Last checked at 30 Sep 2010 07:00
30th September 2010
Connemara Mining Company PLC
Interim Statement for the period ended 30th June 2010
| - | Connemara holds a 25% interest in 16 exploration licences in an emerging world class zinc district in Limerick. |
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| - | Drilling on the Stonepark project has intersected significant zinc mineralisation. |
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| - | Zinc price forecasts are positive. |
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| - | Connemara raised £1 m in July 2010 which will fully fund the drilling programme to the end of 2011. |
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| - | 9 drill holes remain to be completed in the 2010 programme. |
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| - | A further 80 are planned for 2011. |
This is a very exciting time for Connemara shareholders. The zinc mineralisation discovered in the Limerick basin is emerging as a world class find. Xstrata/Minco recently announced an inferred resource of 24.1 million tons of 7.85% zinc and 1.35% lead at the Pallas Green project, close to the Stonepark discovery of Connemara/Teck. In recent months Connemara has announced a series of high-grade zinc-lead intersections occurring within a zone covering a surface area of 650 metres by 150 metres in the Stonepark North zone. This zone remains open in all directions. The Connemara exploration programme is at a earlier stage than that of Xstrata/Minco but the potential for a large economic deposit is considered to be excellent.
It is a good time to be in zinc. Zinc is used in cars, housing, appliances and electronics, all uses growing rapidly due to demand in India, China, Brazil and other emerging economies. Supply is currently flat with a significant production deficit anticipated over the next decade. Fifty mines will close within the next 6 years. There are few new projects scheduled to come on stream, which should result in a growing supply/demand gap. Zinc price forecasts are positive.
Why explore for zinc in Ireland? Simply because it is a world class zinc province, being number one in the world for discoveries per square kilometre. Irish zinc mines produce a clean zinc concentrate that is highly valued and sought after by smelters. There is security of title, taxes are reasonable and there is no State participation. Connemara is the fourth largest exploration licence holder in Ireland with 32 licences.
The Stonepark Discovery
Zinc-lead mineralization was discovered at Stonepark in late 2007 and follow-up drilling has intersected significant high-grade zinc-lead mineralization over a large area. The highlight of the 2010 drilling program is hole 45 which intersected a 7.45 m zone grading 27.8% zinc plus lead from 209 m depth. Table 1 gives results from some of the 2010 drill holes. Drilling to date at Stonepark has outlined three mineralised zones, which are currently separate, but further drilling may show that these zones link up.
Table 1: Stonepark North Drilling Highlights
| Hole ID | From (m) | To (m) | Thickness (m) | zinc (%) | lead (%) |
| TC-2638-055 | 195.0 | 199.9 | 4.9 | 10.57 | 3.05 |
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| Including: |
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| 196.75 | 199.5 | 2.75 | 16.47 | 5.26 |
| TC-2638-053 | 209.4 | 216.25 | 6.85 | 10.47 | 3.68 |
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| Including: |
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| TC-2638-053 | 212.80 | 215.55 | 2.75 | 19.76 | 6.99 |
| TC-2638-051 | 221.40 | 228.95 | 7.55 | 4.88 | 1.49 |
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| Including: |
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| TC-2638-051 | 224.05 | 225.05 | 1.00 | 21.90 | 7.26 |
| TC-2638-045 | 209.10 | 216.55 | 7.45 | 19.24 | 8.52 |
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| Including: |
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| TC-2638-045 | 211.85 | 216.10 | 4.25 | 26.64 | 12.30 |
| TC-2638-038 | 251.40 | 253.20 | 1.80 | 5.65 | 0.91 |
| TC-2638-036 | 202.70 | 208.05 | 5.35 | 13.22 | 3.18 |
| TC-2638-032 | 207.60 | 215.40 | 7.80 | 5.18 | 2.68 |
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| Including: |
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| TC-2638-032 | 214.05 | 215.40 | 1.35 | 10.40 | 2.16 |
| TC-3638-026 | 216.05 | 223.35 | 7.20 | 13.07 | 2.23 |
The discovery at Stonepark is within a small area on one (PL2638) of 16 licences covered by the Connemara/Teck joint venture. All 16 licences have the potential to host zinc-lead mineralisation. Sufficient exploration work is been carried out this year on the entire licence block to keep all of the licences in good standing with the licensing authorities. Two drill rigs are currently drilling a series of regional scouting holes to test for new zones of zinc-lead mineralization outside of the Stonepark area. Drill testing of these outlying targets will be completed in October after which the rigs will move back to Stonepark.
To the east of Stonepark lies the Pallas Green block which is the focus of intense exploration activity by the Xstrata/Minco joint venture and where a series of high-grade sulphide zones have also been discovered. Zinc-lead mineralization and associated hydrothermal brecciation at Pallas Green and Stonepark are broadly similar in style. A picture is emerging of a large ore-forming system in the Limerick area comprising multiple zones of breccia-hosted, zinc-lead mineralization spread over an area of several tens of square kilometres and comparable in size to the Rathdowney Trend (Lisheen and Galmoy). The geological structures that appear to control the mineralised zones already defined by Xstrata/Minco and Connemara/Teck run across the licence boundary between the two groups supporting the idea of a single, large mineralising system. This structural trend runs through the Stonepark area and continues for over 12km to the southwest, through the ground controlled by Connemara/Teck. This has significant implications for the prospectivity of the block and the potential for new discoveries.
Connemara holds a number of other licences, in other parts of Ireland, in particular, three blocks in the Lough Sheelin, Nenagh and Thurles areas. Geophysical and geochemical work has been completed and plans are underway to drill the Thurles and Nenagh blocks.
Finance
The loss for the period was €164,000. The £1 million raised in July will be used for working capital particularly to fund drilling through 2011.
Future
The immediate future is clear. The Teck/Connemara joint venture will continue to explore and drill the Stonepark area of the Limerick licence block. It is expected that 40 holes will be completed in 2010 with a further 80 holes planned in 2011. It is possible that an ongoing technical review may increase the proposed 2011 drilling programme.
The impending takeover of the Lisheen mine by Vedanta of India may offer opportunity. Lisheen will be exhausted in the next few years. Connemara holds prospective ground adjacent to Lisheen. This ground also needs to be explored. On a wider front it may prove to be feasible to supply the Lisheen processing complex with ore from the Limerick area.
How the Limerick orebody will evolve will become better known in the coming year. By then options will also become clearer.
John Teeling
Chairman
30th September 2010
| 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 Limited |
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| Nick Reeve | +44 (0) 117 376 2213 |
| Barrie Newton | +44 (0) 117 376 2213 |
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| Optiva Securities Limited |
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| Jason Robertson | +44(0)203 137 1906 |
| Jeremy King | +44(0)203 137 1904 |
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| College Hill |
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| Nick Elwes | +44 (0) 207 457 2020 |
www.connemaramining.com
| Financial Information (Unaudited) |
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| Six Months Ended |
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| 30 June 10 |
| 30 June 09 |
| 31 Dec 09 | |||||
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| Unaudited |
| Unaudited |
| Audited | |||||
| Condensed Consolidated Statement of Comprehensive Income |
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| €'000 |
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| Revenue |
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| 0 |
| 0 |
| 0 |
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| Operating costs |
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| (167) |
| (159) |
| (312) |
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| Foreign exchange profit |
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| 2 |
| 43 |
| 29 |
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| OPERATING LOSS |
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| (165) |
| (116) |
| (283) |
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| Interest receivable |
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| 1 |
| 5 |
| 13 |
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| LOSS BEFORE TAXATION |
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| (164) |
| (111) |
| (270) |
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| Income tax expense |
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| 0 |
| 0 |
| 0 |
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| LOSS FOR THE PERIOD |
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| (164) |
| (111) |
| (270) |
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| LOSS PER SHARE - basic and diluted |
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| (1.08c) |
| (0.73c) |
| (1.78c) |
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| Condensed Consolidated Balance Sheet |
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| 30 June 10 |
| 30 June 09 |
| 31 Dec 09 |
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| Unaudited |
| Unaudited |
| Audited |
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| €'000 |
| €'000 |
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| NON-CURRENT ASSETS |
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| Intangible Assets |
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| 1,002 |
| 625 |
| 834 |
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| CURRENT ASSETS |
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| Other receivables |
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| 48 |
| 45 |
| 62 |
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| Cash and cash equivalents |
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| 20 |
| 353 |
| 167 |
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| 68 |
| 398 |
| 229 |
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| TOTAL ASSETS |
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| 1,070 |
| 1,023 |
| 1,063 |
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| LIABILITIES |
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| CURRENT LIABILITIES |
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| Trade and other payables |
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| (478) |
| (108) |
| (307) |
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| NET CURRENT (LIABILITIES)/ASSETS |
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| (410) |
| 290 |
| (78) |
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| NET ASSETS |
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| 592 |
| 915 |
| 756 |
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| EQUITY |
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| Share Capital |
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| 2,070 |
| 2,070 |
| 2,070 |
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| Reserves |
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| (1,478) |
| (1,155) |
| (1,314) |
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| TOTAL EQUITY |
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| 592 |
| 915 |
| 756 |
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| Condensed Consolidated Statement of Changes in Shareholders Equity |
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| Share |
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| Retained |
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| Capital |
| Premium |
| Reserves |
| Losses |
| Equity |
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| €'000 |
| €'000 |
| €'000 |
| €'000 |
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| As at 1 January 2009 |
| 151 |
| 1,919 |
| 56 |
| (1,100) |
| 1,026 |
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| Loss for the period |
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| (111) |
| (111) |
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| As at 30 June 2009 |
| 151 |
| 1,919 |
| 56 |
| (1,211) |
| 915 |
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| Loss for the period |
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| (159) |
| (159) |
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| As at 31 December 2009 |
| 151 |
| 1,919 |
| 56 |
| (1,370) |
| 756 |
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| Loss for the period |
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| (164) |
| (164) |
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| As at 30 June 2010 |
| 151 |
| 1,919 |
| 56 |
| (1,534) |
| 592 |
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| Six Months Ended |
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| 30 June 10 |
| 30 June 09 |
| 31 Dec 09 |
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| Unaudited |
| Unaudited |
| Audited |
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| Condensed Consolidated Cash Flow |
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| €'000 |
| €'000 |
| €'000 |
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| CASH FLOW FROM OPERATING ACTIVITIES |
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| Loss for the year |
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| (164) |
| (111) |
| (270) |
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| Investment revenue |
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| (1) |
| (5) |
| (13) |
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| Exchange movements |
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| (2) |
| (47) |
| (29) |
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| (167) |
| (163) |
| (312) |
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| Movements in working capital |
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| 185 |
| 53 |
| 235 |
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| CASH USED BY OPERATIONS |
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| 18 |
| (110) |
| (77) |
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| Investment revenue |
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| 1 |
| 5 |
| 13 |
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| NET CASH USED IN OPERATING ACTIVITIES |
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| 19 |
| (105) |
| (64) |
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| CASH FLOW FROM INVESTING ACTIVITIES |
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| Payments for intangible assets |
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| (168) |
| (61) |
| (270) |
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| NET CASH USED IN INVESTING ACTIVITIES |
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| (168) |
| (61) |
| (270) |
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| FINANCING ACTIVITIES |
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| Proceeds from issue of equity shares |
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| 0 |
| 0 |
| 0 |
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| NET DECREASE IN CASH AND CASH EQUIVALENTS |
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| (149) |
| (166) |
| (334) |
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| Cash and Cash Equivalents at beginning of the period |
| 167 |
| 472 |
| 472 |
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| Effects of Exchange rate changes on cash held in foreign currencies |
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| 2 |
| 47 |
| 29 |
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| CASH AND CASH EQUIVALENTS AT END OF THE PERIOD |
| 20 |
| 353 |
| 167 |
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| Notes: | ||||||
| 1. | Information | |||||
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| The financial information for the six months ended June 30th, 2010 and the comparative amounts for the June 30th, 2009 are unaudited. The financial information above does not constitute full statutory accounts within the meaning of section 148 of the Companies Act 1963.
The accounting policies and methods of computation used in the preparation of the interim financial statements are consistent with those used in the Group 2009 Annual Report, which is available at www.connemaramining.com. The directors have elected not to adopt the IAS 34 Interim Financial Reporting.
The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information. | |||||
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| 2. | No dividend is proposed in respect of the period. | |||||
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| 3. | Loss per share | |||||
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| 30 June 10 | 30 June 09 | 31 Dec 09 | ||
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| € | € | € | |||
| Loss per share - Basic and Diluted | (1.08c) | (0.73c) | (1.78c) | |||
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| Basic loss per share |
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| 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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| Loss for the year attributable to equity holders of the Parent |
(164,353) |
(110,522) |
(269,929) | |||
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| Weighted average number of ordinary shares for the purpose of basic earnings per share |
15,176,711 |
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. | ||||||
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| 4. | Intangible Assets | |||||
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| 30 June 10 | 30 June 09 | 31 Dec 09 | ||
| Exploration and evaluation assets: | €'000 | €'000 | €'000 | |||
| Cost at 1 January | 834 | 564 | 564 | |||
| Additions | 168 | 61 | 270 | |||
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| _________ | _________ | _________ | |||
| Closing Balance | 1,002 | 625 | 834 | |||
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| The above represents expenditure on projects in Ireland and Zimbabwe. | |||||
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| The group's activities are subject to a number of significant potential risks including; | |||||
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| - | Uncertainties over development and operational costs | ||||
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| - | Political & legal risks, including arrangements with governments for licences, profit sharing and Taxation | ||||
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| - | Liquidity risks | ||||
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| - | Going concern | ||||
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| - | Operational and environmental risks | ||||
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| 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. | |||||
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| 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 30 June 2010, the directors are satisfied that the value of the intangible asset is not less than carrying value. | |||||
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| 5. | The Interim Report for the six months to June 30th 2010, was approved by the Directors on 29th September 2010 | |||||
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| 6. | Copies of this announcement will be sent to shareholders and will be available for inspection at the Companies Registered Office at 162 Clontarf Road, Dublin 3, Ireland. The Interim Report may also be viewed at Connemara Mining Company Plc's website at www.connemaramining.com | |||||