Final Results

RNS Number : 8590I

Connemara Mining Company plc

22 June 2011

 



22 June 2011

Connemara Mining Company PLC

Preliminary Results for the Year Ended 31 December 2010

Highlights:

·        Good results continue to flow from drilling in the Stonepark region in Limerick

·        Six drill rigs are working on the Connemara ground in Limerick

·        In 2011 the joint venture will drill 65 holes to delineate and expand the size of the discovery

·        Advanced stage negotiations ongoing to joint venture the Lough Sheelin block of licences.

·        Connemara is fully financed for current exploration plans

John Teeling, Chairman, commented:

"Current prices of over $2,000 US a ton makes zinc a valuable commodity and worth exploring for. This is particularly the case in Ireland which has the best discovery rates for zinc. Connemara is very active with exploration ongoing at our joint venture discovery at Stonepark near Limerick, at Thurles and at Lough Sheelin. There are good results in Stonepark, no base metals have been found at Thurles, while the Lough Sheelin ground is being joint ventured. Connemara is fully financed for current exploration plans."

Enquiries:
Connemara Mining Company Plc
John Teeling, Chairman	[phone]
Jim Finn, Financial Director
Smith & Williamson Corporate Finance
Nick Reeve	[phone]
College Hill
Nick Elwes	[phone]
Optiva Securities Ltd
Jason Robertson	[phone]
Jeremy King	[phone]

www.connemaramining.com

Statement Accompanying the Preliminary Results

Connemara is an AIM listed, tightly focused Irish zinc explorer. Since its foundation in 2007, the Company has acquired quality exploration licences in key locations with potential for world class zinc deposits. Recognising that the discovery and development of any discoveries would require large long term funding Connemara has always seen partnerships with market leaders as an essential element of its success strategy. Our joint venture with Teck of Canada has resulted in the significant zinc discovery in the Stonepark area near Limerick city in southwest Ireland. In 2011 the joint venture will drill 65 holes to delineate and expand the size of the discovery. Adjacent to Stonepark, Xstrata/Minco have a very large and growing zinc discovery. Currently a prefeasibility study is ongoing on the Xstrata/Minco ground where a 24million ton reserve grading 10% combined zinc and lead has been reported. It is now almost certain that the next world class zinc mine will be developed in Limerick. Connemara holds 16 licences in the Limerick area.

Stonepark and Stonepark North Discoveries

At the time of writing six drill rigs are working on the Connemara/Teck block of licences. First discovered in 2007 a second high grade shallow zone, Stonepark North, was discovered in 2009. Throughout 2010 and into 2011 drill results have expanded this new discovery until now it is in excess of 800 metres long and 150 metres wide, laying flat at about 220 metres depth and containing good commercial grades of zinc and lead, including some grades above 20 per cent combined zinc and lead.

The good drilling results in 2009/10 and the increasing attraction of zinc, led Teck to propose an expanded drilling and exploration programme for 2011. Six drilling rigs are now working on the block. In addition advanced geophysical, airborne gravity and, in a rare event for Irish mining, seismic techniques have been deployed to better understand the nature of this discovery. The expensive geological techniques used are to better define the structures below the ground so to better target drill holes. Zinc discoveries in Ireland tend to come in zones or lenses. So it is with Stonepark. Initially it was thought that the Stonepark and Stonepark North discoveries, some 2.7 kms apart could be the one orebody. Drilling results suggest otherwise. Stonepark zinc lies below 300 metres while Stonepark North zinc lies around 220 metres. So they are separate zones. Intriguingly, there is a chance that the two zones do connect as low grade mineralisation has been discovered around 320 metres depth in the Stonepark North drill holes.

The current drill programme has two objectives - close in drilling to better define Stonepark/Stonepark North and distant drilling from 1 kilometre to 10 kilometres away to try to get an understanding of the geology and the potential size of an orebody. Encouraging results have come from an area 1 kilometre to the southwest of Stonepark North.

The Limerick discovery remains a work in progress. Results are very good but not yet definitive. It remains an exploration play. The current intensive drilling will provide a clearer picture by end 2011.

Other Exploration Activity

While the focus is on Limerick we continue to work on our 100% owned licences. The principal activity has been on the 5 block Lough Sheelin area and on the 3 block Thurles area. Since 2005 Connemara has explored the Lough Sheelin area located 25 kms from the giant Navan zinc mine. We are looking for a Navan lookalike. Navan has ore up to 140 metres thick. After an 11 hole drilling programme during 2008 and 2009 we focused, in 2010, on an Induced Polarization (IP) programme and on soil geochemistry. Targets have been defined. They are deep and costly to drill. We are close to finalising a joint venture on this block. If concluded it will bring expert knowledge and finance to the venture.

Work on our Thurles licences located less than 10 kilometres from the Lisheen zinc mine identified good targets. The Lisheen mine is due to run out of ore by 2015 so an adjacent low grade deposit could have potential. The holes drilled to date have produced poor results. We are reassessing the data to identify options.

Finance

As Teck has expanded their drilling programme in Limerick our cash commitment increased. Connemara pays 25 per cent of the costs of the joint venture. We could opt to dilute our percentage, but the opportunity in Limerick is deemed to be well worth the commitment of monies.

In July 2010 we raised £1 million at 20p and in February 2011 we raised £1 million at 20p plus a 12 month warrant at 35p.

Connemara is a very small company. At the end of 2009 there were only 15 million shares issued. After two fund raisings there is today 25 million excluding the warrants.

The Company is fully funded through 2011 and 2012 on current expenditure proposals.

Strategy

Exploration is a long term game. Once the euphoria of a discovery evaporates the hard work of turning a resource into a measured reserve begins. This takes time and money. Irish independent mining companies Connemara, Minco and Belmore have each made, what by world standards are, significant base metal discoveries. Turning these discoveries into commercial mining operations needs well funded strong partnerships with major companies who can access world markets. The Limerick discoveries have the potential to be very big and rich, but they must be proven. The only true lie detector in mining is a drill hole. Although a drilling programme can be costly and time consuming our experienced technical team can provide the Company with cost effective results. I have every confidence that patience will be well rewarded.

John Teeling

Chairman

22 June 2011

Consolidated Statement Of Comprehensive Income

for the year ended 31 December 2010

	2010 €	2009 €
CONTINUING OPERATIONS
Administrative expenses	(301,754)	(283,271)
OPERATING LOSS	(301,754)	(283,271)
Investment revenue	2,160	13,342
LOSS BEFORE TAXATION	(299,594)	(269,929)
Income tax expense	-	-
LOSS FOR THE YEAR AND
TOTAL COMPREHENSIVE INCOME	(299,594)	(269,929)
Loss per share - Basic and Diluted	(1.71c)	(1.78c)

Consolidated Balance Sheet

as at 31 December 2010

	2010	2009
	€	€
ASSETS:
NON CURRENT ASSETS
Intangible assets	1,289,476	834,615
CURRENT ASSETS
Other receivables	65,203	62,357
Cash and cash equivalents	732,758	166,670
	797,961	229,027
TOTAL ASSETS	2,087,437	1,063,642
LIABILITIES:
CURRENT LIABILITIES
Trade and other payables	(467,904)	(307,122)
NET CURRENT ASSETS/(LIABILITIES)	330,057	(78,095)
NET ASSETS	1,619,533	756,520
EQUITY:
Called-up share capital	204,597	151,767
Share premium	3,028,874	1,919,097
Share based payment reserve	55,915	55,915
Retained deficit	(1,669,853)	(1,370,259)
TOTAL EQUITY	1,619,533	756,520

Statement Of Changes In Equity

for the year ended 31 December 2010

	Called-up Share Capital	Share Premium	Share Based Payment Reserve	Retained Deficit	Total
	€	€	€	€	€
At 1 January 2009	151,767	1,919,097	55,915	(1,100,330)	1,026,449
Loss for the year	-	-	-	(269,929)	(269,929)
At 31 December 2009	151,767	1,919,097	55,915	(1,370,259)	756,520
Shares issued	52,830	1,175,848	-	-	1,228,678
Share issue expenses	-	(66,071)	-	-	(66,071)
Loss for year	-	-	-	(299,594)	(299,594)
At 31 December 2010	204,597	3,028,874	55,915	(1,669,853)	1,619,533

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 2010

	2010	2009
	€	€
CASH FLOW FROM OPERATING ACTIVITIES
Loss for the year	(299,594)	(269,929)
Investment revenue recognised in loss for the year	(2,160)	(13,342)
Exchange movements	(2,019)	(28,691)
	(303,773)	(311,962)
MOVEMENTS IN WORKING CAPITAL:
Increase in trade and other payables	160,783	246,700
(Increase) in trade and other receivables	(2,847)	(12,179)
CASH USED BY OPERATIONS	(145,837)	(77,441)
Investment revenue	2,160	13,342
NET CASH USED IN OPERATING ACTIVITIES	(143,677)	(64,099)
CASH FLOW FROM INVESTING ACTIVITIES
Payments for intangible assets	(454,861)	(270,200)
NET CASH USED IN INVESTING ACTIVITIES	(454,861)	(270,200)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of equity shares	1,228,678	-
Share issue costs	(66,071)	-
NET CASH FROM FINANCING ACTIVITIES	1,162,607	-
NET INCREASE/(DECREASE)
IN CASH AND CASH EQUIVALENTS	564,069	(334,299)
Cash and cash equivalents at beginning of financial year	166,670	472,278
Effect of exchange rate changes on cash held in foreign currencies	2,019	28,691
Cash and cash equivalents at end of financial year	732,758	166,670

Notes:

1.   Accounting Policies

There were no changes in accounting policies from those set out in the Group's Annual Report for financial year ended 31 December 2009. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

2.   Loss per Share

	2010	2009
	€	€
Loss per share - Basic and Diluted	(1.71c)	(1.78c)
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:
	2010	2009
	€	€
Loss for the year attributable to equity holders of the parent	(299,594)	(269,929)
	2010	2009
	No.	No.
Weighted average number of ordinary shares for the
purpose of basic earnings per share	17,478,073	15,176,711

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

3.   Intangible Assets

	Group	Group
	2010	2009
	€	€
Exploration and Evaluation:
Cost:
At 1 January	834,615	564,415
Additions	454,861	270,200
At 31 December	1,289,476	834,615
Carrying amount:
At 31 December	1,289,476	834,615

The above represents expenditure on projects in Ireland and Zimbabwe. Included in the group intangible assets is €5,000 (2009: €Nil) of directors' remuneration which was capitalised during the year.

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

-	Uncertainties over development and operational costs;
-	Political and legal risks, including arrangements with government for licenses, profit sharing and taxation;
-	Liquidity risks;
-	Going concern;
-	Operational and environmental risks.

The realisation of this intangible asset is dependent on the discovery and successful development of economic reserves, including the ability of the Group to raise finance to develop the projects. 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 carrying value of exploration and evaluation of assets at 31 December 2010, the directors are satisfied that the value of the intangible asset is not less than carrying value.

4.   General Information

The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2010. The financial information for 2009 is derived from the financial statements for 2009 which have been delivered to the Companies Registration Office. The auditors have reported on 2009 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, financial assets and amounts due by group undertakings. The financial statements for 2010 will be delivered to the Companies Registration Office following the Company's Annual General Meeting.

A copy of the Company's Annual Report and Accounts for 2010 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 may also be viewed at Connemara Mining Company PLC's website at www.connemaramining.com.

 

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