29 Apr 2014 07:00
29 April 2014
Ormonde Mining plc
("Ormonde" or "the Company")
Update on Barruecopardo Progress
The Board of Ormonde provides the following update on progress at its flagship Barruecopardo Tungsten Project in Salamanca, Spain ("Barruecopardo" or "the Project").
Main points
· An independent review by AMC Consultants (UK) Limited ("AMC") of the need to carry out updates to the Barruecopardo Project Definitive Feasibility Study ("DFS") cost estimates has found that there has been no material change in the costs since these were originally estimated in 2012, with the report's indicated reductions in both capital and operating costs being within the feasibility study accuracy levels.
· An independent review of the tungsten market by Tungsten Market Research indicates continued strong growth in demand and a rising tungsten price averaging US$478/mtu over the report's five year period to 2018, considerably above the current prices of US$365/mtu.
· Recent dialogue between Ormonde and the Authorities in Castilla y Leon re-confirms that the documentation for the mining concession is in its final stages. The Company has now however been informed by the Authorities that, in parallel, a review of the historic mining concessions (Barruecopardo was last operated in the 1980's) is being completed and this will result in the conclusion of the permitting process in late June-July, being later than had been previously anticipated.
· Engineering design work by Fairport Engineering continues as scheduled to facilitate placement of orders for key equipment items.
Kerr Anderson, Ormonde's Managing Director, commented:
"Good progress has been made over the past weeks at our flagship Barruecopardo tungsten project, with the advancement of important engineering design works and the completion of supporting reviews and studies required for the planned senior bond financing. The final stages of permitting nears completion and based upon very recent meetings with the Authorities we now anticipate that this should be achieved in late June-July. This does not affect Ormonde's ongoing development plans for Barruecopardo including its planned senior bond financing."
Preparations for Bond Finance
Cost Updates
Ormonde commissioned AMC Consultants (UK) Limited ("AMC") to review whether any need exists to update the cost estimates for the Project since the completion of the Definitive Feasibility Study ("DFS") in February 2012. This review was requested as part of Project financing arrangements. The intention was not to review or revise the DFS itself, but to accept the DFS designs and schedules.
The review has concluded that, in AMC's opinion, there has been no material change in the likely costs since the 2012 DFS cost estimates and therefore AMC does not consider there to be a requirement to update the DFS cost estimates. The estimated differences in costs between the updated estimates and the DFS cost models are -1.3% for operating costs and -5.0% for capital costs. Such slight decreases in costs fall within the feasibility study accuracy level.
Tungsten Market Report
Ormonde commissioned Tungsten Market Research to provide a report on the Tungsten Market and Price Forecast. This report indicates strong growth in tungsten demand of circa 5.5% per annum, with limited new supply to meet such demand. The report forecasts a "Base Case" price for APT (1), over the five year period to 2018, ranging from US$420-510 per mtu and averaging US$478/mtu, considerably above current prices of US$365/mtu.
Permitting
Following recent communications with the Mines Department, the Company is aware that documentation for the mining concession is in its final stages of completion. The Company has been informed by the Authorities in Castilla y Leon that, in parallel, a review of the historic mining concessions is being completed, and as a result it is now anticipated that the permitting process will conclude in late June-July. This is later than had recently been anticipated. Ormonde understands that this review forms part of the process to ensure that the new mining concession is valid in all respects.
Engineering Design Works
Following the awarding of the Engineering Design Contract to UK-based Fairport Engineering Limited ("Fairport") in early March, key and substantive progress has been achieved in conjunction with site visits. Process Flow Sheet development and finalisation is well advanced and key equipment vendor discussions undertaken in order to facilitate the placement of the critical path equipment orders before finalisation of the detailed engineering design required for Project construction.
Extraordinary General Meeting and Annual Report and Accounts
Ormonde's Extraordinary General Meeting convened in connection with the completion of tranche 2 of the recent placing of new ordinary shares is being held in Dublin on 2 May, 2014. The net proceeds of the recent placing have been raised primarily to enable the Company to advance the process of putting in place a senior bond for project financing, to advance the engineering design work enabling placement of key equipment orders without delay following completion of project financing, and for the establishment of the environmental bond shortly after receipt of the Mining Concession. This intended use of proceeds remains unchanged.
The Annual Report and Accounts in respect of the year ended 31 December, 2013 are expected to be published in June, 2014, with the Annual General Meeting being held in July, 2014.
Note: (1) Ammonium paratungstate (APT) price in April 2014 is approximately US$365 per metric tonne unit (mtu) as quoted by the Metal Bulletin. One mtu = 10 kg.
Enquiries to:
Ormonde Mining plc
Kerr Anderson, Managing Director Tel: +353 (0)1 8253570
Bankside 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)
Eugenée Mulhern / Roland French Tel: +353 (0)1 6796363
SP Angel Corporate Finance LLP(Joint Broker)
Ewan Leggat / Katy Birkin Tel: +44 (0)20 3463 2260
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 or follow Ormonde on Twitter https://twitter.com/ormondemining or Linkedin http://www.linkedin.com/company/ormonde-mining-plc
ENDS
About Ormonde
Ormonde Mining Plc is admitted to trading on the AIM market in London and the ESM market in Dublin. Ormonde is a mineral development and exploration company focused on Spain (Ticker: ORM).
Ormonde's key activities include:
Barruecopardo Tungsten- Ormonde is developing a low cost mining operation at Barruecopardo to become a major, secure European supply of tungsten. Following the completion of a Definitive Feasibility Study and submission of permitting documentation in 2012, the Environmental Permit for the Project was received in early 2014, followed shortly thereafter by the signing of a 5 year offtake agreement with Noble Resources International Pte. Limited, a wholly owned subsidiary of Noble Group, with Noble committing to purchase 100% of the tungsten produced at the Project during its initial five years of operation.
Gold Projects in several highly prospective areas of western Spain which includes its joint venture agreement with Aurum Mining plc (AIM: AUR).
La Zarza Copper - polymetallic massive sulphide deposit in the prolific Iberian Pyrite Belt of southern Spain.