Interim Report

RNS Number : 6902O

Connemara Mining Company plc

22 September 2011

 



22 September 2011

Connemara Mining Company plc

("Connemara" or the "Company")

Interim Statement for the period ended 30 June 2011

In recent weeks we reported the discovery of a new zone, Stonepark West, over a kilometre away from the two previously reported zones. A map of the discovery is available at www.connemaramining.com. These results confirm that the zinc-lead discovery at Stonepark in Limerick continues to grow and are a further indication that the nature and extent of the Limerick mineralisation will only be fully realised during mining. However, for now the exploration phase is making good progress with the operator and 75% shareholder in the venture, Teck Ireland, continuing to drill with four rigs on site.

As shown on the map on the website, the discovery area is large. The three zones announced are more than 1.5 kilometres apart so are likely to be separate in a manner typical of Irish zinc discoveries. However there are indications that there may be some mineralised connection between them. Table 1 gives drilling highlights.

Table 1: Stonepark Drilling Highlights

Hole ID	From (m)	To (m)	Thickness1 (m)	zinc (%)	lead (%)
TC-2638-086	382.5	385	2.5	4.16	4.37
Including:	383.9	385	1.1	6.13	4.63
TC-2638-078	339.8	340.8	1	5.97	0.24
TC-2638-0742	220.00	228.65	8.65	7.72	2.19
	Including:
TC-2638-0742	224.45	227.3	2.85	17.41	3.98
TC-2638-0642	273.00	276.10	3.10	1.92	0.56
TC-2638-0642	288.00	290.00	2.00	1.09	0.01
TC-2638-0712	260.30	262.00	1.70	3.01	0.09

¹All drill holes are vertical (-90 degrees). ²Reported 25 May 2011.

The nature of the Stonepark discoveries, like those found by Minco/Xstrata, are typical of Irish zinc discoveries. They can be large and rich but are often in separate zones so need a significant number of drill holes to reach a measured estimate of volume. We believe that the Limerick discoveries have the potential to produce at least one world class zinc mine. It is worth noting that the current discoveries are all on one of the 16 Limerick licences in the Connemara/Teck joint venture. Much of the work done in the first half of 2011 was regional involving seismic, aeromag and drilling up to 9 kilometres away from Stonepark. There has been a high grade hit on the licence adjacent to Stonepark. While this confirms that the current discoveries are open to expansion on three of four sides, it also means that hundreds of drill holes will be needed to test this block. The Directors believe that the Connemara block may become part of a world class lead-zinc mining district. The zinc story is strong and the discoveries in Limerick are highly promising. While no estimate of volume has been issued for Stonepark, the adjacent discovery of Minco/Xstrata has been reported to contain at least 30 million tons at a combined zinc/lead percentage of 10% per ton of ore.

While the clear focus is on Stonepark, Connemara has other high quality base metal exploration projects in Ireland. We expect to agree a joint venture on our Lough Sheelin block which will result in some deep holes being drilled. We are preparing a work programme on our Mine River block of licences in Wicklow/Wexford while geophysical and geochemical work is ongoing on our Nenagh block of ground.

The investment climate

Many international investors are looking for good short term returns and or long term security. Speculative shares are not an attractive option for the wider investment community therefore we are looking to a smaller pool of investors who pick and choose from a variety of plays. We are seeking ways of getting to those investors so that the full value of our projects can be realised. Although Connemara is fully funded until the end of 2012 and the geological results are outstanding, the share price is a cause for concern, with a market capitalisation of just above £3 million. A series of events have combined to damage our share price. The general economic malaise is bad for speculative shares and the AIM market has been badly hit as retail investors try to exit illiquid positions.

This is further exacerbated by the many Irish investors who have seen their net worth decimated by the virtual collapse of the Irish economy and so are forced to sell their Connemara shares. Those not forced to sell should look to a number of fundamental facts:

-     Zinc demand continues to grow at rates of 4% due entirely to Chinese, Indian, Brazilian and other emerging markets demands

-     These emerging markets are expected to grow far faster than declining Western economies

-     Zinc supply is sluggish with few new mines coming on stream

-     Zinc prices, above $2,000 a ton are profitable for producers

Future

It is likely that Teck will continue to drill with multiple rigs through 2012. We are funded for this. The joint venture under discussion on the Lough Sheelin block will also see early drilling. So operationally Connemara is set fair.

As Chairman I am less comfortable with the ongoing corporate activity in the sector where Xstrata have bid to acquire the Minco stake in the Pallas Green discoveries. The takeout price is poor reflecting current stock market conditions and the onus for Minco to continuously raise cash to maintain their interest. Connemara is in a better position in that it has few shares in issue, less than 26 million, and fewer shareholders thus making funding easier. However, maintaining our interest in this potentially world class zinc discovery will take time and cost money. The Board and I are working to secure the shareholders' position and will look at all options to achieve this as the project continues to grow.

John Teeling

Chairman

22 September 2011

Enquiries:

Connemara Mining Company Plc

John Teeling, Chairman                                                                     [phone]

Jim Finn, Financial Director

Westhouse Securities Limited

Richard Baty                                                                                            [phone]

Tim Feather

Optiva Securities Ltd

Jason Robertson                                                                                    [phone]

Jeremy King                                                                                             [phone]

College Hill

Nick Elwes                                                                                                [phone]

                                                www.connemaramining.com

Financial Information (unaudited)

						Six Months Ended				Year Ended
						30 June 11		30 June 10		31 Dec 10
						unaudited		unaudited		audited
Condensed Consolidated Statement of Comprehensive Income						€'000		€'000		€'000
Continuing Operations
Administrative expenses						(198)		(165)		(302)
OPERATING LOSS						(198)		(165)		(302)
Interest receivable						4		1		2
LOSS BEFORE TAXATION						(194)		(164)		(300)
Income tax expense						0		0		0
TOTAL COMPREHENSIVE LOSS						(194)		(164)		(300)
LOSS PER SHARE - basic and diluted						(0.81c)		(1.08c)		(1.71c)
Condensed Consolidated Balance Sheet						30 June 11		30 June 10		31 Dec 10
						unaudited		unaudited		audited
						€'000		€'000		€'000
ASSETS
NON CURRENT ASSETS
Intangible Assets						1,896		1,002		1,289
CURRENT ASSETS
Other receivables						75		48		65
Cash and cash equivalents						1,050		20		733
						1,125		68		798
TOTAL ASSETS						3,021		1,070		2,087
LIABILITIES
CURRENT LIABILITIES
Trade and other payables						(467)		(478)		(468)
NET CURRENT ASSETS/(LIABILITIES)						658		(410)		330
NET ASSETS						2,554		592		1,619
EQUITY
Share Capital						257		151		204
Share Premium						3,856		1,919		3,029
Reserves						(1,559)		(1,478)		(1,614)
TOTAL EQUITY						2,554		592		1,619
Condensed Consolidated Statement of Changes in Shareholders Equity
		Called-up				Share Based
		Share		Share		Payment		Retained
		Capital		Premium		Reserves		Deficit		Total
		€'000		€'000		€'000		€'000		€'000
As at 1 January 2010		151		1,919		56		(1,370)		756
Loss for the period								(164)		(164)
As at 30 June 2010		151		1,919		56		(1,534)		592
Shares issued		53		1,176						1,229
Share issue expenses				(66)						(66)
Loss for the period								(136)		(136)
As at 31 December 2010		204		3,029		56		(1,670)		1,619
Shares issued		53		1,135						1188
Share issue expenses				(59)						(59)
Warrants issued				(249)		249				0
Loss for the period								(194)		(194)
As at 30 June 2011		257		3,856		305		(1,864)		2,554
						Six Months Ended				Year Ended
						30 June 11		30 June 10		31 Dec 10
Condensed Consolidated Cash Flow						unaudited		unaudited		audited
						€'000		€'000		€'000
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the year						(194)		(164)		(300)
Investment revenue						(4)		(1)		(2)
Exchange movements						31		(2)		(2)
						(167)		(167)		(304)
Movements in working capital						(11)		185		158
CASH USED BY OPERATIONS						(178)		18		(146)
Investment revenue						4		1		2
NET CASH USED IN OPERATING ACTIVITIES						(174)		19		(144)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for intangible assets						(607)		(168)		(455)
NET CASH USED IN INVESTING ACTIVITIES						(607)		(168)		(455)
FINANCING ACTIVITIES
Proceeds from issue of equity shares						1,188		0		1,229
Share issue costs						(59)		0		(66)
NET CASH FROM FINANCING ACTIVITIES						1,129		0		1,163
NET DECREASE IN CASH AND CASH EQUIVALENTS						348		(149)		564
Cash and Cash Equivalents at beginning of the period						733		167		167
Effects of exchange rate changes on cash held in foreign currencies						(31)		2		2
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD						1,050		20		733

Notes:

1.     Information

The financial information for the six months ended 30 June 2011 and the comparative amounts for 30 June 2010 are unaudited. The financial information above does not constitute full statutory accounts within the meaning of section 148 of the Companies Act 1963.

The interim financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The accounting policies and methods of computation used in the preparation of the interim financial statements are consistent with those used in the Group 2010 Annual Report, which is available at www.connemaramining.com

The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.

2.     No dividend is proposed in respect of the period.

3.     Loss per share

	30 June 11		30 June 10		31 Dec 10
	€		€		€
Loss per share - Basic and Diluted	(0.81c)		(1.08c)		(1.71c)
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:
Loss for the year attributable to equity holders of the Parent	(193,947)		(164,353)		(299,594)
Weighted average number of ordinary shares for the purpose of basic earnings per share	24,055,601		15,176,711		17,478,073

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

4.     Intangible Assets

	30 June 11		30 June 10		31 Dec 10
Exploration and evaluation assets:	€'000		€'000		€'000
Cost at 1 January	1,289		834		834
Additions	607		168		455
Closing Balance	1,896		1,002		1,289

               The above represents expenditure on projects in Ireland and Zimbabwe.

               The group's activities are subject to a number of significant potential risks including;

               - Uncertainties over development and operational costs

               - Political & legal risks, including arrangements with governments for licences, profit sharing and Taxation;

               - Liquidity risks

               - Going concern

               - Operational and environmental risks

               The realisation of this intangible asset is dependent on the successful development of economic reserves, including the ability of the Group to raise finance to develop the project.  Should this prove unsuccessful the value included in the balance sheet would be written off.

               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 deferred development expenditure at 30 June 2011, the directors are satisfied that the value of the intangible asset is not less than carrying value.

5.    Share Capital

	30 June 11		30 June 10		31 Dec 10
	€'000		€'000		€'000
Authorised:
200,000,000 ordinary shares of €0.01 each	2,000		2,000		2,000
Allotted, Called Up and Fully Paid:	Number		Share Capital €'000		Share Premium €'000
Balance at 1 January 2010	15,176,711		151		1,919
Issued during period	0		0		0
Balance at 30 June 2010	15,176,711		151		1,919
Issued during period	5,283,000		53		1,176
Less share issue expenses					(66)
Balance at 31 December 2010	20,459,711		204		3,029
Issued during period	5,250,000		53		1,135
Less share issue expenses					(59)
Less warrants issued					(249)
Balance at 30 June 2011	25,709,711		257		3,856

               On 25 February 2011, the company raised £1,050,000, before expenses, through the placing of 5,250,000 new ordinary shares of €0.01 each at a price of 20p per share.  Each share was allocated a 12 month warrant to purchase one share exercisable at a price of 35p.

The funds raised will be used as working capital to advance Connemara's projects, and fully covers Connemara's existing and normally anticipated working capital requirements until the end of 2012.

6.    The Interim Report for the six months to 30 June 2011, was approved by the Directors on 22 September 2011.

7.    Copies of this announcement will be sent to shareholders and will be available for inspection at the Companies Registered Office at 162 Clontarf Road, Dublin 3, Ireland. The Interim Report may also be viewed at Connemara Mining Company Plc's website at www.connemaramining.com.

 

END

 

 

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