29 Feb 2016 07:00
29 February 2016
Ormonde Mining plc
("Ormonde" or "the Company")
Barruecopardo Update
The Board of Ormonde is pleased to provide an update on progress at the Barruecopardo Tungsten Project in Salamanca, Spain ("Barruecopardo" or the "Project").
Highlights
· 100% of Priority 1 1 capital equipment orders placed, 60% of Priority 2 2 capital equipment orders placed.
· Plant Construction Management contract awarded to Fairport Engineering Ltd.
· ~30% of project capital budget now committed, with capital expenditure costs running below budget.
· Other progress includes:
o Construction readiness: second environmental bond placed. Preliminary environmental works underway.
o Services: potable water feed line 80% installed.
o Engineering: detailed process plant engineering design well advanced. Final site geotechnical investigations 100% complete. Dam construction engineering design 70% complete.
· 96% of land 'option to purchase' agreements exercised.
· Compulsory land acquisition process continues to be advanced on lands not covered by 'option to purchase' or rental agreements. A recent administrative appeal by a third party in relation to an element of the compulsory land acquisition process, which the Board of Saloro considers to be merely vexatious, will delay the completion of this process. Consequently, the Project Company is optimising the construction schedule, prioritising works on lands to which it has full access and temporarily deferring works on other lands, including construction of the process plant.
· These developments are expected to impact on the schedule for commissioning at Barruecopardo and a further announcement will be made once there is greater clarity on the expected period to completion of the compulsory acquisition process.
· Resource expansion drilling campaign is 85% completed and assay results are being received and evaluated.
· Focus of activities over the coming period will be on execution of onsite earthworks compaction trials and commencement of water dam construction works.
Steve Nicol, Ormonde's Managing Director, commented:
"Progress during Q4 2015 and into early Q1 2016 allowed for a number of important achievements by the onsite team as Barruecopardo moves into its development stage. Key milestones achieved included the placement of 100% of Priority 1 and 60% of Priority 2 equipment orders, and the award to Fairport Engineering of the construction management contract.
We are optimising the Project construction schedule in light, inter alia, of developments relating to the compulsory acquisition process, by prioritising activities on lands already owned or rented by the Company, with certain activities now being advanced consecutively rather than concurrently. We will provide a further update on timing to commissioning in due course."
1 Priority 1 equipment includes Turnkey Crush and Screen Installation, Turnkey Jigs Installation, and Turnkey Water Treatment Plant Installation
2 Priority 2 equipment includes Dryer and Cooler, Dewatering Units, Rod and Ball mills, and Fines Filter Press
Detail
Priority 1 and Priority 2 Equipment Orders
Significant progress has been made in relation to the placement of Priority 1 & 2 equipment orders including the award of the contract to Metso Minerals Portugal to supply and install a Turnkey Crushing and Screening plant. The supply of the standalone Jig Pre-concentration circuit has also been placed, as has the Turnkey Water Treatment Plant contract. In excess of 60% of the total value of the Priority 2 equipment has now been ordered with this procurement process continuing.
Construction Management Contract
The Construction Management contract for the Project was recently awarded to Fairport Engineering Ltd (Fairport). Founded in 1982, Fairport is an experienced UK-based engineering firm involved in the aggregates, cement, industrial minerals, biomass, metals and minerals processing industries, from engineering design to turnkey project delivery. Fairport has wide ranging experience within the UK including participation in the design, installation and commissioning of a minerals processing facility in Spain managing local, experienced construction companies. Fairport was commissioned by Saloro in March of 2014 to carry out the Basic Engineering study for the Project and has been advancing the Detailed Engineering for the Project since June 2015.
Exercise of Land 'Option to Purchase' Agreements
Prior to receipt of the Oaktree funding package, Saloro had signed 'option to purchase' agreements ("Option Agreements") over approximately 75% of the land blocks required to commence construction of the Project, with a further 10% of land blocks covered by long term rental agreements with the Barruecopardo Council. Of these land blocks, where Option Agreements are in place, some 96% have now been exercised and purchased, with the remainder planned to be purchased in the coming quarter.
Compulsory acquisition of the remaining land blocks commenced in March 2015. A step in the administrative process for the compulsory acquisition has recently been appealed by a third party. Saloro's Board and legal advisers consider the claim to be entirely without merit. However the Project partners have decided to adopt a prudent approach to staging the next phases of construction activities pending clarification on timing of completion of the compulsory land acquisition process. In this regard, although there has been no requirement to draw on the Project debt facility to date, the Project Company has held very constructive discussions with the Project's debt provider in relation to amending the debt facility agreement to reflect an extended schedule and expects to formally agree these amendments shortly.
These developments are expected to impact on the schedule for commissioning at Barruecopardo and a further announcement will be made once there is greater clarity on the expected period to completion of the compulsory acquisition process.
Drilling Campaign
A drilling campaign comprising 6 holes (2,300m) was commenced during Q4 2015 to test extensions of the main mineralisation at depth beneath the main central part of the open pit, and also to further investigate mineralisation identified in drilling completed in 2012 below the base of the northern end of the currently planned open pit. To date 5 of the 6 drillholes included in the program have been completed with assays still being received. The Company will update the market on the results from this drilling program when all assays have been received and analysed.
Other Progress in Q4 2015 and to date
Activities on the ground have seen several key achievements.
The second of two environmental bonds was placed with the Regional Government as required by the terms of the mining concession. Placement of this bond was required prior to the commencement of important pre-production environmental works at the site.
The environmental works now underway include establishment of alternative areas for (replacement) rabbit breeding colonies, establishment of alternative white stork nesting sites, removal of old overhead power poles and lines, removal and reconstruction of existing stone fences and the continuation of annual wildlife breeding period monitoring and census activities in the areas surrounding the Project site.
The potable water feedline connecting the Project site to the Barruecopardo town water supply network has been 80% installed and will supply the Project's needs for drinking and sanitary water.
The last quarter of 2015 also saw the detailed engineering works for the process plant, being carried out by Fairport, advanced to approximately 70% complete. Detailed engineering for the water dams has also been rapidly advanced and is now virtually complete and ready for the commencement of dam earthworks' compaction trials, ahead of commencement of actual dam construction works.
In preparation for both the dam and process plant construction works, significant geotechnical field studies and trials were executed during the last quarter, leading to a 100% completion of these important pre-construction investigations.
A glossary explaining technical terms contained in this announcement can be found at www.ormondemining.com/en/investors/technical_glossary.
For more information please visit www.ormondemining.com.
Enquiries to:
Ormonde Mining plc
Steve Nicol, Managing Director Tel: +353 (0)1 8253570
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 Corporate Finance (Nomad / ESM Adviser, Joint Broker and Financial Adviser)
Eugenée Mulhern / Roland French Tel: +353 (0)1 6796363
SP Angel Corporate Finance LLP (Joint Broker)
Ewan Leggat Tel: +44 (0)20 3 470 0470
About Ormonde
Ormonde Mining plc is admitted to trading on the AIM market in London and the ESM market in Dublin and is a mineral development and exploration company focused on Spain (Ticker: ORM). In partnership with funds managed by Oaktree Capital Management ("Oaktree") through the joint venture company Barruecopardo JV BV (Ormonde 30%/Oaktree 70%), the parties are developing a low cost tungsten mining operation at Barruecopardo in the Salamanca Province to become a major European supplier of tungsten. Ormonde also has other exploration projects for gold and copper.