**** INITIATION NOTE **** Jason Robertson (Analyst/Corporate Broker) +44 (0)20 3137 1906 [email protected]Christian Dennis (Corporate Broker) +44 (0)20 3137 1903 [email protected]Adrian Selby (Dealing Desk) +44 (0)20 3137 1905 [email protected]Graeme Dickson (CFD Sales) +44 (0)20 3411 1880 [email protected]Vishal Balasingham (Institutional Sales) +44 (0)20 3411 1881 [email protected]CONNEMARA MINING (CON.L) BUY Stock Data Current Price: 19.75p Market Cap: £4.0m Shares Outstanding: 20.46m Company Profile Sector: Resource Exploration Ticker: CON.L Exchange: AIM ‐ London Website: connemara.com AIM Admission: 31 July 2007 Activities Exploration of zinc and other base metals in Ireland. Performance Data 52 Week Range: 10.9p to 34.2p Key Metrics Net Cash Estimate: £1m Directors John Teeling Chairman Graham Reid Technical Jim Finn FD Vivian Byrne Non Exec Major Shareholders WB Nominees 19.6% John Teeling (Ch) 4.9% David Horgan 4.9% Jim Finn (FD) 4.9% Citicorp Investment 4.9% Catherine Maguire 4.3% Worldwide Nominees 3.4% INVESTMENT RECOMMENDATION Last week’s highly encouraging exploration drilling results from Connemara’s Stonepark project in County Limerick, Ireland provided investors with further confidence that a sizeable zinc mineralisation could be present. This is part of a 10,000 metre drilling campaign being conducted by Connemara and JV partner Teck Resources. In addition just 4.5km away Minco and Xstrata are undertaking an intensive 70,000 metre program on the Pallas Green deposit. From what is known so far it would seem that both Stonepark and Pallas Green could form part of the same orebody and be of world class resource status. With exploration accelerating at Stonepark and Pallas Green over the coming year and more being learnt about the deposit, a number of corporate options could open up for Connemara to advance or monetise its key project if either Teck Resources or Xstrata decide to gain full control over what may be a single giant mineralisation system. Further interest in the region comes from Vedanta, who recently acquired Anglo‐American’s Lisheen zinc mine for $308m, which lies just 60km from Stonepark. With an abundance of exploration newsflow anticipated from Connemara and its neighbours over the next 12‐ months, and the opportunity to buy into what may potentially form part of Irelands’ next significant zinc mine, we recommend Connemara Mining as a SPECULATIVE BUY. KEY PROJECT & LOCATION STRENGTHS Exploring in elephant territory, Ireland is the number one for zinc discoveries per square kilometre in the world. The Navan mine is the largest zinc mine in Europe. In addition to Teck other majors such as Xstrata and Lundin Mining are pursing exploration JVs in the country. Extensive strategic portfolio of 37 exploration licences in Ireland covering over 1,000 sq kms. The Group is the fourth largest ground holder by size in the country. Has the technical and financial backing of JV partner Canadian major Teck Resources at Stonepark and Newcastle West. Following a £1m Placing in July 2010 Connemara is funded for at least the next 12‐months to continue its JV with Teck and pursue its own 100% interests. A number of high grade discoveries have been made on Connemara’s Stonepark licence. The mineralised area covers at least 650 metres in length by 100 to 150 metres wide and is open to the north and south. At the closest point the Stonepark discovery lies just 4.5km from Minco/Xstrata’s Pallas Green deposit, upon which a JORC resource of 11.3mt at 10.22% zinc has been proved up. Stonepark and Pallas Green could be part of the same orebody. In addition to newsflow from Connemara’s own 10,000 metre program at Stonepark this year, the stock could react to any positive newsflow coming from neighbouring Pallas Green where 70,000 metres are being drilled this year. Potential for new zinc discoveries on 100% owned licences such as Thurles which lies just 4km from the Lisheen mine, along with 25% JV property Newcastle West that is near to Stonepark. 30 JULY 2010
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Lough Sheelin (5 Licences – 171 sq kms) ‐ The licences stretch over County Meath and Cavan and are
located just 20km from the enormous zinc/lead Navan mine operated by Boliden, which has a
resource of 69.9m tonnes at a combined zinc and lead grade of 12.7% zinc. The close proximity of
this significant world class mine and the similar geology of Lough Sheelin to Navan could make for
some exciting exploration times ahead. The plan is to seek a JV partner at Lough Sheelin before
conducting any extensive work.
Thurles (3 Licences – 101 sq kms) ‐ The Thurles block in County Tipperary is located only 4km south
of the Lisheen Mine and were previously held by Anglo American. Connemara is looking to conduct
follow up work to fully define a geophysical anomaly that has already been detected and potentially
do some drilling work either at the end of 2010 or early next year.
Nenagh (4 Licences – 138 sq kms) ‐ During 2010 the Group plans to perform a reconnaissance
geophysical survey across three zones previously identified that could warrant detailed exploration.
The permit block is located in County Tipperary and is 1.2km north of the worked out Silvermines
deposit that hosted 17.7m tonnes at 6.4% zinc and 2.5% lead.
Moate (4 Licences – 138 sq kms) ‐ The licence block in Westmeath is situated 40km northeast of the
former Tynagh deposit, which hosted 9.2m tonnes at 5% zinc and 6.2% lead. The management hope
to add adjoining licences to the block if they become available.
Mine River (4 Licences – 130 sq kms) – The licences in County Wicklow and Wexford are very near to
the old Caim Mine, which was in production back in the early 1800’s.
30 JULY 2010
5 CONNEMARA MINING
ZINC IN IRELAND
Ireland is a world‐class province for zinc deposits where a number of large tonnage orebodies have
been discovered. In terms of zinc discoveries per square kilometre, it is number one and number
two for lead. Eighteen deposits have been discovered in the country over the last five decades, the
most notable being the enormous Navan deposit (69.9mt @12.7% combined zinc and lead), Lisheen
(18.9mt @ 14.95% zinc+lead) and Silvermines (17.7mt @ 8.9% zinc+lead).
In terms of output, Ireland produced 36% of Western Europe’s zinc and 28% of its lead in 2009. The
Navan mine operated by Swedish mining and smelting group Boliden is the largest zinc mine in
Europe and 6th largest in the world. The Lisheen mine was recently acquired by Vedanta from Anglo
America for $308m and is expected to close in 2014 when its ore reserves are exhausted.
DIRECTORS
John Teeling, Chairman.
A serial resources entrepreneur, John is the Chairman of several AIM listed resources companies
including Petrel Resources, Persian Gold (to be renamed Clontarf Energy plc) and African Diamonds.
He also has interests in a number of industrial concerns such as Cooley Distillery. Mr Teeling
lectured at University College Dublin in business and finance for over 20 years.
Jim Finn, Finance Director.
With a professional background in accounting and resources, Jim has led the listing procedure for 7
AIM companies. His experience includes 12 years as Finance Director for Minco plc.
Graham Reid, Technical Director.
A geologist with over 30 years of experience. Connemara has contracted its prospecting and
exploration to B.R.G (Geotechnics) Lts, which is a junior exploration company that Graham founded.
Vivian Byrne, Non‐Executive Director.
Mr Byrne is the Technical Director of SLR Consulting Ireland and boasts over 40 years of experience
in the resources industry, which included a period in which he was a senior executive of RTZ’s
European exploration division.
12‐MONTH SHARE GRAPH
(Figure 4: Source ‐ Alpha Terminal).
30 JULY 2010
6 CONNEMARA MINING
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