Connemara Mining (LON:CON) this morning told investors it continues to expand the Stonepark zinc project in County Limerick, Ireland.

Today it revealed results from drilling on the Stonepark West zone, where the Teck Resources led venture is expanding the known zinc-lead mineralisation to the south and northeast.

The highlight result was an intersection of 3.85 metres grading 5.35 per cent zinc and 1.58 per cent lead. That was taken from a depth of 264 metres and it also contained 1.2 metres grading 12.41 per cent zinc and 4.66 per cent lead.

"The continued expansion of the Stonepark West discovery in Limerick highlights the extensive nature of the mineralizing system,” said chairman John Teeling.

“These results follow on from the Company's announcement of 20 December 2011 and further expand the targeted upper mineralized zone. 

“The ongoing 2012 drilling programme will test the extent of the current zone as well as targeting new areas."

Connemara owns a 25 per cent stake in Stonepark. While project operator Teck Resources has the remaining 75 per cent.

Irish zinc miner Connemara Mining Company (LON:CON) said this morning it has all the funding it needs for the drilling programme at its zinc-lead discovery at Stonepark in Limerick in 2012.

Teck Ireland, the firm’s 75-per cent partner in Stonepark and operator of the venture, will continue to drill with multiple rigs through 2012 and “operationally Connemara is set fair”, according to its chairman John Teeling.

Earlier this month, Connemara revealed that the Stonepark partners had found a new zone of high-grade mineralisation intersected at Stonepark West, some 1.7 kilometres south west of the Stonepark North zone.

Its drill hole there, dubbed Hole 86, intersected high-grade zinc and lead mineralisation of 2.5 metres at 4.16 per cent zinc and 4.37 per cent lead, beginning at a depth of 382.5 metres.

In addition, Hole 64, which is located 580 metres east of the new discovery between Stonepark North and Stonepark West, intersected 3.1 metres of 1.92 per cent zinc and 0.56 per cent lead at a depth of 273 metres, with further zinc-lead mineralisation discovered at 288 metres. Drilling 1.5 kilometres to the west of the new discovery also intersected hydrothermal breccias similar to those at Stonepark West.

Connemara said that the nature of the Stonepark discoveries, like those found by Minco/Xstrata, are “typical of Irish zinc discoveries”. They can be large and rich but are often in separate zones, so they need a significant number of drill holes to reach a measured estimate of volume.

“We believe that the Limerick discoveries have the potential to produce at least one world class zinc mine. It is worth noting that the current discoveries are all on one of the 16 Limerick licences in the Connemara/Teck joint venture,” said Teeling.

Connemara’s interim results today showed that the firm made a operating loss of €198,000 during the six months to June 30, compared with a loss of €165,000 in H1 2010. Its net loss was €194,000 (H1 2010: €164,000).

At the end of June, the firm had cash and cash equivalents of €1 million (June 30 2010: €20,000).

Commenting on the investment climate, Teeling said that although Connemara is fully funded until the end of 2012 and its geological results are “outstanding”, the share price is a cause for concern, with a market capitalisation of just above £3 million.

“A series of events have combined to damage our share price. The general economic malaise is bad for speculative shares and the AIM market has been badly hit as retail investors try to exit illiquid positions.

This is further exacerbated by the many Irish investors who have seen their net worth decimated by the virtual collapse of the Irish economy and so are forced to sell their Connemara shares.

However, Teeling said that those investors not forced to sell should look to a number of fundamental facts. He pointed out that zinc demand continues to grow at rates of four per cent due entirely to Chinese, Indian, Brazilian and other emerging markets, and that these emerging markets are expected to grow far faster than declining Western economies.

Meanwhile, he added, zinc supply is sluggish with few new mines coming on stream and zinc prices above US$2,000 per tonne are profitable for producers.

Shares in Connemara Mining (LON:CON) opened higher by more than nine per cent this morning after it reported “very positive and significant” results from its zinc discovery at Stonepark in Limerick, Ireland.

Connemara, which has a 25 per cent stake in the discovery, said it had found a new zone of high-grade mineralisation intersected at Stonepark West, some 1.7 kilometres south west of the Stonepark North zone. Its drill hole here, dubbed Hole 86, intersected high-grade zinc and lead mineralisation of 2.5 metres at 4.16 per cent zinc and 4.37 per cent lead, beginning at a depth of 382.5 metres.

Connemara said it is calling this new discovery “Stonepark West”.

In addition, Hole 64, which is located 580 metres east of the new discovery between Stonepark North and Stonepark West, has intersected 3.1 metres of 1.92 per cent zinc and 0.56 per cent lead at a depth of 273 metres, with further zinc-lead mineralisation discovered at 288 metres. Drilling 1.5 kilometres to the west of the new discovery has also intersected hydrothermal breccias similar to those at Stonepark West.

Connemara added that the Stonepark West discovery is significant because it is likely to be a totally new zone of zinc-lead to add to that at Stonepark and Stonepark North.

“These are very positive and significant results,” said chairman John Teeling. “The discovery at Stonepark West appears to be a new zone, typical of Irish zinc orebodies. That in itself is significant, but the results in other holes to the east (Hole 64), between Stonepark North and Stonepark West, and 1.5 kilometres to the west also contain mineralisation. There is now evidence to indicate that more zones of zinc-lead will be discovered in what is becoming a large area of zinc-lead mineralisation. Step out drilling continues.”

At 08:02am Connemara’s shares were up 9.1 per cent at 12 pence each.

It is issuing 5.25 million new shares - about 20 percent of the enlarged company - to institutional investors at 20 pence a share. One warrant - exercisable at 35 pence a share - has also been issued for every placing share.

The new capital will be used for an expanded exploration programme in Ireland, focused on the Stonepark zinc discovery and the Thurles area near the Lisheen zinc mine.

John Teeling, Connemara chairman, emphasised that worldwide demand for zinc continues to grow, prices are rising.  

“We have excellent ground in Ireland in Limerick, where our partner Teck has an expanded exploration programme as well as at locations near the Lisheen mine and the old Silvermines mine, both in Tipperary.  

“These funds will expand our exciting 2011 drilling programme."

Five rigs are already at work on the Stonepark zinc property in Limerick, where a total of 65 holes are planned for this year. Drilling has also started in the Thurles area to follow up targets identified in earlier prospecting.  

Connemara also said that work is underway on the Mallow licences, adjacent to the old Silvermines lead mine and it is examining options on the Lough Sheelin block.

The placing was arranged by Optiva Securities. The new shares are expected to start trading on the AIM market on or around the 3 March 2011.

The initial programme is for three 300 metre holes, the locations of which have been selected after regional and detailed geophysics followed by geological modeling.

The holes will be drilled on the northern hanging wall of faults along the floors of the Littleton Inlier.  The target is a Lisheen type zinc and lead discovery.

The Lisheen mine, next to the Thurles block, is owned by Vedanta Resources (LON:VED). Now in its second decade of operation, it is currently one of the largest producers of zinc concentrates in Europe.

The company’s chairman John Teeling said: "Zinc in Ireland is a good story.  Our discovery at Stonepark, that of Xstrata and Minco beside us and reported extensions at the Navan and Lisheen zinc mines combine well with strong demand and prices to produce an industry in good health.  

“Our ground in the Thurles area is prospective sharing many of the characteristics of the nearby Lisheen mine.  

“We have reviewed all existing data on the licences and conducted detailed geophysics.  As a result we have identified three targets.  This is high risk early stage exploration but the potential is good."

Connemara was established in 2006 and also owns the Stonepark zinc-lead project near Limerick along with more than 30 other prospecting licences in Ireland. 

Investors cheered the news, sending shares in Connemara up 11 percent in early deals.

Drilling has defined upper and lower zones of zinc-lead mineralisation at approximately 210 meters and 310 meters depth respectively.

The majority of high-grade mineralisation discovered to date is in the upper zone. Recent drilling tested the lower zone.

Hole TC-2638-60, which was drilled 200 metres northwest of earlier holes, intersected intervals of 22.45 metres grading 1.24 percent zinc and 0.07percent lead and 1.4 metres grading 8.05 percent zinc and 0.17 percent lead.

Ten kilometres to the southeast of Stonepark, hole TC-450-009, intersected a 30 meters breccia zone containing 2.9 metres of 0.95 percent zinc and 0.02 percent lead. Visual inspection suggests this zone is very similar to the zones peripheral to Stonepark.

The company said that the extension of zinc-lead mineralisation broadens the scope of the zone.

“The Limerick area continues to grow in significance as a potential zinc province.

“The size, shape and grade of the Stonepark discovery is not yet known so it is important to maintain all of our licences in good standing to allow for an expansion of existing and / or new finds.

“One of the holes drilled 10 kilometres from Stonepark discovered low grade zinc and lead in a similar setting to the areas surrounding Stonepark. This opens up a whole new area,” said chairman of Connemara Mining John Teeling.

Step out drilling is ongoing with nine holes drilled on blocks up to 40 kilometres away from Stonepark in the Newcastlewest area with no significant mineralisation found to date.

Connemara plans to have 4 or 5 rigs drilling up to 50 holes in the Stonepark area in 2011.

Connemara Mining has recently had some encouraging drill results at Stonepark North, which is adjacent to your Stonepark discovery, both of which are joint ventures with Teck Resources. And part of this new discovery was at relatively shallow depths. Would you talk us through how Stonepark North is shaping up, John?


It’s shaping up fairly well. By the end of 2011 we will put 60 holes in the Stonepark area, mainly in Stonepark North. We will have a very good idea of the geology the grade and what the likely size is.

To put this into context, the Limerick area has been very positive for zinc prospecting in recent years.  On the fifth hole of an exploration programme with Teck in 2007 Connemara had a very good discovery at Stonepark.  Over the last two and a half years, that discovery has been extended to Stonepark North, which is 1.7km away. We had hoped that these two would be connected, and there’s still the possibility that they are, at a deeper level of maybe 300m to 350m.

Stonepark North is, a very a flat lying discovery at 200m. So it is very easy to mine. Apart from being easy to mine, it is very high grade by world standards, including one hole that we announced in March of this year which has 45% of combined lead and zinc.

To put that in context, at $2,500 a tonne of zinc that means that each tonne of rock in the ground is worth about $1,200.  Given that it costs significantly less than a $100 to mine this is a phenomenal target. So this is very, very prospective, and very exciting.

What’s going to happen now is we have to drill Stonepark North to see how big is it, how long is it, how wide is it and how rich it is. It is currently 650m long, and it’s about 150m wide. That, by itself, is a substantial block of ore, maybe 5 million tonnes, maybe more. The drilling will extend this North, South, East and West.


What is the situation at Stonepark in Limerick, and what are your plans for exploration in the Stonepark area, John?


The plan calls for 60 to 80 holes between now and the end of 2011. Most of those holes will go into Stonepark North to extend that particular zone. But the other very exciting prospect will be to see if we can join up Stonepark North and Stonepark itself, probably, at a lower depth, maybe at 350m.  This will mean two strata. A few holes will be scouting holes in adjacent blocks, but the main focus (over the next 15 months) will be simply to prove up grade and quantity in that particular area.


What is the ‘Limerick trend’ and why do you say that it is now almost certain that the next world class zinc mine brought into production will be in the Limerick area, and that there is a growing possibility of there being two or more zinc mines brought into production in Limerick?


In the last six or seven years there have been world class discoveries in the Limerick area.  This is now being looked on as a special trend which is typical of the Irish zinc industry, that is limestone based, extending Northeast to Southwest.

Limerick already has the Stonepark and Stonepark North discoveries, which are ours.  Across a boundary, not more than three quarters of a mile away, you have the Xstrata/Minco discoveries, which has been worked on for about six or seven years.

The Xstrata/Minco discoveries are very large and very extensive. Most of the grades are not as good as Stonepark North, but they are still very good. You also have discoveries by Lundin, further to the northwest, and further to the southwest, by Boliden.

Some commentators and brokers feel that you can budget for 40 to 60 million tonnes of zinc ore in the Limerick region, particularly in the Connemara and Minco areas.

If this is so, and there’s increasing probability that it is, you could build one very large world class zinc mine.  You could easily build a 10,000 tonne a day zinc mine in Limerick, and have it supplied for 30 or 40 years. Tara Mines in Navan Ireland is 10,000 tonnes a day of production, and that’s the fifth biggest zinc mine in the world.
     
The other possibility is, given that the two owners each want new zinc mines, is to build two mines, probably 6,000 tonnes a day each.  This would suit our two multinational partners Teck and Xstrata.

Each of those mines then would be in the top 12 in the world. The ore body has the potential to supply both two mines.


The Thurles Block in Co. Tipperary is about 5km south of the Lisheen mine. What have you got that’s of interest on the Thurles block, and what are your plans there?


It is a very exciting development for Connemara. The Lisheen mine is owned by Anglo American. They have sold it to Vedanta, which is the largest zinc producer in the world.  Vedanta is an Indian company.

The Lisheen mine runs out of ore in 2013. There is a possibility of finding ore in the vicinity and supplying it to the Lisheen mine. On the Thurles block, where we have four licences, which we have prospected with geophysical and geochemical techniques, we have identified three high class targets.

We will drill each target and hope to find a certain level of zinc. The plan would be to supply the existing facility at Lisheen. All we would have to do to quarry so lower grades of zinc, maybe 4% would be viable.  You could be in production in 18 months or less, and you don’t require any extensive planning problems. There’s no tailings, there’s no waste water, and there’s very little Capex.

We think that our targets on the Thurles block are very good.


What is happening with the rest of Connemara’s extensive zinc prospect portfolio in Ireland, John?


We have two other main blocks. One of them is Lough Sheelin block is 20km northwest of the Tara mine at Navan. We also have the Nenagh Block which is around the old Silvermines mine in Tipperary.

Our strategy has always been to try and go for blocks where there is known mineralisation, and where they are adjacent to other existing or former mines, on the basis that the best place to find a mine is where there is a mine, or was a mine.

We have had an initial approach from a company who would like to joint venture the Lough Sheelin block. This is a block of 5 licences where we have 11 drill holes most with zinc.  It needs a lot more drill holes.  We could not take on another very large drilling programme while we’re still growing in Limerick.

The Nenagh block is at an earlier stage, but the initial indications are good.  There has been some prior drilling on the block , which is positive.  We will do some work ourselves between now, and the middle of next year. And if this prospectivity holds, we would seek to joint venture the block.


Connemara mining raised about £1 million last July. Where does this leave the company’s financial situation going forward, John?


Fully funded to the end of 2011 for a drilling programme with Teck Resources of up to 60 holes on Stonepark; for a few preliminary holes on the Thurles block, and some geophysical and geochemical work on the Nenagh block.


What can investors expect from Connemara mining over the next 12 to 18 months, John?


A continuous flow of results from the Stonepark North discovery. We’ve been fairly dormant with news in the last few months because we were drilling the surrounding licences to meet work commitments. These are very good licences, adjacent to our Limerick block. We want to make sure we have them in good standing with the Irish Government. We have one rig now back on site at Stonepark and there’s another rig joining by the end of October.

We will have a flow of results coming right through 2011. If we expand to five rigs, our news flow will be even bigger. Not every hole will hit, but we’ll be hopeful of some very good results.

You could also expect some corporate news, on Lough Sheelin and/or Thurles.


What do the Connemara mining team bring to the exploration and development of zinc projects in Ireland?


Unrivalled knowledge of Irish zinc. Two of us, myself and Viv Byrne have been involved in zinc since the late ‘60s in Ireland. The two technical directors have less experience, only about 30 years each!!. We know Irish zinc.  I don’t think you can find a better team.  That’s why our focus will continue to be on zinc in Ireland.

Vedanta bought the Tipperary zinc operation along with other bigger mines in South Africa and Namibia from previous owners Anglo American as part of a US$1.8 billion deal, which estimated Lisheen’s value at US$308m.

Teeling's firm has ground next to the existing mine and the chairman said: “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.”

His comments were contained in the company’s interim results statement, in which the focus was very much on Connemara’s Stonepark operation, in Limerick, where it is partnered with Teck Resources (TSX:TCK, NYSE: TCK).

Nine drill holes remain to be completed this year and a further 80 are planned for 2011.

“It is possible that an ongoing technical review may increase the proposed 2011 drilling programme,” Teeling said.

“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,” he added.  

“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.”

The company raised £1 million in July, which will fund its drill programme next year.

The company posted a pre-tax loss of €164,000 euros in the six months to June 30 compared with €111,000 a year earlier.