A ban on mining in Co Mayo killed "stone dead" the ability of Glencar Exploration Company to develop a substantial gold prospect near Louisburgh, the High Court was told yesterday.
Mr Job Langbroek, mining analyst with Davy Stockbrokers, said Glencar shares were trading between 40-45 pence and the company had a capitalisation of about £8 million before Mayo County Council's 1991 ban on mining in parts of the county. After the ban, the price fell to 10 pence giving a capitalisation of about £2 million.
The price fell because of lack of investor confidence caused by the mining ban, he said. The quashing of the ban in late 1992 had no effect on Glencar, he added. Investors were unwilling to take an added risk and the feeling was that the gold property would not be developed.
In his view, there was little chance now of raising finance to develop the gold prospect in Co Mayo.
Mr Langbroek was giving evidence on the fifth day of the action for more than £2 million damages taken by Glencar and Andaman Resources plc against Mayo County Council over the council's insertion of a mining ban in the 1991 Mayo County Development Plan. The ban was overturned by the High Court in December 1992.
In court yesterday, Mr Langbroek told Mr Rory Brady SC, for Glencar, that his brief was to track resource shares on the Dublin market and prepare reports for investors. He monitored the movement of exploration companies and of the resources sector.
He was familiar with Glencar's exploration activities and its work in Co Mayo in the late 1980s and early 1990s. At that time there was a growing realisation in the investment community that Ireland may have worthwhile gold deposits. People were following Glencar avidly and the news of the gold discovery in Co Mayo was driving Glencar.
When news of the mining ban broke, Glencar's share price fell, he said. There was now little investor confidence in gold exploration in Co Mayo.
Cross-examined by Dr Michael Forde SC, for Mayo County Council, Mr Langbroek denied that a 1994 prospectus issued by his employers was misleading because it failed to say that the Glencar prospect in Co Mayo was worthless.
Dr Forde suggested that investors lost confidence in gold exploration in Co Mayo for a number of reasons. The ban made it clear there would be difficulties in securing planning permission, the government would not intervene to help mining companies and the price of gold was dropping in the early 1990s.
The case resumes on Tuesday before Mr Justice Kelly.
