20 Sep 2019 07:00
20 September 2019
This announcement contains inside information
Ormonde Mining plc
("Ormonde" or "the Company")
Barruecopardo Tungsten Mine Update
The Board of Ormonde ("the Board") is pleased to provide an update on the Barruecopardo Tungsten Mine in Salamanca, Spain ("Barruecopardo" or "the Mine"). The Mine, currently in the first year ramp-up operational phase, is operated by Saloro S.L.U. ("Saloro"), in which Ormonde holds a 30% beneficial interest.
·; Improved mined ore grades as mining in the southern starter pit transitions downwards to fresh ore and northwards towards the main orebody (the broad, high grade tungsten zone below the historic open pit);
·; Significant progress on waste stripping of the east-wall cutback also achieved, such that initial access to the main orebody is expected early in the fourth quarter;
·; The Mine's saleable concentrate inventory has been building during the initial months of operation, with Saloro preparing initial shipments of tungsten concentrates for sale within the next weeks;
·; To provide Saloro with additional liquidity support, as it establishes ore mining operations on the main orebody in the coming months, Saloro is in the process of finalising a €10 million, 12 month loan facility, with Oaktree Capital Management;
·; Successful auction of significant stocks of APT from the now closed Fanya Metals Exchange in China, to a single Chinese tungsten company at market prices, is seen as a positive market development.
Michael Donoghue, Ormonde's Chairman and Interim Managing Director, commented:
"While still early in the ramp-up phase, it is encouraging to see that tungsten grades in the Mine have been improving, and that the waste stripping required to allow Saloro access to more continuous and higher grade fresh tungsten ore, in the main orebody, has seen significant progress.
"The recent, successful auction of Fanya APT stocks, and reported tightness of available tungsten material for prompt delivery, are leading to improved market sentiment, which may prove both timely and positive for Saloro as it continues to ramp up operations."
Details:
Mining
Since Ormonde's last update in June, Saloro has focused mining activities on ore mining in the southern starter pit and waste stripping of the east wall of the historic open pit. Significant progress has been made on both fronts.
The southern starter pit is performing much better than the initial production from the northern starter pit, particularly as ore mining progresses deeper and northwards from near-surface weathered material to fresh ore in the direction of the main orebody. Improved blasting and mining procedures have also contributed towards mined ore grades corresponding increasingly well with modelled grades. Consequently, batches of higher grade and fresher ore are being delivered to the process plant.
In parallel, the east wall cutback has progressed substantially, such that its southern end is merged with the southern starter pit, and as both pits advance northwards during the fourth quarter, ore mining will effectively transition into the main orebody.
Finance
Considering the additional mining costs related to the revised mining schedule and the deferral of first revenues as a result of the lower grade material encountered during the first months of operation, Saloro is in the final stages of agreeing a €10 million, 12 month loan facility with Oaktree Capital Management, Ormonde's 70% joint venture partner at the Mine. Once in place, the loan facility will provide Saloro with additional liquidity support as it establishes ore mining operations on the main orebody over the coming months.
Tungsten concentrates
The Mine's inventory of saleable concentrates has been gradually building during the first months of the current ramp-up phase and Saloro is preparing its initial concentrate shipments for sale.
Tungsten market
The tungsten market has seen a period of weakness over the last number of months, with APT prices falling from the $270 per metric tonne unit ("mtu") level seen for much of H1 2019, to the current level of $200 per mtu. While some of this weakness can be attributed to the ongoing uncertain macroeconomic environment, there has also been significant market uncertainty relating to the release of stocks of APT, amounting to one third of annual Chinese output, formerly held by the defunct Fanya Metal Exchange in China.
The recent successful auction of this material, reportedly to a single large Chinese tungsten company at market prices, is therefore being seen as a positive development. In addition, cutbacks in tungsten concentrate production and APT processing within China are reportedly resulting in a scarcity of material available in the spot market.
Enquiries:
Ormonde Mining plc
Paul Carroll, Chief Financial Officer
Fraser Gardiner, Chief Operating Officer
Tel: +353 (0)1 8014184
Davy (Nomad, Euronext Growth Advisor and Joint Broker)
John Frain / Barry Murphy
Tel: +353 (0)1 6796363
SP Angel Corporate Finance LLP (Joint Broker)
Ewan Leggat
Tel: +44 (0)20 3 470 0470
Capital M Consultants
Simon Rothschild
Mob: +44 (0)77 03167065
Murray Consultants
Mark Brennock
Tel: +353 (0)1 4980300
Mob: +353(0)872335923
Notes:
This announcement includes certain statements that may be deemed "forward-looking statements". Although the Company believes the forward-looking statements are based on reasonable assumptions, such statements should not be in any way construed as guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements.
Risk factors are typical of a mining operation, and include (but are not limited to): the availability and / or delivery of equipment and contractor services; plant performance; rates of metal recovery in the process plant; mined ore tonnages and grade in comparison to estimated ore reserves; cost overruns and the potential for future additional funding requirements; and tungsten concentrate sales prices.
Barruecopardo has been developed through a US$99.7 million funding package agreed with Oaktree Capital Management (70% interest). Ormonde's participation in the Mine is held through its 30 per cent minority interest in Barruecopardo Joint Venture BV, a company which is governed by a Shareholder Agreement which provides for certain rights and obligations for each party. The Mine is operated by Saloro S.L.U., a Spanish incorporated subsidiary of Barruecopardo Joint Venture BV.
For more information, visit www.ormondemining.com