Last checked at 5 Jun 2008 07:00
5th June 2008
Connemara Mining Company PLC
Final Results for Year Ended 31 December 2007
Highlights:
A major zinc discovery in Limerick, Ireland. Step out hole produces good results
Zinc discovered in 5 of 11 drillholes on the Lough Sheelin block 25km west of the Tara zinc mine
Strong licence holding
John Teeling, Chairman of Connemara Mining, commented;
"Two zinc discoveries in our first year as a publicly listed company is a major achievement. The Limerick discovery has very high grades while the Lough Sheelin discovery may be the halo around a large deposit.
We know Irish zinc. We are bringing this experience to bear; in our choice of ground, where we now hold 38 blocks; in our choice of partner, where Teck Cominco operates and pays for Limerick; and in our ability to find skilled people.
Exploration is always risky. A couple of very good holes do not make a mine but the odds are shortening."
Enquiries:
| Connemara Mining Company Plc | |
| John Teeling, Chairman | +353 (0)1 833 2833 |
| Jim Finn, Financial Director | |
| Blue Oar Securities Plc | |
| John Wakefield | +44 (0) 117 933 0020 |
| Simon Moynagh | |
| College Hill | |
| Paddy Blewer | +44 (0) 207 457 2020 |
| Nick Elwes |
www.connemaramining.com
Connemara Mining Company PLC - Statement Accompanying the Final Results
Connemara has made very substantial progress since first listing on AIM in July 2007.
The recent highlights are:
a significant zinc discovery in Limerick, Ireland;
a second zinc discovery at Lough Sheelin in Cavan, Ireland, with zinc in five of eleven holes;
acquisition of a substantial land bank in Ireland.
The late 2007 discovery at Stonepark in Limerick is of major importance. Our partner, Teck Cominco, in November 2007, intersected significant zinc lead mineralisation in the fourth of what was a five hole scouting programme on the Monaster licence.
A follow up programme in early 2008 has again encountered significant zinc and lead in a step out hole 100 metres away from the discovery hole. Table 1 below gives the results from the two holes.
Table 1: Drill Results from Stonepark Zinc Discovery
| Hole ID | Hole Angle (degrees) | From (m) | To (m) | Thick- ness (m) | Estimated True Thickness (m) | Zn (%) | Pb (%) |
| TC-2638-4 | -90 | 372.75 | 374.05 | 1.30 | 1.30 | 6.85 | 0.3 |
| TC-2638-4 | -90 | 374.05 | 376.1 | 2.05 | 2.05 | 0.3 |
|
| TC-2638-4 | -90 | 376.1 | 380.1 | 4.00 | 4.00 | 11.62 | 3.46 |
|
|
| including: |
|
|
|
|
|
| TC-2638-4 | -90 | 378.95 | 380.1 | 1.15 |
| 28.61 | 4.17 |
|
|
|
|
|
|
|
|
|
| TC-2638-7 | -76 | 394.85 | 410.2 | 15.35 | 14.9 | 3.25 | 0.33 |
|
|
| including: |
|
|
|
|
|
| TC-2638-7 | -76 | 394.85 | 397.7 | 2.85 | 2.8 | 12.18 | 0.75 |
The good grades and big thickness of the Stonepark mineralisation is very exciting. It is very similar to the ore at the large Anglo American Lisheen mine to the northeast.
The Stonepark discovery lies 5 kilometres from the Xstrata / Minco zinc discoveries at Caherconlish and Tobermalug. The target is a large Irish style zinc deposit. The Stonepark programme is fully funded by Teck Cominco who are spending Cdn$3.0 million to earn a 75 percent interest in the block.
The second zinc discovery is at Lough Sheelin on the borders of Cavan / Meath about 100 miles to the northeast of the Limerick find. The target on this block of 5 licences is a Tara Mines / Navan lookalike. The Tara mine at Navan is the 6th largest zinc mine in the world. The Lough Sheelin block is located 25km west of Navan in a geological and
structural setting analogous to that of Navan. Following extensive geophysical and geochemical work to identify drill targets, Connemara began drilling in November 2007.
Good results meant that a 5 hole programme was extended to 11 holes as we followed a trail of mineralisation. Zinc was found in 5 holes.
Why Ireland and why zinc? Ireland produced 40 percent of Europe's zinc in 2007. Ireland has many advantages; it is very prospective for zinc with 3 of the largest zinc mines in the world operating in the country, commercial rules are clear, legal title is sound, tax rates are low and there is no state participation. The infrastructure is good and there are world class mining services available in country. But above all, the country is prospective for large zinc discoveries. Some 28 companies are now prospecting in the country including the world's largest mining houses. As an early mover in the revival of Irish zinc, Connemara has obtained a strong land bank. In total, 38 licences are held mainly for zinc and lead in known mineralised trends.
Zinc and lead are cinderella metals. For decades leading up to 2003, the price of each metal slowly eroded away. Exploration dried up. The advanced economies of the world used less and less zinc and lead as they became more service orientated. In Ireland, the number of prospecting licences fell by 75 percent in 20 years. There was little or no investment interest in the metals. The original Limerick discovery by Minco in 2001 excited little interest to the extent that the Minco partner at the time dropped the ground adjacent to the discovery; ground now held by Connemara.
But the decline ignored the fundamentals. Zinc and lead have widespread every day uses in housing, appliances, cars, electronics and batteries. The main uses for zinc are galvanising, die-casting and brass, while lead remains vital for batteries. Chinese, Indian, Brazilian and Russian consumers (the BRIC economies) want vast amounts of the products which use zinc and lead. One simple example will suffice. It is estimated that the number of cars in China will grow from 25 to 400 million in a generation. About 80 pounds of zinc goes into a Chinese car. Worldwide demand for zinc and lead is rising and expected to continue to rise.
What of supply? There is plenty of lead and zinc waiting to be discovered. It is a function of time and money. Supply is lumpy. It tends to be added in large increments while mine lives are often less than 20 years.
Shortage of supply led to price peaks in 2006, but now the price has fallen back to US$2,000 plus a tonne for each metal. New mines coming on stream as a result of the high prices will match the growth in demand for a few years, but by 2012 a deficit in supply is likely.
In the medium term the fundamentals are good.
Future
This will be a busy year for Connemara. An expanded drilling programme in Limerick is likely. Follow up drilling will take place in Lough Sheelin.
The recently acquired licences will be subject to geophysical and geochemical surveys. All of the licences were prospected in earlier decades and all have traces of mineralisation. By applying new thinking, new technology and the experience gained in Irish zinc exploration in the past 20 years, new drilling targets will be identified.
Exploration is a high risk game. Many people have spent years unsuccessfully prospecting and drilling without finding anything. In one year, Connemara has two exciting discoveries; one showing world class grades, the other in an area similar in geology to one of the largest zinc mines ever found.
The future looks very good. We have the finance to fund all of our current programmes.
John Teeling
Chairman
5th June 2008
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
| Period from | |||
| Year ended | 28/3/2006 to | ||
| 31/12/2007 | 31/12/2006 | ||
| € | € | ||
| Cost of admission to AIM | (264,925) | - | |
| Administrative expenses | (387,174) | (8,385) | |
| OPERATING LOSS - CONTINUING OPERATIONS | (652,099) | (8,385) | |
| Finance costs | (301) | - | |
| Finance revenue | 28,002 | 5,248 | |
| LOSS BEFORE TAXATION | (624,398) | (3,137) | |
| Income tax expense | - | - | |
| LOSS FOR THE YEAR | (624,398) | (3,137) | |
| Loss per share - basic and diluted | (4.62)c | (0.03)c |
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2007
| 2007 | 2006 | ||
| € | € | ||
| ASSETS | |||
| NON CURRENT ASSETS | |||
| Intangible assets | 406,961 | 257,525 | |
| CURRENT ASSETS | |||
| Other receivables | 60,660 | 56,869 | |
| Cash and cash equivalents | 1,184,426 | 401,926 | |
| 1,245,086 | 458,795 | ||
| TOTAL ASSETS | 1,652,047 | 716,320 | |
| LIABILITIES | |||
| CURRENT LIABILITIES | |||
| Trade and other payables | (152,803) | (42,432) | |
| NET CURRENT ASSETS | 1,092,283 | 416,363 | |
| TOTAL ASSETS LESS CURRENT LIABILITIES | 1,499,244 | 673,888 | |
| EQUITY | |||
| Called-up share capital | 151,767 | 123,196 | |
| Share premium | 1,919,097 | 547,729 | |
| Share based payment reserve | 55,915 | 6,100 | |
| Retained earnings - (deficit) | (627,535) | (3,137) | |
| TOTAL EQUITY | 1,499,244 | 673,888 | |
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2007
| Group | |||||
| Called up | |||||
| Share | Share | Share Based | Retained | ||
| Capital | Premium | Payment Reserve | Earnings Deficit | Total | |
| € | € | € | € | € | |
| At 28 March 2006 | - | - | - | - | - |
| Share based payments | - | - | 6,100 | - | 6,100 |
| Shares issued for cash | 123,196 | 547,729 | - | - | 670,925 |
| Loss for the period | - | - | - | (3,137) | (3,137) |
| At 31 December 2006 | 123,196 | 547,729 | 6,100 | (3,137) | 673,888 |
| Share based payments | - | - | 49,815 | - | 49,815 |
| Shares issued for cash | 28,571 | 1,438,242 | - | - | 1,466,813 |
| Share issue expenses | - | (66,874) | - | - | (66,874) |
| Loss for the year | - | - | - | (624,398) | (624,398) |
| At 31 December 2007 | 151,767 | 1,919,097 | 55,915 | (627,535) | 1,499,244 |
Share capital
The share capital reserve comprises of share capital issued for cash.
Share premium reserve
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 represents the cumulative charge to the Consolidated Income Statement and Intangible assets of share based payments issued which are not yet exercised and issued as shares.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
| 2007 | 2006 | ||
| € | € | ||
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| Loss for the year/period | (624,398) | (3,137) | |
| Finance costs recognised in loss for the year/period | 301 | - | |
| Investment revenue recognised in loss for the year/period | (28,002) | (5,248) | |
| Share based remuneration | 49,815 | 6,100 | |
| OPERATING CASHFLOW BEFORE | |||
| MOVEMENTS IN WORKING CAPITAL | (602,284) | (2,285) | |
| Movements in working capital: | |||
| Increase in trade and other payables | 110,371 | 42,432 | |
| Increase in trade and other receivables | (3,791) | (56,869) | |
| CASH USED BY OPERATIONS | (495,704) | (16,722) | |
| Finance costs | (301) | - | |
| Investment Revenue | 28,002 | 5,248 | |
| NET CASH USED IN OPERATING ACTIVITIES | (468,003) | (11,474) | |
| INVESTING ACTIVITIES | |||
| Payments for intangible fixed assets | (149,436) | (257,525) | |
| NET CASH USED IN INVESTING ACTIVITIES | (149,436) | (257,525) | |
| FINANCING ACTIVITIES | |||
| Proceeds from issues of equity shares | 1,399,939 | 670,925 | |
| NET CASH GENERATED FROM | |||
| FINANCING ACTIVITIES | 1,399,939 | 670,925 | |
| NET INCREASE IN CASH | 782,500 | 401,926 | |
| Cash and cash equivalents at beginning | |||
| of financial year/period | 401,926 | - | |
| Cash and cash equivalents at end | |||
| of financial year/period | 1,184,426 | 401,926 |
Notes:
1. Accounting Policies
The Group's transition date to IFRS is 1 January 2006 and the comparative financial information for the year ended 31 December 2006 has been restated on a consistent basis with those accounting policies applied by the Group in preparing its first full statutory financial statements in accordance with IFRS as at 31 December 2007, except where otherwise required or permitted by IFRS 1 "First Time Adoption of International Accounting Standards".
2. Loss per Share
| Year Ended | Period from 28/3/2006 | ||
| 31/12/2007 | to 31/12/2006 | ||
| € | € | ||
| Loss per share - Basic and Diluted | (4.62c) | (0.03c) |
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:
| Year Ended | Period from 28/3/2006 | ||
| 31/12/2007 | to 31/12/2006 | ||
| € | € | ||
| Loss for the year attributable to equity holders of | |||
| the parent | (624,398) | (3,137) | |
| Weighted average number of ordinary shares for | |||
| the purpose of basic earnings per share | 13,517,219 | 10,320,578 | |
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
| 2007 | 2006 | ||
| € | € | ||
| Group | |||
| Exploration and Evaluation: | |||
| Cost: | |||
| At 1 January | 257,525 | - | |
| On Acquisition | - | 37,744 | |
| Additions | 149,436 | 219,781 | |
| At 31 December | 406,961 | 257,525 | |
| Net book value: | |||
| At 31 December | 406,961 | 257,525 |
Deferred Exploration and Evaluation expenditure at 31 December 2007 represents spend on projects in Ireland.
No amortisation is charged prior to the commencement of production. When production commences within an area of interest previously capitalised in respect of exploration, evaluation and development, these costs are amortised over the commercial reserves of the mining property on a unit of production basis.
All licences held by the Group to date are at an early stage, but all present indications, including those from geographical reports produced during 2007 are that it will have a value in excess of the accumulated costs to date. No impairment provision has been made in respect of these licences.
The group's activities are subject to a number of significant potential risks including;
Uncertainties over development and operational costs
Price fluctuations over the price of Zinc
Operational and environmental risks
Availability of funding
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 31 December 2007, the directors are satisfied that the value of the intangible asset is not less than carrying value.
Included in the above is an amount of €16,605 (2006: €Nil) of capitalised expenses related to equity settled share-based payment transactions during the year.
4. General Information
The financial information set out above does not constitute the Company's financial statements for the year ended 31 December 2007. The financial information for 2006 is derived from the financial statements for 2006 which have been delivered to the Companies Registration Office. The auditors have reported on 2006 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 2007 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 2007 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.