Last checked at 24 Jun 2010 07:00
24 June 2010
Connemara Mining Company PLC
Preliminary Results for the Year Ended 31 December 2009
Highlights:
·; The Stonepark zinc discovery in Limerick continues to grow in size and importance.
·; Recent results from Stonepark show an extension of a high grade mineralisation at about 200m depth.
·; Two rigs continue to drill the prospect which has potential on all sides.
·; Recent exploration work on our Thurles licence block is showing potential, some 4km from the Lisheen zinc mine.
John Teeling, Chairman, commented, "The potential in Stonepark is excellent and results continue to be very good. The timing of this discovery is ideal as zinc demand is growing and supply is, at best, flat."
| Enquiries: |
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| Connemara Mining Company Plc
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| John Teeling, Chairman | +353 (0)1 833 2833 |
| Jim Finn, Financial Director
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| Smith & Williamson Corporate Finance
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| Nick Reeve | +44 (0) 117 3762213 |
| Barrie Newton |
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| College Hill
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| Nick Elwes | +44 (0) 207 457 2020 |
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| www.connemaramining.com
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Statement Accompanying the Preliminary Results
The Stonepark zinc discovery in Limerick (Connemara - 25% and Teck Comenco 75%) continues to grow in size and importance. The recently announced discovery of high grade mineralisation over 400 metres from the Stonepark North zone is of great significance. It is either a major extension or yet another zone. Stonepark North is shallow, at about 220 metres depth, stretching over 500 metres to date and has produced some spectacular high grade intersections including, in April 2010, 4.5 metres of a combined 39% zinc/lead. A recent drill hole 400 metres away has an interval of 2.75 metres at almost 27% combined.
Close to our discovery, Minco/Xstrata, drilling less than 4 km from Stonepark, has outlined a number of zones containing 15 million tonnes of 12% combined zinc/lead ore. This is before recent drilling successes.
Further excitement comes from Belmore/Lundin Mining, drilling less than 30 kms from Stonepark, has published a series of top class zinc/lead silver grades over mineable widths. Ireland is once again living up to its reputation as the world's best zinc province.
The highly mineralised zone in the Stonepark/Pallas Green area covers about 10 sq km - very large by world standards. A UK brokers report (Beaufort) speculates there could be as much as 60 million tonnes of ore in the area. If this is true it will be one of the largest zinc discoveries in the world. From the work done to date, it is likely that at least one world class zinc mine will emerge. It is believed, by some, that two or more huge zinc mines will be developed.
The future of zinc in Ireland is further enhanced by the recently announced acquisition by Vedanta, the world's largest zinc producer, of the Lisheen zinc mine. The price was $308 million. Lisheen, the twelfth largest zinc mine in the world is located 30 kms away from Stonepark. Formerly owned by Anglo American, the mine is due to run out of ore reserves in 2014. The production facilities are suitable to treat Stonepark ore.
Let me put the above in context. For the last four decades, Ireland has been known as the world's best zinc province with 20 zinc discoveries and 4 world class mines to date, including the Tara mine, 5th in the world, and the Lisheen mine, 12th in the world. Most zinc discoveries in the rest of the world are small, whereas those found in Ireland tend to be exceptionally large. Recent discoveries in Limerick follow the Irish pattern.
The first decade of the 21st century is a good time to make a zinc discovery. World demand, which was growing at a 2% annual rate, has doubled as India, China and Brazil industrialize. Zinc is a critical ingredient in many industrial and consumer products such as car parts, galvanised roofs and parts for white goods. Car ownership in China is expected to grow 10 fold in two decades from 40 million to 400 million. The demand for housing in India and China is vast.
While demand grows, zinc supply is at best stable. Zinc is widely available in the earth's crust but rarely in commercial quantities. A rising price quickly brings new deposits on stream. However, Ireland as a source of production has many advantages - location, access to Western European markets, good infrastructure and services, guaranteed title, a sensible taxation regime and no state participation.
It is envisaged that the two rigs currently drilling Stonepark will continue during 2010 and 2011. Connemara will fund 25% of the programme at a cost of £500,000 a year.
Assuming the good results continue to flow, then development options need to be considered. Questions that will be asked and answered over the coming years include:
·; Whether one or more mines should be developed
·; Whether a combined Connemara/Minco orebody makes sense
·; Whether Xstrata, Teck, Vedanta, or even Connemara/Minco, should process Limerick ore in the Lisheen mine facilities.
There is a direct rail link from the discovery area to within 10 kms of Lisheen.
Other Exploration Activity
During 2009 and into 2010 our sole venture exploration has continued on five separate licence blocks held in Ireland. Three of the blocks are located in the highly prospective Irish midlands where the target is large high grade deposits. The other two areas are targeting massive sulphides and shear hosted gold. Following an 11 hole drilling programme on the 5 licence Lough Sheelin block in Cavan follow-up geochemical sampling identified a strong North-West/South-East zinc and lead anomaly. This needs to be drilled. Two drill holes were drilled on the Castlemaine block on the Kerry border. The results were disappointing and surprising. No mineralisation was discovered through extensive boulder mineralisation was found on the surface.
The 3 licence Thurles block is situated adjacent to the Lisheen mine and 12 km from the former Galmoy zinc mine. A detailed geophysical survey has detected a significant anomaly which needs drilling.
The 4 licence Nenagh block is located beside the worked out Silvermines mine. It has three specific targets which will be surveyed this year. The Moate block will be surveyed this year.
Future Strategy
This is simple. Play to our strengths. Stonepark has a real chance of becoming a mine or being part of a zinc mine. We encourage and support our partners, Teck, in their focus on Stonepark.
Ongoing drilling in Stonepark will see a flow of results. Every hole is unlikely to hit commercial ore but within a year, if not earlier, the shape and size of the orebody will take shape.
It is going to cost Connemara up to £1 million over the coming two years to pay our way in Stonepark. We are having a fundraising to ensure we have the funds in place.
While our focus is Limerick, we will not neglect our other licences. Our prospective ground should be attractive to industry players so a farm-in or joint venture is likely on some of the properties.
John Teeling
Chairman
24 June 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2009
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| 2009 |
| 2008 |
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| € |
| CONTINUING OPERATIONS |
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| Administrative expenses | (283,271) |
| (504,253) |
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| OPERATING LOSS | (283,271) |
| (504,253) |
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| Investment revenue | 13,342 |
| 31,458 |
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| LOSS BEFORE TAXATION | (269,929) |
| (472,795) |
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| Income tax expense | - |
| - |
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| LOSS FOR THE YEAR AND |
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| TOTAL COMPREHENSIVE INCOME | (269,929) |
| (472,795) |
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| Loss per share - basic and diluted | (1.78) c |
| (3.11) c |
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CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2009
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| 2009 |
| 2008 |
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| € |
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| ASSETS |
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| NON CURRENT ASSETS |
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| Intangible assets | 834,615 |
| 564,415 |
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| CURRENT ASSETS |
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| Other receivables | 62,357 |
| 50,178 |
| Cash and cash equivalents | 166,670 |
| 472,278 |
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| 229,027 |
| 522,456 |
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| TOTAL ASSETS | 1,063,642 |
| 1,086,871 |
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| LIABILITIES |
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| CURRENT LIABILITIES |
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| Trade and other payables | (307,122) |
| (60,422) |
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| NET CURRENT (LIABILITIES)/ASSETS | (78,095) |
| 462,034 |
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| NET ASSETS | 756,520 |
| 1,026,449 |
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| EQUITY |
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| Called-up share capital | 151,767 |
| 151,767 |
| Share premium | 1,919,097 |
| 1,919,097 |
| Share based payment reserve | 55,915 |
| 55,915 |
| Retained earnings - (deficit) | (1,370,259) |
| (1,100,330) |
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| TOTAL EQUITY | 756,520 |
| 1,026,449 |
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GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2009
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| Called up Share Capital | Share Premium | Share Based Payment Reserve | Retained Earnings Deficit | Total |
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| € | € | € | € | € |
| At 1 January 2008 | 151,767 | 1,919,097 | 55,915 | (627,535) | 1,499,244 |
| Loss for the year | - | - | - | (472,795) | (472,795) |
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| At 31 December 2008 | 151,767 | 1,919,097 | 55,915 | (1,100,330) | 1,026,449 |
| Loss for the year | - | - | - | (269,929) | (269,929) |
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| At 31 December 2009 | 151,767 | 1,919,097 | 55,915 | (1,370,259) | 756,520 |
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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 earnings
Retained earnings comprise accumulated profit and losses in the current and prior years.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2009
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| 2009 |
| 2008 |
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| CASH FLOW FROM OPERATING ACTIVITIES |
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| Loss for the year | (269,929) |
| (472,795) |
| Investment revenue recognised in loss for the year | (13,342) |
| (31,458) |
| Exchange movements | (28,691) |
| 210,852 |
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| (311,962) |
| (293,401) |
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| MOVEMENTS IN WORKING CAPITAL: |
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| Increase/(decrease) in trade and other payables | 246,700 |
| (92,381) |
| (Increase)/decrease in trade and other receivables | (12,179) |
| 10,482 |
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| CASH USED BY OPERATIONS | (77,441) |
| (375,300) |
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| Investment revenue | 13,342 |
| 31,458 |
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| NET CASH USED IN OPERATING ACTIVITIES | (64,099) |
| (343,842) |
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| CASH FLOW FROM INVESTING ACTIVITIES |
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| Payments for intangible assets | (270,200) |
| (157,454) |
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| NET CASH USED IN INVESTING ACTIVITIES | (270,200) |
| (157,454) |
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| NET DECREASE IN CASH AND CASH EQUIVALENTS | (334,299) |
| (501,296) |
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| Cash and cash equivalents at beginning |
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| of financial year | 472,278 |
| 1,184,426 |
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| Effect of exchange rate changes on cash held in foreign currencies | 28,691 |
| (210,852) |
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| Cash and cash equivalents at end |
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| of financial year | 166,670 |
| 472,278 |
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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 2008. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the council of the European Union.
2. Loss per Share
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| 2009 |
| 2008 |
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| € |
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| Loss per share - Basic and Diluted | (1.78c) |
| (3.11c) |
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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:
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| 2009 |
| 2008 |
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| € |
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| Loss for the year attributable to equity holders of the parent | (269,929) |
| (472,795) |
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| 2009 |
| 2008 |
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| No. |
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| Weighted average number of ordinary shares for the purpose of basic earnings per share | 15,176,711 |
| 15,176,711 |
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Basic and diluted loss per share are the same as the effect of the outstanding share options is anti dilutive and is therefore excluded.
3. Intangible Assets - Group
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| 2009 |
| 2008 |
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| Exploration and Evaluation: |
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| Cost: |
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| At 1 January | 564,415 |
| 406,961 |
| Additions | 270,200 |
| 157,454 |
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| At 31 December | 834,615 |
| 564,415 |
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| Carrying amount: |
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| At 31 December | 834,615 |
| 564,415 |
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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 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 exploration and evaluation of assets at 31 December 2009, 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 2009. The financial information for 2008 is derived from the financial statements for 2008 which have been delivered to the Companies Registration Office. The auditors have reported on 2008 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 2009 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 2009 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.