5 Sep 2017 07:00
05 September 2017
Ormonde Mining plc
("Ormonde" or "the Company")
Barruecopardo Tungsten Project
Construction Update
The Board of Ormonde is pleased to provide an update on construction activities at the Barruecopardo Tungsten Project in Salamanca, Spain ("Barruecopardo" or the "Project").
Following the Company announcing, on 2nd June 2017, that the Project had moved into an accelerated construction and implementation phase, the ramp-up of site activities has advanced rapidly and is on track with the Project schedule, which anticipates mine commissioning in the third quarter of 2018. Progress at the Project has been made against a backdrop of strengthening tungsten demand and rising ammonium paratungstate ("APT") prices.
Key developments include:
· Priority 1 and Priority 2 equipment at manufacture stage; Priority 3 equipment order placement underway
· Construction of workshop, offices and other infrastructure continues
· Multiple construction contracts awarded, including dams and civil works, with main dam construction work underway
· Some 50 persons now working on the Project, including a majority from Barruecopardo and immediately adjacent towns
· APT prices continue to perform strongly, with significant price rises seen over recent months to a current level of US$285-300/mtu. This represents an increase of 30% on the prevailing price when the decision was taken to move to accelerated construction, and an 80% increase from its January 2016 low
Steve Nicol, Ormonde's Managing Director, commented:
"With the very positive decision, taken in early June this year, to advance the Project into an accelerated construction and implementation phase, the intervening period has been exceptionally busy at the Project. The speed and scale of the works progressed over this period has only been possible as a result of the meticulous preparation activities performed by the Project team over the past months.
With the APT price continuing to climb steadily, indications are that the decision to accelerate construction at the Project has been a timely and appropriate one, with the stage now set for the Project to commence commissioning in Q3 2018 against a backdrop of a much improved tungsten price environment."
About Ormonde
Ormonde has a 30% interest in the Barruecopardo Tungsten Project, located in northwest Spain. Barruecopardo is a fully permitted and fully funded mining project currently being developed through a US$99.7 million funding package agreed with Oaktree Capital Management (70% interest) in 2015.
A picture gallery illustrating recent site activities can be viewed at http://ormondemining.com/timeline-in-pictures/
Detail
Construction Activities
With the extensions to the Project timeline announced during 2016, the manufacturing of the ordered Priority 1 and Priority 2 equipment was necessarily deferred. This deferral has now been lifted and all ordered equipment is now being manufactured. In addition, new orders have been placed for the remainder of the outstanding Priority 2 equipment (including spirals, tables, main plant feed screen, and thickeners, etc), with Priority 3 (low criticality and/or short lead time) equipment orders also now being prepared for placement.
The dams' construction contract was recently awarded to Cerezo, a Spanish company with wide experience in the construction of dams and other mining infrastructure, including the execution of entire open pit mining operations for several international mining companies. Cerezo immediately mobilised to site with construction works having commenced in early July.
Meanwhile the civils works contract for the construction of all the foundations required for the Process Plant and associated infrastructure has been awarded to Copisa, a Spanish company active in Europe, Africa, Central America and South America. Copisa has particular experience in the execution of large projects in a wide range of sectors including infrastructure and industrial works. Copisa will be mobilising to site in early October.
In the meantime, construction of site facilities (workshops, welfare, etc) continues with contractors sourced from the local areas around the mine.
Tungsten Market
APT prices touched a low of US$162 per metric tonne unit ("mtu") in January 2016, following a period which had seen significant commodity price reductions associated with a general weakening of the commodity markets. However, since that time, the tungsten market has been gradually moving in an upwards direction, assisted by improvements in economic outlooks in both Europe and the US, and demand increase in some important markets. On the supply side, an estimated 4.2% reduction in primary supply from China during 2016 (China produces circa 80% of world primary tungsten supply), together with more recent supply disruptions to Chinese mine production, as a result of environmental impositions at certain Chinese mines, have had a material impact on the APT price.
Currently APT prices are US$285-300/mtu, following an increase in the rate of price appreciation since early July, shortly after the Barruecopardo Project partners decided to move the Project into an accelerated construction and implementation phase. While some consolidation in the near term may be expected, the outlook remains positive over the medium and longer term.
Enquiries to:
Ormonde Mining plc
Steve Nicol, Managing Director Tel: +353 (0)1 8014184
Capital M Consultants
Simon Rothschild Mob: +44 (0)7703 167065
Murray Consultants
Mark Brennock Tel: +353 (0)1 4980300 Mob: +353 (0)87 2335923
Davy (Nomad, ESM Adviser and Joint Broker)
John Frain Tel: +353 (0)1 679 6363
SP Angel Corporate Finance LLP (Joint Broker)
Ewan Leggat Tel: +44 (0)20 3 470 0470
For more information please visit www.ormondemining.com