Final Results for the Year Ended 31 December 2017

RNS Number : 1977S

Connemara Mining Company plc

22 June 2018

 

22 June 2018

Connemara Mining Company plc

("Connemara" or the "Company")

Final Results for the Year Ended 31 December 2017

Connemara Mining Company today announces its results for the year ending 31 December 2017.

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

ENDS

Enquiries:

Connemara Mining Company Plc
John Teeling, Chairman	[phone]
Patrick Cullen, CEO	[phone] [phone]
Northland Capital Partners Limited
Matthew Johnson / Edward Hutton	[phone]
John Howes
First Equity Limited
Jason Robertson	[phone]
Blytheweigh	[phone]
Tim Blythe	[phone]
Simon Woods	[phone]
Teneo PSG
Luke Hogg	[phone]
Alan Tyrrell	[phone]

www.connemaramc.com

Chairman's Statement

Connemara, an Irish Gold and Zinc explorer is going through an interesting and exciting time.  We have a new CEO, new shareholders, new directors, a new joint venture partner and new prospecting licences.  Metal prices are good, though the impact of these are reflected more in the share prices of mining companies than junior explorers.

Patrick Cullen, an experienced exploration and mining geologist, joined Connemara in mid-2017 as CEO and joined the Board in early-2018.  He brings vitality and expertise to our organisation.  New investors bought significant stakes in the Company and brought in other investors.  The Board was strengthened by the addition of two London based directors, David Cockbill and Michael McNeilly.  They will bring the Connemara story to a new audience in the UK.  Long serving directors Vivion Byrne and Danesh Varma stood down.  Gavin Berkenheger also a Director resigned but continues as technical consultant.  On your behalf I thank them for their input and support over what has been a difficult decade for Connemara. 

Zinc

The Operational Highlight of this period is undoubtedly the new developments at our Stonepark Zinc-Lead Project, located in Limerick.  Teck, the 76% plus partner/operator sold their interest to Group Eleven Resources Corp. ("Group Eleven"), a newly listed company on the Toronto Stock Exchange with powerful shareholders and very experienced management.  We had the option of selling our stake to Group Eleven but decided to keep it and to participate in a new drilling campaign.  We are very glad that we did.  Group Eleven have released what can only be described as a spectacular drill result of 32.2% zinc and lead combined.  In addition they compiled for the very first time a NI-43 101 Compliant Mineral Resource Estimate of the lead/zinc in place from earlier work done by Teck and Connemara.  The estimate of 5 million plus tonnes of zinc at a combined zinc and lead grade of 10.3%, is a significant resource, particularly when the deposit is open on all sides.  Combine this with the 42 million tonnes at 8% plus in the adjacent Glencore deposit, literally on the other side of the Dublin to Limerick main road, and you have a potential major base metal asset by world standards.  As with Connemara, Glencore are also drilling.  With zinc prices in excess of $3,000 a tonne you are looking at the value of a tonne of Stonepark rock to be in excess of $300 a tonne.  More work needs to be done to expand the Stonepark resource.  Connemara expects to maintain its interest in this very exciting project.

Our second base metal joint venture is with Teck on five licences in the Oldcastle area of Meath/Cavan.  This ground has been prospected for decades.  Work in the 1970s identified a small resource.  Later work by Connemara found zinc mineralisation in 5 of 11 holes.  The target is a Navan/Tara Mines (30 km away) lookalike - a large zinc orebody.  Analysis indicated that the big targets were at depth so expensive to drill.  Teck agreed to spend €1.35 million on the ground to earn a 75% interest.  Exploration in recent times by Teck has been limited so they have not yet earned into 75%.  We expect that a multi-hole drilling programme will be undertaken this year at no cost to Connemara.  The investment by Teck will bring their interest to 75%.  Connemara then has the right to participate in further expenditure or to dilute.  We look forward with great interest to results from the 2018 campaign.

Our third significant zinc interest is the Derrykearn block of six licences, five close to the closed Lisheen Zinc Mine and one, Rapla, adjacent to the closed Galmoy Zinc Mine.  Connemara has completed a thorough review of available data including core from 80 holes, and over 5,000 assays.  We remodelled the data and have identified drill targets in the so called Lisduff Oolite, the same stratigraphy which hosted resource grade lead/zinc in the Lisheen Mine.  As yet, no drill holes have tested this strata on our block.

Gold

Turning to Gold.  We hold 20 gold licenses, 11 in the Donegal area and 9 in the Wicklow/Wexford area.  Gold is going through a renaissance in Ireland and the first major gold mine looks likely on the Dalradian ground in Tyrone.  A number of companies are exploring for gold in different parts of the country.

Gold in Ireland tends to come in veins sometimes with high grade, but the veins are often narrow less than 1 metre wide.  This poses major challenges for exploration.  Siting drill locations is fraught and often wrong.  Veins pinch and swell, wander in different directions and disappear at times.  They are easy to miss.

Connemara is very active in this sector.  We followed up on the good results at Meenaragh on the Inishowen Peninsula in Donegal by taking on an additional six licences giving us a continuous block of eleven.  Ten licences to the South of Donegal were dropped.  We drilled five holes of which three reported gold grades, including 14.25g/t over 0.5 metre from 21.5 metre depth in hole 17-MR-08.  New geophysics were interpreted.  They improved our understanding of the geology.  A sampling programme will be undertaken in late summer 2018.  It is still a very early stage in this campaign. 

We hold nine licences in Wicklow/Wexford, the Mine River Block.  This ground has been explored on and off for two centuries since the gold rush of 1796.  Connemara has held much of this ground for a long time.  We jointed ventured most of it with Hendricks Resources, a Private Canadian company.  Illness and the subsequent passing of the principal, Dale Hendrick, led to a hiatus in work.  Following the death of Dale, Connemara acquired Hendrick Ireland Ltd.

Work on the ground has increased the strike length of our gold target from three kilometres to fifteen kilometres.  Our recent focus has been on Tombreen and Knocknalour a small section of the strike where, historically, good grades have been found.  Drilling in late 2017 saw gold mineralisation in each of three holes including 8 metres of 4.53 g/t at Tombreen.

A ten hole drilling campaign was undertaken in April 2018.  Access problems hampered the programme and resulted in selecting secondary drill sites, and ultimately the program was curtailed to six holes.  Most of the strike length remains untested.

Finance

The company raised £200,000 in August 2017 and £900,000 in early 2018.  The funds are being used to fund our very active exploration programmes.

Future

Connemara has made significant progress in the last year and is well positioned to move further ahead.  We have good ground and committed executives.

John Teeling

Chairman

21 June 2018

CONNEMARA MINING COMPANY PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017

	2017 €	2016 €
CONTINUING OPERATIONS
Administrative expenses	(214,331)	(195,584)
OPERATING LOSS	(214,331)	(195,584)
LOSS BEFORE TAXATION	(214,331)	(195,584)
Income tax expense	-	-
LOSS FOR THE FINANCIAL YEAR AND TOTAL COMPREHENSIVE INCOME	(214,331)	(195,584)
Loss per share - basic and diluted	(0.27c)	(0.29c)

CONNEMARA MINING COMPANY PLC

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2017

	2017	2016
	€	€
ASSETS:
FIXED ASSETS
Intangible assets	2,911,618	2,698,314
CURRENT ASSETS
Other receivables	28,596	13,632
Cash and cash equivalents	122,716	162,794
	151,312	176,426
TOTAL ASSETS	3,062,930	2,874,740
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables	(625,298)	(442,120)
NET CURRENT LIABILITIES	(473,986)	(265,694)
NET ASSETS	2,437,632	2,432,620
EQUITY:
Called-up share capital	874,176	757,897
Share premium	5,162,527	5,063,806
Share based remuneration reserve	4,343	-
Retained deficit	(3,603,414)	(3,389,083)
TOTAL EQUITY	2,437,632	2,432,620

CONNEMARA MINING COMPANY PLC

STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017

Group
	Called up Share Capital	Share Premium	Share Based Payment Reserve	Retained Deficit	Total
	€	€	€	€	€
At 1 January 2016	557,797	4,809,006	-	(3,193,499)	2,173,304
Shares issued	200,100	278,742	-	-	478,842
Share issue expenses	-	(23,942)	-	-	(23,942)
Loss for the year				(195,584)	(195,584)
At 31 December 2016	757,897	5,063,806	-	(3,389,083)	2,432,620
Shares issued	116,279	98,721	-	-	215,000
Share options issued	-	-	4,343	-	4,343
Loss for the year	-	-	-	(214,331)	(214,331)
At 31 December 2017	874,176	5,162,527	4,343	(3,603,414)	2,437,632

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 financial years.

CONNEMARA MINING COMPANY PLC

CONSOLIDATED CASH FLOW STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017

	2017	2016
	€	€
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the financial year	(214,331)	(195,584)
Foreign exchange	(4,818)	11,963
	(219,149)	(183,621)
MOVEMENTS IN WORKING CAPITAL
Increase in trade and other payables	183,178	15,728
(Increase)/decrease in other receivables	(14,964)	14,667
NET CASH USED IN OPERATING ACTIVITIES	(50,935)	(153,226)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for exploration and evaluation	(208,961)	(247,299)
NET CASH USED IN INVESTING ACTIVITIES	(208,961)	(247,299)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of equity shares	215,000	478,842
Share issue costs	-	(23,942)
NET CASH FROM FINANCING ACTIVITIES	215,000	454,900
NET (DECREASE)/INCREASE IN
CASH AND CASH EQUIVALENTS	(44,896)	54,375
Cash and cash equivalents at beginning
of financial year	162,794	120,382
Effect of exchange rate changes on cash held in foreign currencies	4,818	(11,963)
Cash and cash equivalents at end
of financial year	122,716	162,794

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 2016.  The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

2.    Loss per Share                                                                                                                                 

	2017	2016
	€	€
Loss per share - Basic and Diluted	(0.27c)	(0.29c)

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:

	2017	2016
	€	€
Loss for the year attributable to equity holders of the parent	(214,331)	(195,584)
	2017	2016
	No.	No.
Weighted average number of ordinary shares for the
purpose of basic earnings per share	80,186,016	68,498,396

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

	2017	2016
	€	€
Exploration and Evaluation:
Cost:
At 1 January 2017	2,698,314	2,451,015
Additions	213,304	247,299
At 31 December 2017	2,911,618	2,698,314
Carrying amount:
At 31 December 2017	2,911,618	2,698,314

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 75% interest. As per the agreement the licences were transferred into a new company, Oldcastle Zinc Limited. As at 31 December 2017 Teck had completed €1,108,602 worth of expenditure. As per the agreement upon Teck completing €550,000 worth of expenditure 343,500 ordinary shares in Oldcastle Zinc Limited were to be issued to Teck. The shares were issued on 20 February 2015 giving Teck a 51% interest in the company. On completion of a further €400,000 worth of expenditure 269,360 ordinary shares in Oldcastle Zinc Limited were to be issued to Teck. The shares were issued on 22 December 2017 giving Teck a total 65% interest in the company

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 ("TILZ"), which at 31 December 2017 was owned 23.44% (2016: 23.44%) by Limerick Zinc Limited and 76.56% (2016: 76.56%) by Group Eleven Resources Corp.

On 13 September 2017 the board of Connemara was informed that Group Eleven Resources Corp. a private company, had acquired the 76.56% interest held by Teck in TILZ. Connemara owns the remaining 23.44%. The Group is subject to cash calls from Group Eleven Resources Corp. 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 may be diluted accordingly. The Group's share of expenditure on the licences continues to be capitalised as an exploration and evaluation asset.

On 19 October 2017 the company announced the acquisition of 100% of Hendrick Resources (Ireland) Limited.  Connemara has acquired 100% control of twelve existing HRI prospecting licences in Ireland for a royalty agreement comprising a 2 per cent. Net Smelter Return on future production.  In addition, the five Connemara prospecting licences in joint venture with HRI have been returned to the Company. Though the primary focus is gold, lithium pegmatite targets are being developed adjacent to the western margin of the block and Connemara is reviewing potential targets within the expanded block.

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:

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;

Should this prove unsuccessful the value included in the balance sheet would be written off to the statement of comprehensive income.

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 2017, the directors are satisfied that the value of the intangible asset is not less than carrying value.

Segmental Analysis

	2017	2016
	€	€
Limerick	1,412,861	1,404,296
Oldcastle	330,000	330,000
Rest of Ireland	1,168,757	964,018
	2,911,618	2,698,314

4.    Share Capital and Share Premium

	2017	2016
	€	€
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 2016	55,779,711	557,797	4,809,006
Issued during the financial year	20,010,000	200,100	278,742
Share issue costs	-	-	(23,942)
At 31 December 2016	75,789,711	757,897	5,063,806
Issued during the financial year	11,627,907	116,279	98,721
31 December 2017	87,417,618	874,176	5,162,527

On 13 May 2016, a total of 20,010,000 shares were issued at a price of 2p per share to provide additional working capital and fund development costs. For each share subscribed for, the investors also received one warrant to subscribe for an additional ordinary share at a price of 5p per share at any time until 26 May 2018.

On 15 August 2017, a total of 11,627,907 shares were issued at a price of 1.72p per share to provide additional working capital and fund development costs. For each share subscribed for, the investors also received one warrant to subscribe for an additional ordinary share at a price of 3.4p per share at any time until 15 August 2019.

5.    Share Based Payments

Equity-settled share-based payments are measured at fair value at the date of grant.

The Group plan provides for a grant price equal to the average quoted market price of the ordinary shares on the date of grant.  The options vest immediately.

OPTIONS	2017	2017	2016	2016
	Options	Weighted average	Options	Weighted average
		exercise price		exercise price
		in cent		in cent
Outstanding at beginning of
the financial year	-	-	-	-
Granted during the
financial year	300,000	1.45	-	-
Exercised during the
financial year	-	-	-	-
Outstanding and
exercisable at the end
of the financial year	300,000	1.45	-	-

During the financial year 300,000 options were granted with a fair value of €4,343. These fair values were calculated using the Black-Scholes valuation model. These options vested immediately:

The inputs into the Black-Scholes valuation model were as follows:

Grant 23 March 2017

Weighted average share price at date of grant (in pence)	1.45p
Weighted average exercise price (in pence)	1.45p
Expected volatility	111.26%
Expected life	7 years
Risk free rate	1.3%
Expected dividends	none

Expected volatility was determined by management based on their cumulative experience of the movement in share prices over the financial year.

The terms of the options granted do not contain any market conditions within the meaning of IFRS 2.

The Group capitalised expenses of €4,343 and expensed costs of €Nil retailing to equity-settled share-based payment transactions during the financial year.

WARRANTS	2017	2017	2016	2016
	Warrants	Weighted average	Warrants	Weighted average
		exercise price		exercise price
		in pence		in pence
Outstanding at beginning of
the financial year	20,010,000	2	-	-
Granted during the
financial year	11,627,907	1.72	20,010,000	2
Exercised during the
financial year	-	-	-	-
Outstanding and
exercisable at the end
of the financial year	31,637,907	1.89	20,010,000	2

On 15 August 2017, a total of 11,627,907 shares were issued at a price of 1.72p per share. As part of the placing, for each share subscribed for, the investors also received one warrant to subscribe for an additional ordinary share at a price of 3.4p per share at any time until 15 August 2019.

The warrants have a fair value of 0.727p per warrant. The fair values were calculated using the Black-Scholes valuation model.

The inputs into the Black-Scholes valuation model were as follows:

Grant 15 August 2017

Weighted average share price at date of grant (in pence)		1.72p
Weighted average exercise price (in pence)		3.4p
Expected volatility		111.26%
Expected life		2 years
Risk free rate		1.3%
Expected dividends		none

Expected volatility was determined by management based on their cumulative experience of the movement in share prices over the financial year.

6.    Post Balance Sheet Events

On 26 February 2018 the Group announced a strategic financing and board restructuring exercise. 

The following events occurred:

A total of £900,000 cash was raised at a price of 4.15p per share through the issue of 21,686,747 new ordinary shares. Each Placing Share is accompanied by a share warrant to subscribe for a further new ordinary share at an exercise price of 7 pence with a life to expiry of two years from admission of the original placing shares.

Should the volume weighted average share price of the Company exceed 20 (twenty) pence for five consecutive trading days the Company has the right to provide a written notice to warrant holders that they have one week to exercise the 7p warrants with a further two weeks thereafter for payment.  Any then unexercised warrants could be cancelled by the Company.  This acceleration condition is entirely at the volition of the Company should the 20 pence hurdle described above be triggered.

This financing transaction was undertaken by First Equity Limited who are now appointed Joint Corporate Broker to the Company.  The funds raised had been sourced from existing and new investors enabling the Company to broaden its shareholder base.

John Teeling and James Finn, directors of Connemara, had their unpaid salaries owed to them totalling £199,500 settled via the issue of 4,807,228 new ordinary shares at the placing price of 4.15p.  In addition, John Teeling and James Finn were granted 2,698,795 and 2,108,433 warrants respectively to subscribe for ordinary shares on the same terms as the placing warrants.   

The Board was restructured with Patrick Cullen to become Executive Director and full-time Chief Executive Officer and John Teeling becomes Non-Executive Chairman.

Michael McNeilly (Chief Executive Officer of Metal Tiger plc) and David Cockbill (Corporate Finance Executive at First Equity Limited) were appointed new Non-Executive Directors of the Company and previous Non-Executive Directors Vivion Byrne, Danesh Varma and Gavin Berkenheger stepped down from the board.

7.    Annual General Meeting

The Company's Annual General Meeting will be held at 12:30 pm on 25 July 2018 in the Gresham Hotel, 23 O'Connell Street Upper, Dublin D01 C3W7.

8.    General Information

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2017.  The financial information for 2016 is derived from the financial statements for 2016 which have been delivered to the Companies Registration Office.  The auditors have reported on 2016 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 2017 will be delivered to the Companies Registration Office.

A copy of the Company's Annual Report and Accounts for 2017 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's website at www.connemaramc.com

 

END

 

 

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