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Ormonde Mining PLC - Final Results 2013

RNS Number : 3056J
Ormonde Mining PLC
11 June 2014
 

11 June 2014

 

Ormonde Mining plc

("Ormonde" or "the Company")

 

Final Results for the year ended 31 December 2013

 

DUBLIN & LONDON: 11 June 2014 - Ormonde Mining plc announces its final results for the year ended 31 December 2013.

 

HIGHLIGHTS FOR THE YEAR AND POST YEAR END

 

·    Significant advances in permitting for Barruecopardo, resulting in the receipt of the Project's Environmental permit.

·    Off-take agreement signed with Noble Group for 100% of the tungsten concentrate produced from the Barruecopardo open pit mine during its initial five years of operation.

·    Appointment of Swedbank as advisor in relation to a €50 million senior bond financing for Barruecopardo.

·    Award of the Barruecopardo Engineering Design Contract to Fairport Engineering.

·    Tungsten prices forecast to remain strong over the coming years.

·    Further positive results from drilling on our gold projects in Salamanca.

 

 

Mike Donoghue, Chairman, commented:

 

"We have made considerable progress at our flagship Barruecopardo Tungsten Project over the last year and into 2014, including the achievements on permitting with the receipt of the Environmental Permit, the appointment of Swedbank as advisor in relation to a €50M senior bond financing, and the signing of an offtake agreement with Noble Group, expected to generate net revenues, if the current tungsten price (APT) of around US$375 per metric tonne unit were to be applied, in excess of US$350 million over the Project's initial five years of production. 

 

In addition, Ormonde engaged Fairport Engineering to provide Engineering & Design services for the Project, positioning us ready to order key equipment items and advance development upon receipt of the Mining Concession and a successful conclusion to project financing activities."

 

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

 



 

CHAIRMAN'S REVIEW

 

 

2013 was an eventful year for your Company with very considerable initiatives taken and ongoing progress made at our flagship Barruecopardo Tungsten Project. These have to date resulted in the receipt of the Environmental Permit; the appointment of Swedbank as advisor in relation to a €50M senior bond financing; the signing of an offtake agreement with Noble Group for the tungsten concentrates produced over the Project's initial five years of production; and the advancement of engineering and design work required to enable the ordering of priority one equipment orders; all achieved despite an unsolicited preliminary approach from a tungsten producer seeking to acquire Ormonde in a share for share exchange. This approach caused the Company to enter an 'offer period' under the Irish Takeover Rules, causing the activity of the Company to be curtailed to an extent during this period.

 

Barruecopardo

 

Our permitting and environmental submissions to the Salamanca Provincial Authorities of the Region of Castilla y Leon were presented in Q3 2012 and following successful completion of the public consultation process and internal reviews by the Provincial Authorities, our submission was forwarded, with a positive recommendation, to the Regional Environment Department in July 2013. A review of the submission was then completed by that Department, leading to a favourable recommendation in the "Report on the Nature Network" ("IRNA). This was followed shortly thereafter by the issuing of the Environmental Impact Declaration ("EID") for the Project. The receipt of the EID represents a major milestone, in effect being the Project's environmental permit, and one of the final steps required to enable the Mining (Exploitation) Concession to be granted by the Director General for Energy and Mines. It is understood that a review of the historic mining concessions (Barruecopardo was last operated in the 1980's) is now being completed as part of the finalisation of the documentation for the Mining Concession. We now await the issuance of the Mining Concession, anticipated shortly.

 

While the permitting process has been proceeding, and indeed prior to this during the feasibility study stage, Ormonde has developed appropriate contacts in the capital markets, particularly with lenders who have capability and experience in arranging or providing debt to resource projects. In this regard, as progress was made in the permitting process, the Company decided to appoint Swedbank Norway (a subsidiary of Swedbank) as advisor in relation to a €50 million senior bond financing. Swedbank has considerable experience and distribution capability in the bond market, working as lead or sole broker in  a number of such issues each year, a significant portion of which are in the resource sector.

 

For minor metals such as tungsten, debt providers need sufficient comfort that there will be a buyer for the metal produced. To ensure that such comfort was available, Ormonde developed contacts with most tungsten concentrate offtakers and marketing agents over the last few years and the progress made during 2013 and early 2014 opened up the opportunity to finalise our tungsten offtake arrangements prior to committing to the capital funding arrangements. This led, in April this year, to the Company entering into a binding offtake agreement with Noble Resources International Pte. Ltd a wholly-owned subsidiary of the Noble Group, a global market-leading commodities supply-chain manager of energy products, metals, minerals & ores and agricultural products, with total revenues of US$98 billion in 2013. Under the agreement, Noble will purchase 100% of the tungsten concentrate produced from the Barruecopardo open pit mine during its initial five years of operation. Thereafter, Noble and Ormonde will extend the offtake through negotiation or enter into an arrangement whereby Noble will provide marketing agency services to Ormonde for the tungsten concentrate produced.

 

With various aspects of the Project making significant advances, Ormonde was in a position to move forward on other fronts, the most critical from a timing perspective being engineering design works, essential to ensure that the orders of key equipment for the mine processing plant can be placed without further delay following completion of project financing. During 2013, discussions were held with appropriate engineering firms, possessing the relevant mineral processing experience, with a view to selection of a firm to carry out the detailed engineering design work for the development of a mine at Barruecopardo. This lead to the signing of a contract with Fairport Engineering Limited, an experienced UK-based engineering firm involved in the aggregates, cement, and minerals processing industries, from engineering design to turnkey project delivery. Fairport has extensive design and development experience within the UK and continental Europe, involving the gravity separation and concentration of minerals. Stage-1 of this engineering design work is presently in progress. In addition, the project team in Spain has been busily preparing all matters onsite to ensure readiness when the Mining Concession is received. This work includes the continuation of land acquisition arrangements, via a lease with option to purchase agreements, with contingency preparations in place to initiate compulsory acquisition of outstanding lands, as necessary, upon receipt of the Mining Concession.

 

With permitting nearing completion, capital funding being progressed, engineering design work underway, offtake arrangements secured and onsite preparations well advanced, Ormonde has made considerable progress during the past 12-15 months having regard to its available resources.

 

Looking briefly at the tungsten market, the tungsten price averaged around US$375 per mtu of APT during 2013 and is currently trading at around that price. The serious constraints on discovering and developing new tungsten mining projects, the continuing increasing global demand, coupled with the lack of substitution options, supports the view that the supply-demand dynamic will remain supportive of a strong price into the future. Projections by independent market research for annual global growth in demand range between 3% and 5%, and 3 to 5 year price forecasts are above US$400 for much of that period, with one metals analyst, Tungsten Market Research, forecasting prices in the range of US$475-510 over the period 2015-18.

 

 

Other Projects

 

Drilling results reported from both the Peralonso and Cabeza de Caballo Prospects in the first half of the year in our gold joint venture with Aurum Mining plc yielded encouraging results, including shallow high-grade drillhole intersections of 2 metres grading 10.2 g/t gold and one metre grading 33.2 g/t gold from Peralonso.  At Cabeza de Caballo, low-grade gold mineralisation was intersected in the first holes to be drilled on the prospect, within an extensive vein system.  Both prospects warrant further drilling.

 

At La Zarza, our efforts were concentrated on the conclusion of an arrangement that would see a potential divestment of the Company's interest in the Project.  Discussions are on-going in this regard.

 

 

Corporate and Financials

 

I referred at the outset to the unsolicited approach made by another tungsten company. That approach, in August 2013, by Almonty Industries, was rejected by the Board as it was regarded as opportunistic and lacking in both strategic and economic merit for Ormonde shareholders at a key time when the Company was making significant progress towards the development of Barruecopardo. Although the resultant offer period arising under the Irish Takeover Rules did complicate certain activities, we remained focused throughout the offer period and following its termination at the end of January when Almonty failed to make an offer by the deadline imposed by the Irish Takeover Panel, we are now embarked on the final activities to enable development of our planned mining operation.

 

The Company has reported a loss for the year of €1.81m, compared with a loss of €4.48m for 2012. The Company raised approximately £1.07 million (before expenses) through a share placing in September 2013, and subsequent to the year end, the Company raised £2.0 million (before expenses) through a  share placing in April 2014 to progress engineering works, permitting and funding activities relating to Barruecopardo and for general working capital purposes.

 

In conclusion, I would like to thank shareholders for their patient support during the last year. I believe it has been worthwhile, with the substantial progress made, and I look forward to the period ahead as we take our Barruecopardo project into the development stage.

 

 

Michael J. Donoghue

Chairman

 

10 June 2014



 

Consolidated Statement of Comprehensive Income

Year ended 31 December 2013

 

 



2013

 


2012



€000's


€000's






Administrative expenses


(1,397)


(1,169)

Exploration costs written off


(418)


(3,335)

OPERATING LOSS


(1,815)


(4,504)

Interest receivable and similar income


7


23

LOSS FOR THE YEAR BEFORE TAXATION


(1,808)


(4,481)

Taxation


(1)


(5)

LOSS FOR THE YEAR


(1,809)


(4,486)

Minority Interest


-


-

RETAINED LOSS FOR THE YEAR


(1,809)


(4,486)






EARNINGS PER SHARE





Basic loss per ordinary share


(€0.0045)


(€0.0122)

Diluted loss per ordinary share


(€0.0044)


(€0.0121)

 



 

Consolidated Statement of Financial Position

As at 31 December 2013

 



2013


2012

 



€000's


€000's

ASSETS










NON-CURRENT ASSETS





Intangible assets


17,127


16,406

Property, plant and equipment


1


3



17,128


16,409

CURRENT ASSETS





Trade and other receivables


394


559

Cash and cash equivalents


1,050


2,282

Total Current Assets


1,444


2,841

TOTAL ASSETS


18,572


19,250






EQUITY AND LIABILITIES










EQUITY





Issued share capital


12,197


11,636

Share premium account


28,837


28,192

Share based payment reserve


837


777

Capital conversion reserve fund


29


29

Capital redemption reserve fund


7


7

Foreign currency translation reserve


1


1

Retained loss


(23,608)


(21,799)

Equity attributable to Owners of the Company


18,300


18,843






CURRENT LIABILITIES





Trade and Other Payables


272


407

Total Current Liabilities


272


407






Total Liabilities


272


407

TOTAL EQUITY AND LIABILITIES


18,572


19,250

 



 

Consolidated Statement of Cash Flows

Year ended 31 December 2013

 



2013


2012

 



€000's


€000's

 

CASHFLOWS FROM OPERATING ACTIVITIES










 

Loss for the year before taxation


(1,808)


(4,481)

 






Adjustments for:





Depreciation


2


2

 

Exploration costs written off


418


3,335

 

Movement on share-based payment reserve


60


-

 

Investment revenue recognized in profit or loss


(7)


(23)

 



(1,335)


(1,167)

 

MOVEMENT IN WORKING CAPITAL





 

(Increase) in debtors


165


(132)

 

Increase /(Decrease)in creditors


(136)


(951)

Income taxes paid


-


-

NET CASH (USED IN) OPERATING ACTIVITIES


(1,306)


(2,250)






 

CASH FLOWS FROM FINANCING ACTIVITIES





 

Proceeds of issue of share capital


1,206


5,503

 






 

CASH FLOWS FROM INVESTING ACTIVITIES





 

Expenditure on exploration activities


(1,138)


(2,977)

 

Movement in property, plant and equipment


-


(2)

Interest received


7


23

 

Taxation


(1)


(5)

 

NET CASH (USED IN) INVESTING ACTIVITIES


(1,132)


(2,961)

 






 

NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS


(1,232)


292

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR


2,282


1,990

 

CASH AND CASH EQUIVALENTS AT END OF YEAR


1,050


2,282

 



 

Consolidated Statement of Changes in Equity

Year ended 31 December 2013

 

 




Share







Based





Share

 

Share

Payment

Other

s

Retained

s

 

s


Capital

Premium

Reserve

Reserves

Losses

Total









€000's

€000's

€000's

€000's

€000's

€000's








Balance at 1 January 2012

10,151

24,175

777

37

(17,313)

17,827

Loss for the year

-

-

-

-

(4,486)

(4,486)

Recognition of share based payments

-

-

-

-

-

-

Proceeds of share issue

1,485

4,017

-

-

-

5,502

Balance at 31 December 2012

11,636

28,192

777

37

(21,799)

18,843








Balance at 1 January 2013

11,636

28,192

777

37

(21,799)

18,843

Loss for the year

-

-

-

-

(1,809)

(1,809)

Recognition of share based payments

-

-

60

-

-

60

Proceeds of share issue

561

645

-

-

-

1,206

Balance at 31 December 2013

12,197

28,837

837

37

(23,608)

18,300

 

 

 

1.   The basic loss per share and the diluted loss per share have been calculated on a loss after taxation of €1,809,000 (2012: loss of €4,486,000) and a weighted average number of Ordinary Shares in issue for the year of 404,950,441(2012: 368,307,907) for the basic loss per share and 406,705,542 (2012: 372,209,018) for the diluted loss per share.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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