Cantillon: Golden lining at Connemara Mining

John Teeling has never been known for understating his position but even allowing for that, his comments on the publication of the interim results of Connemara Mining were on the outer edge of the irrationally exuberant.

“The great recession is ending,” he told shareholders of Connemara Mining. “Stock exchange indices are at all time highs.

It is only a matter of time before interest returns to the bombed out junior resources sector. When it does, early investors will look very good.”

As a marketing pitch, it may have plenty going for it but as an accurate indicator of the fortunes of prospective investors, it is altogether less helpful.

The “great recession” may indeed be ending but, as a growth rate of 0.4 per cent in the last quarter indicates, the economy is still a long way from normal, with little indication that things are going to improve rapidly. Indeed, the domestic economy remains mired in recession which will do little to encourage local investors.

Even then, the Irish exploration sector is renowned more for the investor euros that have been lost down the years, rather than for a history of successfully turning initial exploration into commercial projects.

Connemara, which has been around since 2006, is focused on exploring for zinc and gold in Ireland. And yes, before you remind us, we know there is no active commercial gold mine in the State for all the optimism for Dr Teeling and their team about the encouraging data from the Wicklow/Wexford area where it has five licences.

There is nothing to suggest any imminent rush into the “bombed out junior resources” sector anytime soon and, if recent history is to be observed, early entrants to mining minnows like Connemara are more likely to find themselves tapped for cash than patting themselves on the back for the perceptive investment.

Earlier this year, the company issued a further 9.03 million shares at 5p a share to provide additional working capital and fund development costs.