ORM.L Regulatory News (ORM)

6 Feb 2008 07:01

Ormonde Mining PLC06 February 2008 06 February 2008 Ormonde Mining plc Ormonde Reports La Zarza Feasibility Study DUBLIN & LONDON: 06 February 2008 - Ormonde Mining plc ("Ormonde" or the "Company") reports results received from the feasibility study (the "Study") onits La Zarza Project in the Huelva Province, southern Spain. The Study wascarried out by internationally recognised consultants under the management ofAker Kvaerner Engineering Services Ltd, and evaluated an underground miningproject at a 600,000 tonne per year ("tpy") production rate. The Study provides a mining plan and process plant design to access theconsiderable revenue potential of the metals in the La Zarza deposit, andoutlines a route designed to deliver saleable concentrates at good recoverylevels of contained metal. The capital cost estimate in the case of the 600,000tpy production rate is higher than anticipated, and in particular, this includesa higher than normal proportion of fixed capital costs. However the Study alsomakes key recommendations, which the Company is following with a view tomaximising the returns from La Zarza. Consequently, using the considerabledesign data now available, Ormonde is evaluating two alternative developmentstrategies as follows: • An increase in the production rate through an enlargement of the mineral resource, based upon extensions to the thick zinc mineralised intersections identified in last year's drilling (reported November 2007); • A reduction in capital costs; this may include an option for a more focussed initial development resulting in staging of capital investment. Kerr Anderson, Managing Director, said: "The current Study has shown that we have further work to do to maximise thereturn from La Zarza. We will therefore be following up on the Study'srecommendations, aiming to improve the Project's debt capacity and economics andto identify the best development path to deliver optimum value from the Project.These studies will continue in tandem with our work to rapidly progress theBarruecopardo Tungsten Project." The salient points from the current Study are: • Independent estimate of Indicated Resources totalling 9.9 million tonnes as follows: Copper Silicatado Mineralisation 2.6Mt grading 2.1% Cu, 0.5% Pb, 1.5% Zn, 30 g/t Ag and 0.9 g/t Au Gold Silicatado Mineralisation 2.6Mt grading 0.6% Cu, 1.5% Pb, 2.1% Zn, 53 g/t Ag and 3.7 g/t Au Massive Sulphide Mineralisation 4.7Mt grading 0.6% Cu, 1.0% Pb, 4.3% Zn, 36 g/t Ag and 0.9 g/t Au • The 600,000 tpy production case calls for an underground mining operation with a flexible process plant capable of treating four mineralisation feeds and producing copper, gold, silver, zinc, and lead in four saleable concentrates. • The majority of the paste tailings would be placed underground as backfill material to limit surface disposal requirements and the balance sent to a surface storage facility. • Capital costs estimated at €86 million, with details being: - €73 million for the processing plant, tailings management facility and infrastructure - An additional €13 million for initial mining development and working capital - the full extent of a contingent provision of €12 million for dewatering of the old underground workings has also been allowed for, but further work is required to assess the application of this contingency. The main recommendations made in the Study Report are: • "The Project has shown to be capital intensive, however a larger than normal proportion of capital exists as a fixed capital component which would not vary with increasing scale of operations. This fixed capital would include the historic mine water treatment costs and certain infrastructure costs. The Project would likely benefit from an increase in the scale of production ....... recent exploration successes in the Lower Massive Sulphide Zone, as reported by Ormonde in November 2007, may provide opportunities for such an increase in project scale with an assessment of this possibility being recommended." • Reduced capital cost development options may exist for the Project and it is recommended that these options be further explored. Mineral Resource Statement The Mineral Resource Estimate has been prepared by CSA Australia Pty Ltd and isreported under the Australasian Code for Reporting of Exploration Results,Mineral Resources and Ore Reserves (The JORC Code 2004 edition). The MineralResources are as follows: Indicated Resources CATEGORY Cut-off Mt Cu % Pb % Zn % Au g/t Ag g/t Copper Silicatado 1.5% Cu 2.64 2.1 0.5 1.5 0.9 30.2Gold Silicatado 2.0g/t Au 2.55 0.6 1.5 2.1 3.7 52.6Zinc Massive Sulphide 3.5% Zn 4.39 0.6 1.0 4.4 0.8 35.2Copper, Zinc and Gold 0.28 0.9 1.0 2.9 2.1 53.0Massive Sulphide Total Indicated 9.88 1.0 1.0 3.0 1.6 38.9 Inferred Resources CATEGORY Cut-off Mt Cu % Copper Massive Sulphide 1.5% Cu 1.30 1.9(West) The La Zarza Mineral Resource estimate was completed under the overallsupervision and direction of Mr Gerry Fahey MAusIMM (CP), MAIG, who is aCompetent Person as defined by the JORC Code (2004 Edition) and who consents tothe inclusion in this report of the matters based on his information in the formand context in which it appears. Feasibility Study Mineral Processing The extensive metallurgical testwork carried out as part of the FeasibilityStudy resulted in considerable advances in the ability to produce relativelyclean copper-gold, copper, lead and zinc concentrates at good recoveries fromthe four mineralisation types at La Zarza included in the Study. This testworkalso indicated that a viable paste backfill may be produced from the finelyground tailings. The process plant design arising from the testwork is for aconventional comminution circuit comprising primary and secondary crushingfollowed by a three stage primary grinding circuit. This 600,000 tpa capacitycircuit comprises rod and ball milling followed by stirred mill detritors.Milling circuit discharge feeds into three sequential differential flotationcircuits, each of which has facilities for regrinding followed by concentratethickening and pressure filtration to yield four saleable concentrate types. A paste tailings and backfill plant is incorporated into the processing plantdesign. Mining While it is expected that the underground mine would have negligibleground-water inflow during operations, the old workings are presently floodedand dewatering is required prior to underground development. In estimating theextent of this exercise, it was necessary to assume that the La Zarza workingswill have a direct hydraulic connection to the adjacent, flooded, Perunnal Mine.Sampling to estimate the pH and metal content of the water in the old workingsyielded very variable results. It was necessary to assume the more adverse metalconcentrations in the water when designing the water treatment plant. The underground mine is designed for surface decline access and oretransportation by trucks at a rate of up to 600,000 tpy. Ground conditions inthe mine are known to be very good. Underground development would be bymechanised diesel-hydraulic mobile plant. Ore would be mined using longhole andbench open-stoping mining methods, with use of paste backfill to minimisesurface tailings and maximise ore recovery. Capital Costs Capital costs have been estimated at €86 million based upon a flexible processplant design to accommodate four distinct feed types and the production of foursaleable concentrates. In addition allowance has been made for a contingentprovision of €12 million for mine dewatering and water treatment to neutralisethe water and remove the dissolved metals. The processing plant and siteinfrastructure and tailings are estimated to cost €73 million. Kerr Anderson PhD EurGeol PGeo, Managing Director of Ormonde Mining plc, and aqualified person as defined in the Guidance Note for Mining, Oil and GasCompanies, March 2006, of the London Stock Exchange, has reviewed and approvedthe technical information contained in this announcement. A glossary explaining technical terms contained in this announcement can befound at www.ormondemining.com/projects/glossary.html. Enquiries to: Ormonde Mining plc Kerr Anderson, Managing Director,Fraser Gardiner, DirectorTel: +353 (0)46 9073623 Bankside Consultants Simon Rothschild / Louise Mason Tel: +44 (0)20 7367 8888 Mob: +44 (0)7703 167065 Davy (Nomad / IEX Adviser) Fergal Meegan Tel: +353 (0)1 6796363 Brewin Dolphin (UK Adviser) Gordon Culfeather Tel: +44 (0) 141 314 8121 ENDS About Ormonde Ormonde Mining plc is quoted on the AIM in London and the IEX in Dublin.Ormonde is a mineral development and exploration company focused on Spain, withthe objective of developing mining projects and taking them into production. For more information please visit www.ormondemining.com. This information is provided by RNS The company news service from the London Stock Exchange