Ormonde Mining (LON:ORM) this morning revealed it has appointed Jacobs Engineering Group (NYSE:JEC) to carry out a cost and definitive study for a process plant and surface operation at the Barruecopardo tungsten project in Salamanca, Spain.
It will be a key component of the definitive feasibility study, which Jacobs will also co-ordinate and follows the initial metallurgical results which reveal a coarser crushed product will liberate the tungsten-bearing scheelite.
This in turn lead to cost savings as the process will be simpler and easier than first envisaged.
Managing director Kerr Anderson said: "The selection of Jacobs is an important milestone in the development of the mining operation at Barruecopardo, and we are extremely encouraged by the testwork results showing liberation of the tungsten at even coarser crush sizes than indicated by the original programmes.
“This has positive implications for cost savings in the mineral processing operation.”
In the meantime the price of tungsten, which is in short supply, continues to rise, making the Barruecopardo mine economics even more compelling.
It has advanced to US$448 per metric tonne unit from US$245 when the company revealed the results of mining study compiled by independent consultant Scott Wilson.
Ormonde’s plan is to have Barruecopardo up and running by the end of 2012, initially mining 500,000 tonnes of ore per year after a steady ramp-up.
In its study, Scott Wilson put the capital cost of the mine at around €30 million with an additional €10 million needed to increase capacity to 800,000 tonnes.
This latter scenario would require converting Ormonde’s inferred resource to the indicated category, which in turn would necessitate more drilling
The Scott Wilson analysis showed there is enough ore near the surface to maintain an open pit production for ten years, before the operation heads underground.
The project is based around a former mine in the Salamanca Province of Spain, which closed back in 1984 when tungsten prices plummeted.
The fact there has already been mining production on the site has two potential benefits. It sets a persuasive precedent which should be helpful during the permitting process.
It also means that the product is well known among potential buyers. And in fact it is a reasonably high grade.
Concentrates normally have to be at least 65 per cent tungsten trioxide. However, Barreucopardo has the capacity to produce concentrates of up to 78 per cent, which would make its output particularly sought after.
The fact that it requires nothing more than a gravity processing plant to get it to this stage explains why the cash costs of the operation are likely to be so very low at €80 per MTU, and it also makes the project far simpler to execute.