Connemara Mining slashes 2009 losses, bullish on growing Stonepark zinc discovery

Irish zinc miner Connemara Mining (LON:CON) narrowed losses in 2009 significantly and noted the operational progress made during the year at the the Stonepark zinc discovery in Limerick which continued to grow in size and importance, with recent results showing an extension of a high grade mineralisation.

Earlier this week, the company said it intersected high-grade zinc-lead mineralisation 400 metres to the southwest of the Stonepark North discovery, which it said suggested either an extension to the discovery or a new zone. Hole 53, 400 metres southwest of the Stonepark North discovery in Limerick, returned intersections of 6.85 metres grading 10.47% zinc and 3.68% lead from 209.4 metres depth, including 2.75 metres at 19.76% zinc and 6.99% lead. About 150 metres to the southwest, Hole 51 intersected 7.55 metres at 4.88% zinc and 1.49% lead from 221.4 metres including 1 metre at 21.90% zinc and 7.26% lead.

The company said that the mineralisation intersected at both holes was at similar depths and was of similar style to the discovery holes at Stonepark North, suggesting either a significant extension to the Stonepark North zone or the discovery of a new zone.

Connemara said that the future of zinc in Ireland was further enhanced by the recently announced acquisition by the world’s largest zinc producer and FTSE 100 constituent Vedanta Resources (LON:VED), which bought the Lisheen zinc mine for US$308 million.

“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,” said chairman John Teeling.

The company noted that zinc demand has been growing at a 2% annual rate and has doubled since the industrialisation of India, China and Brazil. Car ownership in china is expected to grow tenfold in two decades from 40 million to 400 million, with the demand also supported by “vast” housing demand in China and India. At the same time, supply is expected to be “stable at best.”

Connemara has also proceeded with exploration at its five separate license blocks held in Ireland, three of which are targeting large high grade deposits and the other two targeting what the company called massive sulphides and shear hosted gold.

A detailed geophysical survey on the 3 license Thurles block has detected a significant anomaly that Connemara now intends to drill, while also surveying three specific targets at the 4 license Nenagh block and the Moate block.

The financial results included pre-tax losses of €0.27 million, significantly reduced from the €0.47 loss posted in 2008. Loss per share declined from 3.11 euro cents to 1.78 euro cents. Cash balance currently stands at £0.17 million, down from last year’s €0.47 million. The company has used €64,099 in operating activities and €270,200 in investing activities, making for the total reduction of €374,299, down from a cash burn of €501,296 in 2008.

The company said its future strategy would be to “play to its strengths” and focus on the ongoing drilling at Stonepark, which it said had a “real chance” of becoming a mine or being part of a zinc mine.

“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,” the company said in its statement.

Connemara is looking to conduct a fundraising to secure the necessary £1 million to fund its operations at Stonepark over the next two years.

Connemara pledged not to “neglect” other licenses and stated that its prospective ground had to be attractive to industry players, making it likely that it would secure farm-out agreements for some of its properties.