Final Results

RNS Number : 7465H

Connemara Mining Company plc

25 June 2013

 



25 June 2013

Connemara Mining plc ("Connemara" or the "Company")

Preliminary Results for the Year Ended 31 December 2012

Connemara Mining announces its results for the year ending 31 December 2012.

Operational Highlights:

·     Zinc

o  Connemara's partners - Teck-  now conducting extensive exploration campaign on Oldcastle Block as follow-up to drilling by Connemara in their 2008 campaign

o  Partner being sought for  near Lisheen and Newcastlewest targets

o  Geophysical and geochemical programme ongoing at Oldcastle block with drilling expected later in 2013

·     Gold

o  Airborne Magnetic surveys have shown have identified at least three zones which have been followed up by ground geochemical surveys with significant gold potential

o  Drilling programme expected  in late 2013/early 2014

Chairman, John Teeling, said, "Connemara is fortunate in that it has low fixed expenses; our gold and Oldcastle zinc programs are fully funded, while work on the Stonepark block is funded by Teck, though diluting Connemara.  We are therefore able to advance the portfolio of assets without a considerable cash cost.  As the exploration sector implodes for lack of funding, opportunities are emerging.  Junior exploration companies have in some cases markets capitalisations below their cash balances.  In other cases measured or indicated reserves are available at very low valuations.  We expect there will be consolidation in the industry and will monitor any acquisition opportunities if they arise."

 

Enquiries:

Connemara Mining Company Plc

John Teeling, Chairman                                                                                                [phone]

Jim Finn, Director

Blythe Weigh Communications                                                                                [phone]

Tim Blythe                                                                                                          [phone]

Robert Kellner                                                                                                  [phone]

Eleanor Perry                                                                                                    [phone]

Westhouse Securities Limited

Richard Baty                                                                                                       [phone]

Jonathan Haines

Optiva Securities Ltd

Jason Robertson                                                                                              [phone]   

Jeremy King                                                                                                       [phone]

Pembroke Communications

David O'Siochain                                                                                             [phone]

www.connemaramining.com

Statement Accompanying the Preliminary Results

Over the past year the operating conditions for junior explorers have grown more challenging, but we believe the fundamentals for Connemara are still sound.  Apart from our existing ground portfolio, the Company is well placed and has the experience to take advantage of the opportunities that will emerge in a sector struggling to attract the necessary investment to transform quality exploration targets into minable resources.

Connemara is an explorer focused on zinc and gold in Ireland.  More zinc per square kilometre has been discovered in Ireland than in any other country.  Two of the largest zinc mines in the world, Tara and Lisheen, operate in the country while there have been three recent zinc discoveries at Stonepark, Pallas Green and Kilbricken, all in the Limerick region in the southwest of the country.

The best place to find a mine is where there is or was a mine.  Connemara following this mining mantra is an exploration company focused on zinc exploration with the addition of a number of exciting gold licences.

Why zinc?  It lacks the allure of gold or the mystery and romanticism of diamonds, but it is a product with excellent supply demand fundamentals.  Zinc is used in every day products but the big demand driver is the growth in global galvanised steel for construction purposes.  Demand in the emerging markets is growing and will continue to grow.  Overall world demand is expected to grow by 4% annually.  Meanwhile supply is sluggish.  Forecast closures amount to 15% of current world supply and there is a lack of new mines to take up the slack.  The net effect is an expected gap in supply to 2020 with consequent upward pressure on prices.  Connemara was formed opportunistically.  A group of experienced zinc explorers saw good quality Irish exploration ground become available.  Ground was acquired in Limerick adjacent to what became the Xstrata Pallas Green zinc discovery.  Connemara in partnership with Teck Resources Limited ("Teck") of Canada, in 2007 made a zinc discovery at Stonepark on this block of Limerick ground. 

Ground was also acquired adjacent to the Lisheen mine in Tipperary.  Drilling on this ground has been inconclusive.  A block of five licences, the Oldcastle Block, in Meath/Cavan, with signatures analogous to the Tara geology, was acquired.  A suite of 11 holes were drilled with positive results.  This block is now operated in partnership with Teck who are conducting an extensive exploration campaign.

The early focus of the company was on the 16 licence block in Limerick covering Stonepark and Newcastlewest in joint venture with Teck.  They made an exciting discovery at Stonepark in 2007, which was followed up by two subsequent discoveries at Stonepark North in 2009 and Stonepark West in 2011.  Some of the discovery holes contained world class zinc grades - some in excess of 30% combined lead and zinc.

The initial enthusiasm was fuelled by the on-going discoveries at Pallas Green, owned now by Xstrata, less than 5 km away.  The 2009 and 2011 Stonepark discoveries raised the hope that the three zones would join into one significant orebody.  Typically Irish zinc orebodies come in zones or lenses and do not join up.  This makes mining very expensive.  But zones can be big enough or more importantly rich enough to make an average mining grade delivered to the mill a viable proposition.

Teck has drilled over 150 km in 143 holes to date at Stonepark, but to date, an orebody of sufficient size and grade has not been identified.  By way of example, it is suggested that the adjacent Pallas Green discovery needs an orebody of 28 million tons grading 11.5% combined lead and zinc.  Mining majors need big mines.

A detailed review by Teck led to the drilling of a very deep and very expensive hole in 2012 to test if the orebody existed under the basalt which covers much of the block.  The hole failed to reach its target.

Over €7 million has been spent to date on the Stonepark target.  Connemara had a 25% carried interest through most of this but now must contribute or dilute.  We believe strongly that there remains significant potential on the block.  The mineralised system is large 6 km X 14 km and there are multiple zones of mineralisation, which need to be drilled.  Teck, as operator take a different view.  As announced on 20 November 2012, we have declined to contribute to current expenditure flows which if they go ahead will dilute our interest to 23.5%.  We will continue to press our case for an alternative approach to exploration.

The other 10 licences as part of the original block are known as the Newcastlewest Block.  Teck explored and drilled enough to keep the ground in good standing.  It had a number of mineralised zones in its drill holes but took the decision to relinquish the block back to Connemara.  Our geologists evaluated the data and highlighted five priority licences which we have retained.  The remaining five licences have been dropped.  We have had discussions with a view to finding a joint venture partner for these licences but to date nothing has been finalised.

Moving north from Limerick we hold three licences near the Lisheen zinc mine.  We have undertaken extensive geophysical and geochemical work on the ground and identified 15 drill holes.  We drilled four holes with no success.  We may find a partner to drill out the remaining targets.

Further north again we hold the 5 licence Oldcastle block which lies 20 km from the giant Tara mine.  This area has been prospective for decades and was drilled in the early 1970s with some success.  In 2008 we drilled 11 holes and found extensive low grade zinc lead mineralisation.  Further drilling was needed but the largest zones are deep and each hole expensive.  During the year, we entered into a joint venture agreement for the block with Teck who hold extensive ground to the south of Oldcastle.  Teck must spend €1.35 million to earn 75% interest in the block.  An extensive geophysical and geochemical programme using innovative techniques is ongoing.  Drilling is anticipated later in 2013.

The attractiveness of the Oldcastle block is being enhanced by ongoing high grade discoveries at depth by Boliden, the owner of Tara is working its way in the direction of Oldcastle.  To the northwest of Oldcastle, Lundin Mining is reputed to have uncovered high grade zinc in recent drillings.

Gold

While zinc and lead are the primary focus of Connemara, we maintained an ongoing interest in gold.  Gold was mined lightly in Ireland over a thousand years ago.  Intrepid explorers have continued to explore in the Wicklow Hills, in Monaghan and in Tyrone.  Recently there has been some success, predominately in the northern part of the country.  A small mine now operates in Omagh, a Canadian company is reported to have a 2.7 million ounce deposit in Tyrone and an Irish company has reported extensive low grade gold mineralisation along the border counties. 

Connemara focused on the east coast of Ireland - the Wicklow/Wexford area.  It was in this area that the biggest and most famous gold mine operated - the Avoca Gold Mine.  First discovered in 1796 and followed by a gold rush, there has been continuous panning in the rivers.  Numerous companies have explored but the source of the gold has never been found.

Connemara's geologists acquired and analysed an extensive data base and selected five licences.  A private Canadian company Hendrick Resources Ltd (HRI) has acquired a significant number of licences in Wicklow/Wexford and entered into a joint venture with Connemara to spend €1 million to earn 75%.  HRI see similarities in the area to the Hemlo gold area in Canada.  In the last 18 months they have concluded extensive aero magnetic surveys which are being followed up by detailed soil sampling, prospecting and lithogeochemical sampling.  Results reported to date show attractive features on three of the five Connemara licences.  We expect a drilling programme later in 2013.

Future

In common with most junior explorers, Connemara has suffered in the market place.  The Company has a paltry market capitalisation, which the board believes does not reflect the potential.  A minimal market capitalisation makes funding very dilutive.  Further, in the present environment it is difficult to fund even at low prices.  Connemara is fortunate in that it has few fixed expenses; our gold and Oldcastle zinc programs are fully funded, while work on the Stonepark block is funded by Teck, though diluting Connemara.  The alternative of raising outside capital to fund this programme would have a greater dilutive impact on shareholders.  We are in good standing in Thurles and Oldcastle at the present time.

We have raised £451,000 in 2013 to cover liabilities and expenditure for the next year.  The funds were raised mainly from directors, family and friends.  The hope and expectation is that market sentiment will improve when we have drilling results to report from Oldcastle and the gold in Wicklow/Wexford.  As the exploration sector implodes for lack of funding, opportunities are emerging.  Junior exploration companies have in some cases markets capitalisations below their cash balances.  In other cases measured or indicated reserves are available at very low valuations.  We expect there will be consolidation in the industry and will monitor any acquisition opportunities if they arise.

John Teeling

Chairman

25 June 2013

__________________________________________________________________________________

CONNEMARA MINING COMPANY PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2012

	2012	2011
	€	€
CONTINUING OPERATIONS
Administrative expenses	(324,083)	(399,708)
OPERATING LOSS	(324,083)	(399,708)
Investment revenue	1,095	2,587
LOSS BEFORE TAXATION	(322,988)	(397,121)
Income tax expense	-	-
LOSS FOR THE YEAR AND
TOTAL COMPREHENSIVE INCOME	(322,988)	(397,121)
Loss per share - basic and diluted	(1.26c)	(1.59c)

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2012

	2012	2011
	€	€
ASSETS:
NON CURRENT ASSETS
Intangible assets	2,253,319	2,098,369
CURRENT ASSETS
Other receivables	23,426	52,441
Cash and cash equivalents	165,256	662,018
	188,682	714,459
TOTAL ASSETS	2,442,001	2,812,828
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables	(413,796)	(461,635)
NET CURRENT ASSETS	(225,114)	252,824
NET ASSETS	2,028,205	2,351,193
EQUITY:
Called-up share capital	257,097	257,097
Share premium	4,105,155	4,105,155
Share based payment reserve	55,915	55,915
Retained deficit	(2,389,962)	(2,066,974)
TOTAL EQUITY	2,028,205	2,351,193

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2012

	Called up		Share Based
	Share Capital	Share Premium	Payment Reserve	Retained Deficit	Total
	€	€	€	€	€
At 1 January 2011	204,597	3,028,874	55,915	(1,669,853)	1,619,533
Shares issued	52,500	1,135,690	-	-	1,188,190
Share issue expenses	-	(59,409)	-	-	(59,409)
Loss for the year	-	-	-	(397,121)	(397,121)
At 31 December 2011	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

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 2012

	2012	2011
	€	€
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the year	(322,988)	(397,121)
Investment revenue recognised in loss for the year	(1,095)	(2,587)
Exchange movements	(5,972)	22,524
	(330,055)	(377,184)
MOVEMENTS IN WORKING CAPITAL:
Decrease in trade and other payables	(47,839)	(6,269)
Decrease in trade and other receivables	29,015	12,762
CASH USED BY OPERATIONS	(348,879)	(370,691)
Investment revenue	1,095	2,587
NET CASH USED IN OPERATING ACTIVITIES	(347,784)	(368,104)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for exploration and evaluation	(154,950)	(862,496)
Receipts for exploration and evaluation	-	53,603
NET CASH USED IN INVESTING ACTIVITIES	(154,950)	(808,893)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of equity shares	-	1,188,190
Share issue costs	-	(59,409)
NET CASH FROM FINANCING ACTIVITIES	-	1,128,781
NET DECREASE IN CASH AND CASH EQUIVALENTS	(502,734)	(48,216)
Cash and cash equivalents at beginning of financial year	662,018	732,758
Effect of exchange rate changes on cash held in foreign currencies	5,972	(22,524)
Cash and cash equivalents at end
of financial year	165,256	662,018

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 2011. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

2.    Loss per Share                                                                                                                                 

	2012	2011
	€	€
Loss per share - Basic and Diluted	(1.26c)	(1.59c)

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:

	2012	2011
	€	€
Loss for the year attributable to equity holders of the parent	(322,988)	(397,121)
	2012	2011
	No.	No.
Weighted average number of ordinary shares for the
purpose of basic earnings per share	25,709,711	24,918,615

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                                                                        

	2012	2011
Exploration and Evaluation:	€	€
Cost
At 1 January	2,098,369	1,289,476
Additions	154,950	862,496
Disposals	-	(53,603)
At 31 December	2,253,319	2,098,369
Carrying amount:
At 31 December	2,253,319	2,098,369

The above represents expenditure on projects in Ireland. Included in additions to the Group intangible assets is €22,800 (2011: €10,800) of directors' remuneration which was capitalised during the year.

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 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 2012 was owned 25% by the Group and 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 on-going exploration and evaluation of these licences.  In the event that the group decides not to meet these cash calls its interests in TILZ Minerals Limited may be diluted accordingly.

On 21 December 2011 the Group sold its interest in licences in Zimbabwe to a third party.

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:

·      Geological development and operational risks

·      Compliance with licence obligations

·      Liquidity risks

·      On-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 2012, the directors are satisfied that the value of the intangible assets are not less than carrying value.

4.    Annual General  Meeting

The Company's Annual General Meeting will be held on Friday 26 July 2013 in the Westbury Hotel, Grafton Street, Dublin 2 at 1:00 pm.

5.    General Information

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2012. The financial information for 2011 is derived from the financial statements for 2011 which have been delivered to the Companies Registration Office. The auditors have reported on 2011 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 2012 will be delivered to the Companies Registration Office.

A copy of the Company's Annual Report and Accounts for 2012 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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