Connemara Mining (LON:CON) has raised £1.05 million for an expanded drill programme on its zinc assets in Ireland. The programme will be focused on the Stonepark zinc discovery and the Thurles area near the existing Lisheen zinc mine, operated by Vedanta Resources (LON:VED). Lisheen is one one of the largest producers of Zinc concentrates in Europe.

Also today, Minco PLC (LON:MIO) said its joint venture partner for the Pallas Green zinc project, Xstrata (LON:XTA) has completed a preliminary assessment of the project, and considers it to be economic at its current stage.

What’s more, Xstrata has increased the inferred resource there substantially. The new resource of 17.6 million tonnes at a 6 percent zinc cut-off is 56 percent greater in tonnage than the previously published JORC compliant resource published in August 2009.

Five rigs are already at work on the Stonepark zinc property in Limerick, where a total of 65 holes are planned for this year. Drilling has also started in the Thurles area to follow up targets identified in earlier prospecting.

At Pallas Green, Xstrata Zinc is proposing a €13 million exploration and development programme for 2011. The proposed budget comprises continued definition and exploration drilling for €10 million coupled with an initial pre-feasibility study which is estimated to cost €3 million. The will be two-thirds infill definition work and one third exploration, for a total 100,000 metres in 230 holes.

What makes the recent developments at Stonepark and Pallas Green even more interesting is the fact that they are literally next to each other and that Minco and Connemara are in joint ventures with large and respectable partners in the industry: Connemara controls 25 percent of Stonepark while Canada’s Teck Resources (TSX:TCK, NYSE:TCK) has 75 percent, and Minco holds a 23.6 percent participating interest in Pallas Green, with Xstrata’s zinc business holding the remainder.

Zinc could be a commodity to watch. Commentators and analysts have recently been pointing out that over the next few years demand may exceed supply, as demand for galvanized steel is expected to soar in the wake of increasing migration from the countryside to cities particularly in China and India.

China currently accounts for around 30 percent of the global zinc demand, and its construction industry is growing more than 10 percent every year. Car production is also growing.

Credit Suisse expects a zinc supply shortfall in 2016, while RBC Capital Markets would not be surprised if it occurred as early as 2014.

Considering that the partners in the Stonepark and Pallas Green projects are already very upbeat on their respective prospects, a hike in zinc prices while they are being developed hast the potential to massively improve their economics. Both mines are currently planned to start production in 2017.

Irish broker Davy commented on the news regarding new zinc mines in the the country, with a particular focus on the Minco story. It noted that Ireland has a long history of zinc and lead mining with a major new project discovered nearly every decade over the last 40 years.

“There are very good indications that the Pallas Green project will join this list with a proposed mine start-up date of 2017. While confirmed economic with substantial grades of zinc and lead, there is still some way to go to establish the ultimate size and economic footprint.”

Davy views the positive aspect of the work in the wider Pallas Green area as being that the presence of widespread and ubiquitous mineralisation points to ongoing future additions to resources.

“In fact, management at Minco believes that the higher-grade core of the deposit still remains to be established. This refers to the possibility that deeper drilling will locate mineralisation adjacent to a feeder fault line, a defining characteristic of the Irish zinc ore fields, and one that has delivered really good grades and tonnes in other Irish zinc projects,” it added.


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