Final Results for the Year Ended 31 December 2016

RNS Number : 3367J

Connemara Mining Company plc

28 June 2017

 

28^th June 2017

Connemara Mining Company plc ("Connemara")

Final Results for the Year Ended 31 December 2016

Connemara Mining Company today announces its results for the year ending 31 December 2016.

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]
Jim Finn, Director
Gavin Berkenheger, Director	[phone]
Northland Capital Partners Limited
Matthew Johnson / Gerry Beaney	[phone]
John Howes
Dowgate Capital Stockbrokers Limited
Jason Robertson	[phone]
Blytheweigh	[phone]
Nick Elwes	[phone]
Camilla Horsfall	[phone]
Teneo PSG
Ciaran Flynn	[phone]
Alan Tyrrell	[phone]

www.connemaramining.com

Statement Accompanying the Final Results

Connemara is an Irish focused zinc and gold explorer with 35 licences spread across Ireland.  We have three joint ventures where we brought in partners with funds and technology.  Or so we hoped.  Two of the joint ventures are in zinc with Teck Resources, one of the world's greatest zinc companies.  Losses in areas other than zinc have ravaged the share price of Teck.  Exploration budgets were slashed to virtually nothing.  In recent years Teck have done little on our joint venture licences apart from keeping them in good standing.  I believe that the coming months will see developments in the joint ventures.

Hendrick Resources, a private Canadian gold prospector, joint ventured five gold licences in Wicklow/Wexford.  They did some excellent work identifying high potential targets.  Finance for small gold exploration companies in Canada has been virtually non-existent for the past five years.  The promoter has struggled to raise funds while also battling ill health.  Once again sufficient work has been done to keep our licences in good standing. 

Zinc has doubled in price in the past 18 months and I believe it has further to go.  Gold above $1,200 an ounce means that every 1 gram a ton is worth $40.  These prices make most producers profitable and should incentivise explorers and early stage investors into exploration shares.

There has been a dramatic revival of interest, particularly from Canada, in Irish zinc exploration with up to seven new companies entering the sector.  The announcement by Boliden, the owner of the Tara zinc mine at Navan in Meath, that they have identified an additional orebody on the property which will extend the commercial mine life by years has boosted interest.  It is thought that the use of 3D seismic techniques, prevalent in oil exploration but rare until now in Irish zinc/lead exploration, identified the structure at depth.

For many years the flagship Irish zinc exploration project has been at Pallas Green in Limerick, where Glencore the licence holder has identified 42 million tons of ore at a combined grade of 8% zinc/lead.  In recent years little or no exploration has been done on the property.  But it is now reported that eight drilling rigs are working on the site with a target of 22,000 metres of drilling.

The first Connemara/Teck joint venture is in Stonepark in Limerick, a few hundred metres from the Pallas Green discovery.  The excitement of the early years when three good zinc bearing zones were discovered has given way to care and maintenance.  This is not a good position for a junior explorer like Connemara which needs news and excitement.  Teck are operator and control over 76% of the joint venture.  We believe there is interest in acquiring Teck's share of the joint venture and we would be more than pleased to support any sale.  Such a sale would be positive for Connemara as we would like to see new eyes evaluate the potential on the Stonepark block.

The second joint venture with Teck is five licences in the Oldcastle area straddling the Meath/Cavan border.  This area has historical zinc/lead discoveries.  Our block is 30 km west of the Tara mine.  The target is a large ore body at depth.  Teck holds many licences in the midland area of Ireland and they appear to be following a regional model in which the geology of Oldcastle plays a part.  Teck are earning into the block so Connemara has no expenditure at present.  In 2016, Teck drilled one deep hole on the block with disappointing results.  We do not believe that one hole is enough, however such holes are expensive, costing up to €100,000 each.  Further drilling which is our preferred option will mean that Teck will earn into their 75% holding.  After which, like in Stonepark, Connemara will either fund its share or dilute.

We like zinc and believe that Ireland is the best zinc prospecting province in the world.  The geology is good, title is secure, skills are available and licencing terms are reasonable.  We have continued to monitor available ground and in the past year have added seven new licences.  Five new prospecting licences have been acquired in the Derrykearn area of Laois.  The properties lie along the Rathdowney Trend not far from the closed Galmoy and Lisheen zinc/lead mines.  Two historic mines, Tonduff and Derrykearn, are on the licences.  The best place to find a mine is where there is or was a mine.  Exploration technology is evolving rapidly so we believe that new eyes casting a critical look at the geology of Derrykearn may reveal new targets.

The two Ladyswell licences in Cork cover an area containing a former barite mine.  Barite is found in association with base metals.  Little historic exploration has been carried out on the ground.  Some early stage prospecting will take place this year.

Gold

We have two distinct gold exploration programmes - our 100% owned licence block in Donegal where we are active and our joint venture with Hendrick in Wicklow/Wexford which is effectively on care and maintenance.

The Inishowen block in Donegal now covers 187 km² in eleven licences.  We drilled four holes in 2016 with positive results including 4.82 metres at 5.48 grams/tonne of gold.

We also explored the old Glentogher silver mine approximately 4 km away from our discoveries to see if we could connect the two.  We failed to find significant gold grades.  Analysis of the geophysics over the area suggest additional veins and has identified two magnetic anomalies about 1 km north of the earlier drilling.  We are examining a drilling proposal for later in 2017.

Gold in Wicklow/Wexford has been the subject of lore, fable and frustration since first discovered in Avoca in 1796.  Over the decades many companies have prospected and explored to try to find the hard rock source for the gold found in the rivers and streams in the area.

Connemara personnel have long experience in the area.  We believe that we hold five of the best licences.  This view was supported by the decision of Hendrick Resources to acquire the licences surrounding our block and to joint venture our block.  Extensive work by Hendrick revealed numerous drilling targets on Connemara ground.  Then the recession hit, money dried up and the principal, Dale Hendrick, a renowned gold explorer, had health issues.  The joint venture is in limbo.  Because of the skills, experience and technology in Hendrick we are reluctant to walk away.  We are in discussions with the principals in order to seek a resolution.

Future

A rising tide lifts all ships.  So it is with Connemara.  Better zinc prices, renewed exploration actively in Ireland and the arrival of new explorers is good for Connemara.  We would be pleased for Teck to drill both joint ventures Stonepark and Oldcastle.  But that does not look likely for Stonepark.  We would support any transfer of the Teck interest to a new explorer willing to invest in the property.  Though the pace of exploration in Oldcastle is excruciatingly slow we are not spending any money and won't for some time.  Given the prospectivity and potential of Oldcastle a new partner with more commitment and deeper pockets would be our preferred way forward.

We believe that our new ground in Derrykearn and Ladyswell has excellent potential.  We will prospect the ground and then seek to bring in a partner.  Our overhead and joint venture partner spending is low so we spend very little money to do the exploration work.  But our partners are not spending on the ground.  We would like this rectified.  We have funded the company on a shoestring and will continue to do so.

John Teeling

Chairman

27^th June 2017

CONNEMARA MINING COMPANY PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

	2016	2015
	€	€
CONTINUING OPERATIONS
Administrative expenses	(195,584)	(202,965)
OPERATING LOSS	(195,584)	(202,965)
Investment revenue	-	4
LOSS BEFORE TAXATION	(195,584)	(202,961)
Income tax expense	-	-
LOSS FOR THE FINANCIAL YEAR AND
TOTAL COMPREHENSIVE INCOME	(195,584)	(202,961)
Loss per share - basic and diluted	(0.29c)	(0.36c)

CONNEMARA MINING COMPANY PLC

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2016

	2016	2015
	€	€
ASSETS:
FIXED ASSETS
Intangible assets	2,698,314	2,451,015
CURRENT ASSETS
Other receivables	13,632	28,299
Cash and cash equivalents	162,794	120,382
	176,426	148,681
TOTAL ASSETS	2,874,740	2,599,696
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables	(442,120)	(426,392)
NET CURRENT LIABILITIES	(265,694)	(277,711)
NET ASSETS	2,432,620	2,173,304
EQUITY:
Called-up share capital	757,897	557,797
Share premium	5,063,806	4,809,006
Retained deficit	(3,389,083)	(3,193,499)
TOTAL EQUITY	2,432,620	2,173,304

CONNEMARA MINING COMPANY PLC

STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

Group and Company
	Called up Share Capital	Share Premium	Share Based Payment Reserve	Retained Deficit	Total
	€	€	€	€	€
At 1 January 2015	557,797	4,809,006	-	(2,990,538)	2,376,265
Loss for the year	-	-	-	(202,961)	(202,961)
At 31 December 2015	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

In respect of prior financial year:

Group and Company
	Called up Share Capital	Share Premium	Share Based Payment Reserve	Retained Deficit	Total
	€	€	€	€	€
At 1 January 2014	357,397	4,524,801	49,815	(2,732,061)	2,199,952
Shares issued	200,400	300,600	-	-	501,000
Share issue expenses	-	(16,395)	-	-	(16,395)
Options exercised	-	-	(49,815)	49,815	-
Loss for the year	-	-	-	(308,292)	(308,292)
At 31 December 2014	557,797	4,809,006	-	(2,990,538)	2,376,265
Loss for the year	-	-	-	(202,961)	(202,961)
At 31 December 2015	557,797	4,809,006	-	(3,193,499)	2,173,304

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 2016

	2016	2015
	€	€
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the financial year	(195,584)	(202,961)
Investment revenue recognised in loss for the financial year	-	(4)
Exchange movements	11,963	(16,334)
	(183,621)	(219,299)
MOVEMENTS IN WORKING CAPITAL
Increase/(Decrease) in trade and other payables	15,728	(30,980)
Decrease in other receivables	14,667	41,099
CASH USED BY OPERATIONS	(153,226)	(209,180)
Investment revenue	-	4
NET CASH USED IN OPERATING ACTIVITIES	(153,226)	(209,176)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for exploration and evaluation
NET CASH USED IN INVESTING ACTIVITIES	(247,299)	(71,624)
CASH FLOW FROM FINANCING ACTIVITIES	(247,299)	(71,624)
Proceeds from issue of equity shares	478,842	-
Share issue costs	(23,942)	-
NET CASH FROM FINANCING ACTIVITIES	454,900	-
NET INCREASE/(DECREASE) IN
CASH AND CASH EQUIVALENTS	54,375	(280,800)
Cash and cash equivalents at beginning
of financial year	120,382	384,848
Effect of exchange rate changes on cash held in foreign currencies	(11,963)	16,334
Cash and cash equivalents at end
of financial year	162,794	120,382

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 2015.  The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

2.    Loss per Share                                                                                                                                 

	2016	2015
	€	€
Loss per share - Basic and Diluted	(0.29)	(0.36c)

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:

	2016	2015
	€	€
Loss for the year attributable to equity holders of the parent	(195,584)	(202,961)
	2016	2015
	No.	No.
Weighted average number of ordinary shares for the
purpose of basic earnings per share	68,498,396	55,779,711

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

	2016	2015
Exploration and Evaluation:	€	€
Cost:
At 1 January 2016	2,451,015	2,379,391
Additions	247,299	71,624
At 31 December 2016	2,698,314	2,451,015
Carrying amount:
At 31 December 2016	2,698,314	2,451,015

The above represents expenditure on projects in Ireland. Included in the Group intangible assets is €Nil (2015: €Nil) 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 75% interest. As per the agreement the licences have been transferred into a new company, Oldcastle Zinc Limited. As at 31 December 2016 Teck had completed €1,064,403 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.

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 2016 was owned 23.44% (2015: 23.44%) by Limerick Zinc Limited and 76.56% (2015: 76.56%) 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.

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 2016, the directors are satisfied that the value of the intangible asset is not less than carrying value.

Segmental analysis	2016	2015
	€	€
Limerick	1,404,296	1,370,210
Oldcastle	330,000	330,000
Rest of Ireland	964,018	750,805
	2,698,314	2,451,015

4.    Share Capital and Share Premium

	2016	2015
	€	€
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 2015	55,779,711	557,797	4,809,006
Issued in the year	-	-	-
At 31 December 2015	55,779,711	557,797	4,809,006
Issued in the year	20,010,000	200,100	278,742
Share issue costs	-	-	(23,942)
31 December 2016	75,789,711	757,897	5,063,806

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. As date of issue each warrant had a fair value of 0.0824p.

5.    Annual General  Meeting

The Company's Annual General Meeting will be held on 24^th July 2017 in the Shelbourne Hotel, St. Stephen's Green, Dublin at 1:00 pm.

6.    General Information

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2016.  The financial information for 2015 is derived from the financial statements for 2015 which have been delivered to the Companies Registration Office.  The auditors have reported on 2015 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 2016 will be delivered to the Companies Registration Office.

A copy of the Company's Annual Report and Accounts for 2016 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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