Last checked at 10 Jun 2009 07:00
10th June 2009
Connemara Mining Company PLC
Preliminary Results for the Year Ended 31 December 2008
Highlights:
| • | Further commercial grade zinc discoveries at Stonepark, Limerick |
| • | A new mineralised zone, Stonepark North, discovered 1.5 kilometres away from the initial discovery |
| • | Good drilling results at Lough Sheelin require a follow up drilling programme |
| • | High grade zinc discovered in boulders at Castlemaine in Kerry |
| • | 2009 drilling season beginning in June |
| • | Connemara is now the fourth biggest licence holder in Irish exploration |
John Teeling, Chairman of Connemara Mining, commented:
"Connemara has had a successful run in exploration results - supporting our central investment case that Ireland is a viable zinc province.
Following the initial high grade zinc discovery in Limerick, five additional holes have hit. A scouting hole 1.5 kilometres away from the first discovery reported good zinc and lead grades. Given the nature of the geology, this is likely to be a second pod or lense. Further evidence of the region's potential is shown by the excellent results from the Minco / Xstrata drilling programme, adjacent to our Stonepark project.
Good results from our drilling at Lough Sheelin offers early hope of a large Tara style orebody, while the high grade zinc discovery at Castlemaine provides encouragement.
Connemara is well positioned to take advantage of what is likely to be the next wave of Irish zinc mine development."
| Enquiries: | |
| Connemara Mining Company Plc | |
| John Teeling, Chairman | +353 (0)1 833 2833 |
| Jim Finn, Financial Director | |
| Smith & Williamson Corporate Finance | |
| Nick Reeve | +44 (0)117 376 2213 |
| Barrie Newton | |
| College Hill | |
| Paddy Blewer | +44 (0)20 7457 2020 |
| Nick Elwes |
www.connemaramc.com
Statement Accompanying the Preliminary Results
Connemara, an Irish company listed on the London Stock Exchange (AIM) is one of the largest exploration licence holders in Ireland, holding 38 licences. The company is focused on zinc with an interest in gold exploration.
Zinc has been discovered on our ground at Stonepark in Limerick, at Lough Sheelin in Cavan, while we recently reported good results on our Castlemaine licence in Kerry.
Why zinc? Two principal reasons. Ireland is known as a zinc province, which means it has a history of zinc mining and has ground with proven world class zinc potential. Currently, two of the biggest zinc mines in the world are in Ireland, the Tara mine owned by Boliden and the Lisheen mine owned by Anglo American. In terms of potential, the Xstrata / Minco zinc discovery in Limerick, a few kilometres away from our Stonepark discovery, could provide at least one additional large world class zinc mine. Apart from geology, an Irish location has other advantages. Ireland has clear commercial rules, excellent infrastructure, title is secure and tax rates of 25% are low. There is no State participation. These factors offset higher labour and services costs.
The second reason for focusing on zinc is the fundamentals. Zinc is used in cars, housing, appliances and electronics. In particular, zinc is used to galvanise iron or steel and to produce close tolerance die cast parts for a multiplicity of uses. The famous Dinky car models were made of zinc. Zinc consumption growth rates have slowed in the post industrialised developed world, but are growing in the developing areas, particularly the BRIC economies (Brazil, Russia, India and China). It is estimated that future world consumption will grow at a 4.0% annual rate.
The economic chaos of the past eighteen months has impacted severely on both zinc consumers and producers. Cars, houses and appliances are among the products most severely impacted by the collapse of credit. Zinc metal prices fell from US$4,000 a ton to US$1,200 a ton - a price which produces losses for almost every mine. The price in mid 2009 of US$1,500 a ton is probably near cash breakeven for a zinc mine of average grade and output. The longer the price stays low, the more mines will close and the less exploration will be undertaken. The result will be a shortage when economic growth rates resume.
The Connemara licence portfolio in Ireland can be broken into 5 categories:
| • | 16 licences in Limerick adjacent to the Xstrata / Minco discoveries. Our main discovery is on this block; |
| • | 5 licences around Lough Sheelin on the Cavan / Meath border where good results were found in our first drilling campaign; |
| • | 11 licences targeting prime ground in the limestone belt. Generally the ground is close to an existing or former base metal mine; |
| • | 5 licences in the Southeast of Ireland; and |
| • | 1 licence with connections to the old Avoca gold mine of the early 1800s. |
Zinc Discovery at Stonepark, Limerick
A significant zinc discovery was made at Stonepark in Limerick in late 2007. The project is a joint venture between Connemara and Teck Cominco of Canada. Teck Cominco, one of the world's leading zinc producers, is spending CAD$3 million to earn a 75% interest. Following the 2007 discovery, 5 of the 19 holes drilled in 2008 contained commercial grades of zinc. Three of these holes had combined zinc / lead grades of greater than 20% in intervals of a metre or more. The 2008 drilling has shown that the area of contiguous resource grade mineralisation runs for at least 300 metres and remains open in most directions.
An additional positive development in 2008 was the result from a single drillhole 1.5 kilometres north of Stonepark, which intersected 0.95 metres of 2.73% zinc and 4.73% lead. Analysis of the core suggests that this is a separate zone of mineralisation. This is very significant as Irish zinc orebodies are often referred to as "strings of pearl". They comprise of a series of pods or lenses. A similar geological setting is found at Pallas Green.
The 2009 drilling season at Stonepark and Stonepark North begins in June.
Exploring the 100% Owned Connemara Licences
During 2008, Connemara undertook a scouting drilling programme on the five licence Lough Sheelin block, located about 20 kilometres West of the Tara mine. The target is a Tara style deposit - large thick mineralised zones. Eleven widely spaced holes were drilled in the Drumlerry area of the block. The early holes disappointed, but the last three found significant grades and thickness of zinc and lead. The style and grade of mineralisation is similar to what would be expected within one or two kilometres of a deposit. A follow up drilling programme is being evaluated.
It is said that the best place to find a mine is where there was a mine. A lead / silver mine existed in ancient times at Annagh, near the village of Castlemaine in Kerry. The nature of the geology in this area suggests that the zinc / lead mineralisation could stretch way beyond the old mine. Connemara undertook a programme of mapping and geophysics. Prospecting discovered boulders with high concentrations of zinc and lead, including one containing over 50% zinc located 400 metres West of the old mine. While one rock does not make a mine, the location and grade of the boulder is significant.
This area must be drilled and we intend to do so later in 2009.
Mapping, geophysics and geochemical work is ongoing on our remaining blocks.
Finance
Connemara has adequate funds to undertake required expenditure in 2009. The CAD$3 million commitment by Teck Cominco in the Limerick region could be reached in 2009 by the substantial drilling programme proposed. Further work will require Connemara to pay 25% of the costs. But funding success is rarely a problem.
The year's trading reported a reduced loss of €0.47 million (2007: €0.62 million), while cash balances closed the year at €0.47 million, with no debt.
Future
The focus of Connemara is firmly on zinc. The results to date demonstrate the quality of our licence portfolio. Our target is large, Irish type zinc / lead deposits. We have licences covering the spectrum from early stage to advanced exploration. In the coming months, we will drill Lough Sheelin and Castlemaine while our partner, Teck Cominco, will focus on exploring the size of the Stonepark discovery. As the world recovers from the economic collapse, Connemara is well placed to benefit from renewed investor interest in metals and exploration companies.
John Teeling
Chairman
10th June 2009
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
| 31/12/2008 € | 31/12/2007 € | ||
| Cost of admission to AIM | - | (264,925) | |
| Administrative expenses | (504,253) | (387,174) | |
| OPERATING LOSS | (504,253) | (652,099) | |
| Investment revenue | 31,458 | 27,701 | |
| LOSS BEFORE TAXATION | (472,795) | (624,398) | |
| Income tax expense | - | - | |
| LOSS FOR THE YEAR | (472,795) | (624,398) | |
| Loss per share - basic and diluted | (3.11)c | (4.62)c |
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2008
| 2008 € | 2007 € | ||
| ASSETS | |||
| NON CURRENT ASSETS | |||
| Intangible assets | 564,415 | 406,961 | |
| CURRENT ASSETS | |||
| Other receivables | 44,083 | 60,660 | |
| Cash and cash equivalents | 472,278 | 1,184,426 | |
| 516,361 | 1,245,086 | ||
| TOTAL ASSETS | 1,080,776 | 1,652,047 | |
| LIABILITIES | |||
| CURRENT LIABILITIES | |||
| Trade and other payables | (54,327) | (152,803) | |
| NET CURRENT ASSETS | 462,034 | 1,092,283 | |
| TOTAL ASSETS LESS CURRENT LIABILITIES | 1,026,449 | 1,499,244 | |
| EQUITY | |||
| 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) | (1,100,330) | (627,535) | |
| TOTAL EQUITY | 1,026,449 | 1,499,244 |
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2008
| Group | |||||
| Called up Share Capital | Share Premium | Share Based Payment Reserve | Retained Earnings Deficit | Total | |
| € | € | € | € | € | |
| At 1 January 2007 | 123,196 | 547,729 | 6,100 | (3,137) | 673,888 |
| Share based payments | - | - | 49,815 | - | 49,815 |
| Shares issued for cash | 28,571 | 1,371,368 | - | - | 1,399,939 |
| Loss for the period | - | - | - | (624,398) | (624,398) |
| At 31 December 2007 | 151,767 | 1,919,097 | 55,915 | (627,535) | 1,499,244 |
| Loss for the year | - | - | - | (472,795) | (472,795) |
| At 31 December 2008 | 151,767 | 1,919,097 | 55,915 | (1,100,330) | 1,026,449 |
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 arises on the grant of share options to employees and directors under the share options plan.
Retained earnings
Retained earnings comprise accumulated profit and losses in the current year and prior years.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2008
| 2008 € | 2007 € | ||
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| Loss for the year | (472,795) | (624,398) | |
| Investment revenue recognised in loss for the year | (31,458) | (27,701) | |
| Share based remuneration | - | 49,815 | |
| Exchange movements | 210,852 | - | |
| (293,401) | (602,284) | ||
| MOVEMENTS IN WORKING CAPITAL | |||
| (Decrease)/increase in trade and other payables | (98,476) | 110,371 | |
| Decrease/(increase) in trade and other receivables | 16,577 | (3,791) | |
| CASH USED BY OPERATIONS | (375,300) | (495,704) | |
| Investment revenue | 31,458 | 27,701 | |
| NET CASH USED IN OPERATING ACTIVITIES | (343,842) | (468,003) | |
| CASH FLOW FROM INVESTING ACTIVITIES | |||
| Payments for intangible fixed assets | (157,454) | (149,436) | |
| NET CASH USED IN INVESTING ACTIVITIES | (157,454) | (149,436) | |
| CASH FLOW FROM FINANCING ACTIVITIES | |||
| Proceeds from issues of equity shares | - | 1,399,939 | |
| NET CASH GENERATED FROM FINANCING ACTIVITIES | - | 1,399,939 | |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (501,296) | 782,500 | |
| Cash and cash equivalents at beginning of financial year | 1,184,426 | 401,926 | |
| Effect of exchange rate changes on cash held in foreign currencies | (210,852) | - | |
| Cash and cash equivalents at end of financial year | 472,278 | 1,184,426 |
Notes:
1. Accounting Policies
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
| 31/12/2008 € | 31/12/2007 € | ||
| Loss per share - Basic and Diluted | (3.11c) | (4.62c) |
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:
| 31/12/2008 € | 31/12/2007 € | ||
| Loss for the year attributable to equity holders of the parent | (472,795) | (624,398) | |
| 31/12/2008 No. | 31/12/2007 No. | ||
| Weighted average number of ordinary shares for the purpose of basic earnings per share | 15,176,710 | 13,517,219 |
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
| 2008 € | 2007 € | ||
| Exploration and Evaluation: | |||
| Cost: | |||
| At 1 January | 406,961 | 257,525 | |
| On Acquisition | - | - | |
| Additions | 157,454 | 149,436 | |
| At 31 December | 564,415 | 406,961 | |
| Carrying amount: | |||
| At 31 December | 564,415 | 406,961 |
The above represents expenditure on projects in Ireland.
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. |
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 2008, 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 €Nil (2007: €16,605) 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 2008. The financial information for 2007 is derived from the financial statements for 2007 which have been delivered to the Companies Registration Office. The auditors have reported on 2007 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 2008 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 2008 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.connemaramc.com