Conroy Gold gives peace a chance with first drill since brutal boardroom battle, but will the good times last? CGNR

By Patricia Miller


Conroy Gold and Natural Resources (LSE:CGNR) has begun drilling its Clay Lake-Clontibret gold target in Ireland. This is the first major step forward for Conroy since the conclusion of a bitter boardroom battle at the end of last year. The company has mobilised two drill rigs to focus on upgrading the overall mineral resource at Clontibret, where 517,000oz of gold has already been defined at just 20pc of the total gold target area.

The drilling programme, which will cover 1000m over ten drill holes to a depth of up to 200m, has also been designed to convert inferred resources into indicated resources to eventually enable the calculation of reserves. Conroy also plans to test the extent of high-grade gold lodes indicated by channel samples in the historic Tullybuck antimony mine and gain geotechnical information for its proposed gold mine.

Following this, the company will drill at its other licences along the 65km gold trend it discovered at Ireland’s Longford-Down massif. This trend contains a series of gold targets ranging from grass roots to advanced stage exploration, and Conroy is targeting high tonnage and high-contained ounce deposits.

Conroy’s chairman Professor Richard Conroy said: ‘I am pleased to announce the commencement of this drilling programme at the Clontibret gold deposit. The programme is designed to move the Company forwards towards commercialisation of the major gold property, which it has discovered in Ireland. I look forward to updating shareholders as the drilling programme progresses.’

Investors will no doubt feel skeptical about this comment, not least because it is remarkably similar to many similar such comments “the Professor” has made over the years. However, there is a chance that this time he might mean it…

Boardroom battle

Conroy’s news marks the first step in its efforts to accelerate development on its Irish gold property with a view to eventually reaching commercialisation.

This new focus was established ahead of a £1m strategic placing last December, which put to bed a year of bitter dispute between Conroy’s management and its largest shareholder Patrick O’Sullivan, who owns 24.6pc of the company’s shares.

The dispute began in June, when O’Sullivan requisitioned a general meeting to remove from Conroy’s board non-executive deputy chairman Seamus FitzPatrick, finance director James Jones, and non-executive directors Sorca Conroy, Louis Maguire, Michael Power, and David Wathen.

In their place, O’Sullivan proposed the election of himself and mining veterans Paul Johnson and Gervaise Heddle.

Conroy advised shareholders to vote against O’Sullivan’s proposals rather than ‘leaving one large minority shareholder believing that he has the right to decide how the company should be run and who should be its directors’.

However, O’Sullivan argued that Conroy would need help to explore its assets and raised concerns about corporate governance and directors’ pay.

He said that Conroy’s board was not in a position to advance the company’s best interests and would need to appoint experts in gold exploration so it could raise the cash needed for exploration, something it later decided to do.

Although O’Sullivan’s proposals to remove existing board members were successful at the August EGM, the proposals to elect himself, Johnson, and Heddle were not accepted, despite receiving strong shareholder support. In a controversial move, they were declared of no effect by Conroy’s lawyers because they did not comply with the firm’s constitution.

As a result, Conroy’s board consisted of just three people: executive chairman Richard Cantor, managing director Maureen Jones and non-executive director Professor Garth Earls.

Unhappy with these results, O’Sullivan immediately requisitioned another general meeting to remove Conroy and Jones from the company’s board and requested that the firm not issue any new shares or appoint any new directors.

He also took the firm to court to argue that he, Johnson and Heddle were validly appointed to the firm’s board.

However, the court ultimately voted in favour of Conroyeven awarding the firm compensation – and O’Sullivan was unsuccessful in his attempts to oust Conroy and Jones from the firm’s board at the second meeting.

Following this, Conroy cancelled its listing on Ireland’s Enterprise Securities Market to focus entirely on its AIM listing.

It also appointed international finance and corporate management expert Karl Keegan and base metal mining sector expert Brendan McMorrow as non-executive directors to help with its gold exploration programmes.

Early days

Conroy certainly took its investors on something of a roller coaster ride last year, but the boardroom bickering looks to have at least temporarily stopped with December’s strategic financing and today’s drilling update.

However, with O’Sullivan continuing to sit as Conroy’s largest shareholder and fellow rebel Johnson recently building his stake up to 5.2pc, the revolution appears far from dead. However, rather than reopening a new front it appears the hatchet has been buried, with management working in harmony with the company’s major stakeholders to restore the business to its former glories.

In its results for the year ended 31 May 2017, Conroy reported an operating loss of €431,922 and total liabilities of €3m, and the firm is currently a significant distance from reaching production.

However, the business also confirmed that its creditors will not seek repayments for at least the duration of the current financial year, and subsequently raised £1m in December’s fund raise.

As a result, Conroy appears to be well enough funded to continue operational development, not least because of the 1 for 1 warrants, exercisable at 22p, issued as part of December’s placement.

Ready or not?

The bottom line is that, for all its recent problems, Conroy now seems to be confidently pursuing its accelerated development strategy with a view towards commercialisation.

At the current gold price of £958.15/oz, the 517,000oz defined at Clontibret would notionally be worth an impressive £495.3m. While the firm expects this resource base to increase with more drilling, if it is able to move a significant proportion of the resources from the inferred into the indicated category, this could prove to be the catalyst for a major rerate in the Conroy’s share. With those shares currently trading at just 26p, giving it a market cap of £5.1m, it could be worth a speculative punt – especially when one considers shares were just 12.8p in early December.



Daniel Flynn


The author does not hold shares in the company mentioned in this piece.


Author: Patricia Miller

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

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