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Construction at Ormonde Mining's Barruecopardo project is continuing on time and on budget
Barruecopardo Project Update
This announcement contains inside information
Ormonde Mining plc
("Ormonde" or "the Company")
Barruecopardo Tungsten Project
The Board of Ormonde is pleased to provide an update of construction activities for the Barruecopardo Project in Salamanca, Spain ("Barruecopardo" or the "Project").
Following a period of review of the construction schedule, the Board of the Project company, Saloro SLU ("Saloro"), has authorised the issuance of outstanding approvals on various equipment and plant construction contracts, thus advancing the Project into an accelerated construction and implementation phase, with an updated schedule allowing for mine commissioning in the third quarter of 2018. These approvals come against a backdrop of rising tungsten APT prices, and increasing demand for tungsten concentrates, which will serve to de-risk the Project during the commissioning stage.
As the Project now moves into its most critical stage, in order to focus attention on implementation on time and within budget, Steve Nicol, Ormonde's current Managing Director, will relinquish his role at Ormonde in order to focus full time on his responsibilities as Managing Director of Saloro and Project Manager for Barruecopardo. Therefore immediately following the upcoming Ormonde AGM, Steve will step down from his position as Ormonde Managing Director. Mike Donoghue, current Chairman, will act as interim Managing Director from that point.
Michael Donoghue, Ormonde's Chairman, commented:
"The Company, together with its Project partner, have always recognised the importance to the Company's shareholders, and to Project stakeholders, of ensuring that the Barruecopardo Project comes online into a strengthening tungsten price environment, thus not exposing the Project or its shareholders to undue risk during the critical commissioning and start-up phases. Against a backdrop of rising tungsten prices, and increasing demand for tungsten concentrates, the partners believe the time is now right to ensure that the construction of the Project progresses at full speed towards commissioning of a new mine at Barruecopardo, now targeted for the third quarter of 2018.
Steve Nicol, who has diligently guided the Barruecopardo Project over the past nine years through all the preparations leading up to this stage, will step down from the Board of Ormonde, at our next AGM, in order to focus on the implementation of this flagship project. The Project partners consider this step to be of fundamental importance in reducing implementation risk and successfully bringing Barruecopardo into first production on time and on budget.
On behalf of the board, I wish to thank Steve for the major contribution that he has made to Ormonde, and particularly his efforts in taking the Barruecopardo Project from brownfield site into its current development stage. Ormonde looks forward to continuing to work with Steve and the Saloro team as we advance the Project to production.
The Project partners have recognised the importance to the Company's shareholders, and to Project stakeholders, of reducing Project risk and optimising the likelihood of Project success through adopting a policy of continual assessment of the date for commissioning of the mine against the prevailing economic conditions, and adjusting the project's construction schedule accordingly. This has led to the construction schedule being extended on two occasions during 2016.
Following recent assessments, and against a backdrop of an improving tungsten market and general economic forecasts, the partners believe it is timely and advantageous to commit to the final stages of the equipment supply and construction contracts. Consequently, the company has authorised the necessary approvals to allow for construction and implementation of the Project, which will see the Barruecopardo entering commissioning in the third quarter of 2018.
Saloro has also agreed to certain amendments to be reflected in the debt facility agreement (as yet undrawn) for the Project, to align with the approved construction schedule. Ormonde has agreed that, subject to the latest development schedule being implemented as planned, the remaining component of the equity investment, of circa €16 million, will be drawn on a pro rata basis with the debt during the development period, with any residual equity amounts being drawn on commissioning.
APT prices have gradually been moving in an upwards direction since touching a low of $162 per metric tonne unit ("mtu") in January 2016, following a period which saw significant commodity price reductions associated with a general weakening of the commodity markets. In the case of tungsten this trend was magnified as a result of a significant drop-off in usage of tungsten in the energy sector, particularly relating to a significant reduction in US oil related drilling activity. However, more recently there has been a reversal of this trend, with many indicators pointing towards a sustained increase in the tungsten price into the future.
These indicators include a more than doubling of the US oil rig count, improvements in economic outlooks in Europe and the US and supply shortages of tungsten concentrates outside of China caused, in part, by underperformance from some western world tungsten producers.
Currently the APT price is $220-225/mtu which represents a circa 37% increase since the January 2016 low, with the period since July 2016 seeing a modest but consistent uptrend in price. The medium to longer term outlook now looks increasingly positive.
Ormonde Mining plc
Steve Nicol, Managing Director Tel: +353 (0)1 8253570
Capital M Consultants
Simon Rothschild Mob: +44 (0)7703 167065
Mark Brennock Tel: +353 (0)1 4980300 Mob: +353 (0)87 2335923
Davy (Nomad, ESM Adviser and Joint Broker)
John Frain Tel: +353 (0)1 679 6363
SP Angel Corporate Finance LLP (Joint Broker)
Ewan Leggat Tel: +44 (0)20 3 470 0470
This information is provided by RNS
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