ORM.L Regulatory News (ORM)

8 May 2006 07:01

Ormonde Mining PLC08 May 2006 08 May 2006 Ormonde Mining plc Final Results for the year ended 31 December 2005 DUBLIN & LONDON: 08 May 2006 - Ormonde Mining plc ("Ormonde" or "the Company")announces its final results for the year ended 31 December 2005. HIGHLIGHTS • Significant progress achieved on the Company's Spanish mineral assets with advances in particular being made at the La Zarza Copper-Gold Project. • Metallurgical testwork demonstrates that a more economical than expected flotation treatment route is applicable to La Zarza with the recovery of gold, copper and silver into saleable concentrates. • Ormonde's first JORC-compliant Mineral Resource estimate confirms the La Zarza deposit could sustain a robust mine production rate and an adequately long mine life to support a production decision. • Exploration results from the Salamanca Gold Project indicate the potential for large, previously unrecognised bulk-tonnage gold deposits. • Investigation of tungsten-bearing tailings at Salamanca offers the opportunity for low cost and low risk early cash flow. • Reported loss of €420,850 - management continues to do its utmost to minimize overheads and maximize in-the-ground investment. Mike Donoghue, Chairman of Ormonde commented: "With La Zarza already on the path towards production, and with some excellentprogress being made on our exploration properties, I anticipate that 2006 willbe a landmark year for your Company". Enquiries to: Kerr Anderson, Managing Director,Ormonde Mining plc Tel: +353 (0)46 9073623 Fraser Gardiner, DirectorOrmonde Mining plc Mobile: +353 (0)86 3931178 Simon Rothschild,Bankside Consultants Tel: +44 (0)20 7367 8871 CHAIRMAN'S REVIEW OVERVIEW The year 2005 was another busy and productive period which saw Ormonde achievesignificant progress on its Spanish mineral assets. Our focus during the yearremained on the advancement of the La Zarza Copper-Gold Project towardsproduction. We can now move forward with confidence to the Feasibility Studyphase in 2006, with completion of the initial drilling programmes, our firstJORC-compliant mineral resource estimate and positive metallurgical testworkresults. Notwithstanding the emphasis on La Zarza, we also made excellentprogress in our discovery-driven exploration programmes, particularly atSalamanca, where several gold-tungsten targets and opportunities have beenidentified. We expect early and rapid progress at Salamanca during the yearahead. OPERATIONAL HIGHLIGHTS In last year's review I stated that the key to the development of La Zarza wouldbe the establishment of an optimal ore processing route. The most significantnews that we delivered during the year, therefore, was the early results fromthe investigative phase of our metallurgical testwork on La Zarza drillingsamples. Having expected the extraction of gold to require a capital-intensiveand high operating cost processing route of ultra fine-grinding followed byleaching, we were very pleased to establish that a much more economicalflotation treatment route is applicable to the La Zarza Gold Silicatado, withthe recovery of gold, copper and silver into saleable concentrates. Thetestwork also established that recovery of the copper to a flotation concentratein the adjacent Copper Silicatado would be higher than expected. In short, thepositive impact on the Project's economics of the use of the same flotationprocess to recover the gold, copper and silver, could be very significantindeed. Of equal importance to the favourable metallurgical results is our newJORC-compliant Mineral Resource estimate, which shows La Zarza to contain 85,000tonnes of copper, 486,000 ounces of gold and 6.9 million ounces of silver, or1.3 million ounces of gold equivalent. These figures confirm that the La Zarzadeposit could sustain a robust mine production rate and an adequately long minelife to support a production decision and we see clear potential to expand uponthese resources with our ongoing drilling. Our Preliminary Assessment Studywill soon provide us with the necessary cost figures to allow us to proceed tothe Feasibility Study stage, but I am already very confident that in La Zarza wehave an excellent core asset to underpin the growth of the Company. Our primary objective is to take La Zarza into production. However, we alsorecognize that substantial value can be added to the Company throughwell-directed and successful exploration and discovery. I am therefore verypleased to report that our first year of field work on our extensive Salamancalicences has delivered some exceptional results, suggesting the potential forlarge, previously unrecognized bulk-tonnage gold deposits. Extensivegold-in-soil geochemical anomalies, supported by rock sampling results, willprovide initial drilling targets. It is still early days on this project andonly a drilling programme will tell us the size and the overall bulk grade ofthe mineralization underlying the anomalous zones. However, I look forward to aperiod of intense activity in Salamanca in the coming months. We have also continued to make progress on other gold projects in ourexploration portfolio including drilling at Tracia and Salamon. At Tracia,detailed soil geochemistry has identified new drilling targets, and at Salamon,where last year's drilling included an intersection of 4.8 metres grading 25.3 g/t gold, we will continue our evaluation of the deposit's deeper potential. Finally, I should report that as a result of our on-going endeavours to acquireor develop a more immediate cash flow mining operation in Spain, in February ofthis year we signed an option agreement to investigate the tungsten-bearingdumps and tailings from the historic Barruecopardo Open-Pit Tungsten Mine,located on our Salamanca licences. We believe that processing this materialcould give us early cash-flow and exposure to upside in the tungsten price. Theincreased demand, reduced supply and lack of availability of new tungstenprojects has resulted in a return of tungsten prices closer to levels last seenin the early 1980s. Should our assessment confirm sufficient resource grade andrecovery at Barruecopardo, the low capital costs required for a simple gravityrecovery plant to treat these tungsten tailings could give us the opportunity todevelop a profitable operation at very low risk to the Company. We will make adecision on the project's feasibility by late 2006. CORPORATE DEVELOPMENTS On the corporate side 2005 also featured some significant events. Our admissionto trading on London's AIM and the associated capital raising in April gave usthe foundation for the progress we made during the rest of the year. As aresult our trading liquidity is up significantly and we have attracted newinstitutions onto our share register. We have strengthened our Board with theappointment of two new directors, Fraser Gardiner as an executive director andPaul Mihalop as a non-executive. David O'Beirne and Colin Andrew stepped downas non-executive directors during this period and on behalf of the Board I wishto thank them both for the significant roles they have played in the developmentof the Company. FINANCIAL REVIEW During 2005 the Company spent a total of €2.6 million, of which €420,850 isreported as a loss for the year (2004: €375,446). I believe that these figuresdemonstrate very clearly that even as Ormonde grows and progressively ups thescale of its operational activity, our management continues to do its utmost tominimize overheads and maximize in-the-ground investment across its projectportfolio. Towards the end of the year we received notification from the Spanish governmentthat we had been awarded central government grants totalling €320,000 on thebasis of our expenditure on the La Zarza and Tracia projects. Besides thisbeing a significant sum of money to be applied to our projects, it is a welcomedgesture from the Spanish authorities that they have confidence not only inOrmonde and its operations, but in the mining industry as a whole. MARKET TRENDS AND OUTLOOK The current boom in commodity prices reflects both an overdue correction after aprolonged downturn in which investment was minimal and a major structuraladjustment as some Asian countries embrace free-market principles and economicexpansion. The underlying demand and lack of new projects points to a prolongedmining cycle. This clearly is an opportune time for everyone involved in themining industry. The metals of direct relevance to Ormonde - gold, copper,silver and tungsten - are all enjoying record-high prices. As high metal pricesappear to be with us for the longer term, this underpins Ormonde's growthstrategy of creating value in Spanish projects by taking them into production.With La Zarza already on the path towards production, and with some excellentprogress being made on our exploration properties, I anticipate that 2006 willbe a landmark year for your Company. Michael J. DonoghueChairman05 May 2006 Consolidated Profit & Loss AccountYear ended 31 December 2005 2005 2004 €000's €000's Administrative expenses (451) (401)Operating income - 19 OPERATING (LOSS) (451) (382)Interest receivable 30 6 (LOSS) ON ORDINARY ACTIVITIESBEFORE TAXATION (421) (376)Tax on (loss) on ordinary activities - - (LOSS) ON ORDINARY ACTIVITIESAFTER TAXATION (421) (376)Minority Interest - 1 Retained (loss) for year (421) (375) (Loss) per Share (€0.0029) (€0.0033) Consolidated Statement of Total Recognised Gains and LossesYear ended 31 December 2005 2005 2004 €000's €000's (Loss) for the financial year (421) (375)Currency translation differences onforeign currency net investments 3 3 Total recognised gains and losses (418) (372) Consolidated Balance SheetAs at 31 December 2005 2005 2004 €000's €000's FIXED ASSETSTangible assets 19 20Goodwill 112 112Intangible assets 3,555 1,795 3,686 1,927 CURRENT ASSETSDebtors 571 66Cash at bank and on hand 1,891 444 2,462 510CREDITORS: (amounts falling duewithin one year) (236) (100)NET CURRENT ASSETS 2,226 410 TOTAL ASSETS LESS CURRENT LIABILITIES 5,912 2,337 CREDITORS: (amounts falling dueafter more than one year) - (9)NET ASSETS 5,912 2,328 CAPITAL AND RESERVESCalled-up share capital 5,483 4,636Share premium account 10,360 6,717Capital conversion reserve fund 29 29Shares to be issued forConsideration - 486Capital reserve 7 7Foreign currency reserve 3 3Profit and loss account (9,972) (9,552)SHAREHOLDERS' FUNDS 5,910 2,326 Minority interest 2 2 5,912 2,328 Consolidated Cash Flow StatementYear ended 31 December 2005 2005 2004 €000's €000's NET CASH (OUTFLOW) FROM OPERATING ACTIVITIES (821) (329) RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 30 6Interest element of finance leases - (2) NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 30 4 CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTSale of tangible asset 18 -Expenditure on intangible assets (1,759) (587)Payments to acquire tangible assets (25) (3) NET CASH (OUTFLOW) FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (1,766) (590) NET CASH (OUTFLOW) BEFORE FINANCING (2,557) (915) FINANCING Issue of shares net of expenses 4,004 895Capital element of finance leases - (10) NET CASH INFLOW FROM FINANCING 4,004 885 INCREASE/(DECREASE) IN CASH 1,447 (30) Note: The loss per share was calculated from the loss for the period attributable toordinary shareholders of €420,850 (December 2004 = €375,446) divided by thetime-weighted average number of shares in issue during the period of 143,204,927(December 2004 = 112,490,110). There is no dilutive effect of share options onthe basic loss per share. This information is provided by RNS The company news service from the London Stock Exchange