Dublin-based mining company, Conroy Gold And Natural Resources Plc (LON:CGNR) is seeking to establish a major gold mine in Clontibret, Co. Monaghan, Ireland. The company’s exploration work has already led to the identification of a new European gold district in Ireland extending some 30 miles across Armagh, Monaghan and Cavan, and now the firm has issued a statement saying that there could be 15 to 20 million ounces of the precious metal in the area known as the ‘Longford-Down Massif’.

Could this mean a rush on company shares?

Company chairman, Professor Richard Conroy talked about the prospects:

“We are steadily working towards bringing Clontibret into production whilst still discovering additional targets in particular at Clay Lake, where indications are for high tonnage and overall gold content.”

He warned that it could be a few years before the mine is up and running with a lot of financial, technical and environmental work to be carried out, but said that the mine could yield some 50,000 ounces per annum, worth about €70 million. Estimates suggest that the mine would have an initial lifespan of 11 years, but Conroy says this could be extended significantly.

If this turns out to be the case, the company’s stock could be a prime target for investors. ValueWalk asked the professor how profitable he thought the site could be for shareholders.

Estimating the potential

“If we didn’t think it would be profitable, we wouldn’t be proceeding with it. When you make a discovery, you see if it makes financial sense. Certainly, in the case of Clontibret, the indications are there. It makes sense and will ensure a return to shareholders.”

Of course, all this depends on the price of gold.

“A gold mine is slightly less complicated than a base metal one. Early and very tentative figures suggest that a mine at Clontibret could be profitable provided that the gold price exceeds $300 per ounce, or preferably $400 per ounce – at which point it could be very profitable. Of course the economics may change if we find bigger deposits or ones with a higher grade or the price of gold changes.”

As someone with vast experience in precious metals sector, Professor Conroy has already made some clever calls regarding movements in the price of gold.

“When we set up, the price [of gold] was much lower. Some, such as the UK treasury thought gold was overvalued and sold, but we believed the price would go up. My own view is the global financial problems are still serious and quantitative easing means there will be inflation, which means it’s important to have gold reserves. As a result, the price will go up. The figures for our estimates are already very conservative.”

Minimizing environmental risk

Landowner concerns, state legislation and environmental groups can scupper the best-made plans when it comes to mining. Professor Conroy, a keen birdwatcher, said that his company had some of the best environmental polices in the world in place:

“Zinc is now a major product in Ireland and we rank 10th in the world. Our three mines are quoted in textbooks as being environmentally sound – they’ve very well built and very well run. We implement the highest possible standards. At Galmoy, we were the first mine in Europe to have a double lining under the tailings pond. We also take care over the visual impact of the projects and try to make them as unobtrusive as possible. When it comes to extraction, we use biological processes such as Biox. This treatment uses naturally occurring bacteria to breakdown the sulphide ore.”

Conroy Gold financials

The firm posted a loss after tax of €423,979 to the end of May this year, down from €533,262 last year. €0.5 million in new equity was raised throughout the year and a further €1 million has been acquired since May. The company is keeping its options open regarding mine development.

“We may do it ourselves and I think that we could raise the finance. We have done it before. But we appreciate that there is a lot of effort and skill involved and it is quite possible that we will bring in others, either under contract or in a joint venture, provided that it is on a satisfactory basis for our shareholders.”

All in all, there could be a golden future ahead for Conroy Gold And Natural Resources Plc (LON:CGNR). Broker, Hybridan, agrees:

“We believe that Conroy is significantly undervalued compared with comparable gold exploration companies, many of which are located in countries where production and costs are subject to political and economic uncertainties.”

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