498	1,095
LOSS BEFORE TAXATION	(348,199)	(322,988)
Income tax expense	-	-
LOSS FOR THE YEAR AND
TOTAL COMPREHENSIVE INCOME	(348,199)	(322,988)

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2013

	2013	2012
	€	€
ASSETS:
NON CURRENT ASSETS
Intangible assets	2,290,281	2,253,319
CURRENT ASSETS
Other receivables	25,272	23,426
Cash and cash equivalents	64,912	165,256
	90,184	188,682
TOTAL ASSETS	2,380,465	2,442,001
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables	(180,513)	(413,796)
NET CURRENT LIABILITIES	(90,329)	(225,114)
NET ASSETS	2,199,952	2,028,205
EQUITY:
Called-up share capital	357,397	257,097
Share premium	4,524,801	4,105,155
Share based payment reserve	49,815	55,915
Retained deficit	(2,732,061)	(2,389,962)
TOTAL EQUITY	2,199,952	2,028,205

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2013

	Called up Share Capital	Share Premium	Share Based Payment Reserve	Retained Deficit	Total
	€	€	€	€	€
At 1 January 2012	257,097	4,105,155	55,915	(2,066,974)	2,351,193
Loss for the year				(322,988)	(322,988)
At 31 December 2012	257,097	4,105,155	55,915	(2,389,962)	2,028,205
Shares issued	100,300	437,594			537,894
Share issue expenses		(17,948)			(17,948)
Options exercised	-	-	(6,100)	6,100	-
Loss for the year				(348,199)	(348,199)
At 31 December 2013	357,397	4,524,801	49,815	(2,732,061)	2,199,952

Share premium

The share premium reserve comprises of the excess of monies received in respect of share capital over the nominal value of shares issued.

Share based payment reserve

The share based payment reserve arises on the grant of share options to directors and consultants under the share options plan.

Retained deficit

Retained deficit comprises accumulated losses in the current and prior years.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2013

	2013	2012
	€	€
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the year	(348,199)	(322,988)
Investment revenue recognised in loss for the year	(498)	(1,095)
Exchange movements	4,539	(5,972)
	(344,158)	(330,055)
MOVEMENTS IN WORKING CAPITAL
Decrease in trade and other payables	(233,283)	(47,839)
(Increase)/Decrease in other receivables	(1,846)	29,015
CASH USED BY OPERATIONS	(579,287)	(348,879)
Investment revenue	498	1,095
NET CASH USED IN OPERATING ACTIVITIES	(578,789)	(347,784)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for exploration and evaluation	(36,962)	(154,950)
NET CASH USED IN INVESTING ACTIVITIES	(36,962)	(154,950)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of equity shares	537,894	-
Share issue costs	(17,948)	-
NET CASH FROM FINANCING ACTIVITIES	519,946	-
NET DECREASE IN CASH AND CASH EQUIVALENTS	(95,805)	(502,734)
Cash and cash equivalents at beginning of financial year	165,256	662,018
Effect of exchange rate changes on cash held in foreign currencies	(4,539)	5,972
Cash and cash equivalents at end of financial year	64,912	165,256

Notes:

1.    Accounting Policies

There were no changes in accounting policies from those used to prepare the Group's Annual Report for financial year ended 31 December 2012.  The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

2.    Loss per Share                                                                                                                                 

	2013	2012
	€	€
Loss per share - Basic and Diluted	(1.06c)	(1.26c)

Basic loss per share

The earnings and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:

	2013	2012
	€	€
Loss for the year attributable to equity holders of the parent	(348,199)	(322,988)
	2013	2012
	No.	No.
Weighted average number of ordinary shares for the
purpose of basic earnings per share	32,700,369	25,709,711

Basic and diluted loss per share is the same as the effect of the outstanding share options and warrants is anti-dilutive.

3.    Intangible Assets

	2013	2012
Exploration and Evaluation:	€	€
Cost:
At 1 January 2013	2,253,319	2,098,369
Additions	36,962	154,950
At 31 December 2013	2,290,281	2,253,319
Carrying amount:
At 31 December 2013	2,290,281	2,253,319

The above represents expenditure on projects in Ireland. Included in the Group intangible assets is €10,000 (2012: €22,800) of directors' remuneration which was capitalised during the year.

In 2012 the Group entered into an agreement with Teck Ireland Limited ("Teck"), a subsidiary of Teck Resources Limited, which gives Teck the option of earning a 75% interest in licences held by the Group in Cavan/Meath. Teck have to spend €1.35 million on the licences by 2018 in order to earn the option to acquire the total 75% interest.  As per the agreement the licences have been transferred into a new company, Oldcastle Zinc Limited, which at 31 December 2013 was owned 100% by Connemara Mining Company of Ireland Limited.

In 2007 the Group entered into an agreement with Teck Cominco which gave Teck Cominco the option to earn a 75% interest in a number of other licences held by the Group.  Teck Cominco had to spend CAD$3m to earn the interest.  During 2012 the relevant licences were transferred to a new company, TILZ Minerals Limited, which at 31 December 2013 was owned 23.79% (2012: 25%) by Limerick Zinc Limited and 76.21% (2012: 75%) by Teck Ireland Limited.   The Group's share of expenditure on the licences continues to be capitalised as an exploration and evaluation asset.  The Group is subject to cash calls from Teck Ireland Limited in respect of the financing of the ongoing exploration and evaluation of these licences.  In the event that the Group decides not to meet these cash calls its interest in TILZ Minerals Limited may be diluted accordingly.  As a result of the Group's decision not to meet cash calls in 2012 its interest in TILZ Minerals Limited was diluted from 25% to 23.79%.

The realisation of the intangible assets is dependent on the discovery and successful development of economic reserves which is subject to a number of risks as outlined below.  Should this prove unsuccessful the value included in the balance sheet would be written off to the statement of comprehensive income.

The Group's exploration activities are subject to a number of significant and potential risks including:

               - uncertainties over development and operational risks;

               - compliance with licence obligations;

               - liquidity risks; and

               - going concern risks;

The directors are aware that by its nature there is an inherent uncertainty in such exploration and evaluation expenditure as to the value of the asset.  Having reviewed the carrying value of exploration and evaluation of assets at 31 December 2013, the directors are satisfied that the value of the intangible asset is not less than carrying value.

Segmental analysis	2013	2012
	€	€
Limerick	1,326,447	1,323,409
Oldcastle	330,000	330,000
Rest of Ireland	633,834	599,910
	2,290,281	2,253,319

4.    Share Capital and Share Premium

	2013	2012
	€	€
Authorised:
200,000,000 Ordinary shares of €0.01 each	2,000,000	2,000,000

Allotted, Called-Up and Fully Paid:

		Share	Share
	Number	Capital	Premium
		€	€
At 1 January 2013	25,709,711	257,097	4,105,155
Issued during the year	10,030,000	100,300	437,594
Share issue costs	-	-	(17,948)
31 December 2013	35,739,711	357,397	4,524,801

On 8 April 2013, 1,000,000 options were exercised by the directors at a price of 1c per share. 

On 22 April 2013, 9,030,000 shares were issued at a price of 5p per share to provide additional working capital and fund development costs.  2,730,000 of these shares were issued to directors in lieu of outstanding directors' remuneration. 

5.    Annual General  Meeting

The Company's Annual General Meeting will be held on 17^th July 2014 in 162 Clontarf Road, Clontarf, Dublin 3 at 11:00 am.

6.    General Information

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2013.  The financial information for 2012 is derived from the financial statements for 2012 which have been delivered to the Companies Registration Office.  The auditors have reported on 2012 statements; their report was unqualified with an emphasis of matter in respect of considering the adequacy of the disclosures made in the financial statements concerning the valuation of intangible assets, investment in subsidiaries and amounts due by group undertakings. The financial statements for 2013 will be delivered to the Companies Registration Office.

A copy of the Company's Annual Report and Accounts for 2013 will be mailed to all shareholders shortly and will also be available for collection from the Company's registered office, 162 Clontarf Road, Dublin 3, Ireland.  The annual report will shortly be available for viewing at Connemara Mining Company PLC's website at www.connemaramining.com.             

 

END

 

 

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