ORM.L Regulatory News (ORM)

28 Feb 2006 07:02

Ormonde Mining PLC28 February 2006 28 February 2006 Ormonde Mining plc Option to Acquire Tungsten Project in Salamanca DUBLIN & LONDON: 28 February 2006 - Ormonde Mining plc ("Ormonde" or "theCompany") announces that it has entered into an option agreement to acquire theBarruecopardo Tungsten Tailings Project ("the Project"), located in the permitarea of the Company's Salamanca Gold Project in Western Spain. During Ormonde's option period, which runs until September 2006, it will fullyassess the grade, volume, and rate of recovery of the tungsten contained in thedumps and tailings ("tailings") material produced from the Barruecopardotungsten mine. Recent sampling by Ormonde of the vein material originally minedto produce the tungsten has also confirmed the presence of gold with thetungsten and this gold potential will also be evaluated. Upon exercising itsoption, Ormonde would have 100 per cent of the mineral rights pertaining totungsten and gold for which it will pay an annual royalty and lease fee. The Company envisages a simple, low-cost operation initially processing around400,000 tonnes of material per annum through a small gravity separation plant,to produce high-quality tungsten concentrates for direct sale. There would beno mining cost and a low milling cost as the material is already partiallycrushed. Production capacity could be increased following the start-up of anoperation. The Barruecopardo Mine, which closed in the early 1980s, was one of Europe'slargest tungsten operations producing some of the highest quality tungstenproducts in the market. Mining records suggest, however, that the rate oftungsten recovery was only about 40 per cent, indicating that a majority of thetungsten was discarded in the tailings. Ormonde estimates that there is between5-10 million tonnes of tailings at grades of 0.08 to 0.10 per cent WO3, whichpotentially represents a significant resource. Ormonde's Chairman Mike Donoghue said today, "The Tungsten Tailings Project has potential to become a near-termprofit-generating operation and gives Ormonde exposure to upside in the tungstenprice, being at its highest for over 20 years. We feel that the Project,considering the low capital spend required, has distinct potential which can beexploited at low cost and without detracting management resources from our coreassets." Enquiries to: Kerr Anderson, Managing Director, Ormonde Mining plc Tel: +353 (0)46 9073623 Fraser Gardiner, Director, Ormonde Mining plc Tel: +353 (0)86 3931178 Simon Rothschild, Bankside Consultants Tel: +44 (0)20 7367 8871 Mobile: +44 (0)7703 167065 ENDS BACKGROUND INFORMATION Ormonde Mining is quoted on the AIM in London and the IEX in Dublin. TheCompany's strategy is to enhance shareholder value by developing gold projectsin Spain and taking them into production. Ormonde has a strong local Spanishmanagement team, supported by a Board with extensive mine development andexploration experience. For more information and contact details including email, please visitwww.ormondemining.com. ABOUT TUNGSTEN Tungsten is most frequently used as tungsten monocarbide, which has a hardnessclose to diamond, in cemented carbides. The most well-known use of tungsten isin lighting filaments, and other important applications include improving steelproperties and use in tungsten alloys, electronics, and chemical products. Annual world production is only 74,000 tonnes of tungsten metal, with thelargest producer being China. One of the world's largest producers of tungstenconcentrates outside China is the Panasqueira mine in Portugal. Marketable ore concentrates of scheelite, the main tungsten mineral atBarruecopardo, typically contain 65-70 per cent WO3 (tungsten trioxide).Concentrates are generally priced per "metric tonne unit" (mtu), equivalent to10 kilograms. Prices of tungsten concentrates, which are traded through privatecontracts and not on an open market, have increased three-fold in the past yearin market conditions which are expected to remain buoyant for the long term.Recent quotes for tungsten concentrates have been reported by the Metal Bulletinin the range $190-$220/mtu, with some reporters commenting that the demand fortungsten products is increasing much faster than the supply can be developed. This information is provided by RNS The company news service from the London Stock Exchange