RNS Number : 2541U
Ormonde Mining PLC
13 May 2008
13 May 2008
Ormonde Mining plc
Final Results for the year ended 31 December 2007
DUBLIN & LONDON: 13 May 2008 - Ormonde Mining plc ("Ormonde" or "the Company") announces
its final results for the year ended 31
December 2007.
HIGHLIGHTS
* Barruecopardo tungsten project upgraded to advanced project status; initial testwork
and studies demonstrate the project has the
potential to generate significant cashflows at relatively modest capital investment levels
* Ormonde fast-tracking Barruecopardo; envisages evaluation phase should be completed
during 2008, with first production in late
2009
* Company pursuing feasibility study recommendations on La Zarza; targeting the
possibility of developing upper level copper-gold
zones and a staged capital investment strategy
* Positive drilling results at Salamanca gold prospects achieved during the year
* Ormonde reports a loss after tax and minority interest of EUR580,071 for the year
(2006: a loss of EUR597,267), following EUR4.25
million investment programme on exploration and development activities.
Mike Donoghue, Chairman of Ormonde commented:
"The Company has made distinct progress on its tungsten property in the year under review
and this progress has continued into 2008.Barruecopardo is increasingly well placed to move to production towards the end of 2009. At La
Zarza, we are following up on recommendations
made in the feasibility study to improve the Project's debt capacity and economics.
I believe that Ormonde has made very significant progress in positioning itself to advance
into production, which would generate
significant cash flow and substantially increase shareholder value."
Enquiries to:
Ormonde Mining plc
Kerr Anderson, Managing Director / Fraser Gardiner, Director Tel: +353 (0)46 9073623
Bankside Consultants
Simon Rothschild / Louise Mason Tel: +44 (0)20 7367 8888 Mob: +44 (0)7703 167065
Davy (Nomad / IEX Adviser)
Fergal Meegan Tel: +353 (0)1 6796363
Brewin Dolphin (UK Adviser)
Gordon Culfeather Tel: +44 (0) 141 314 8121
CHAIRMAN'S REVIEW
The critical milestones for Ormonde during 2007 were the completion of the Feasibility
Study on the La Zarza Copper-Gold Deposit and the
upgrading of the Barruecopardo Tungsten Deposit to advanced project status, following the many
high grade drill intersections from that
project. The Company also focussed its gold exploration activities in its extensive ground
holdings in the Salamanca region, with initial
drilling revealing positive results from both the Sierro and Pino de Oro prospects.
Barruecopardo
An aggressive drilling programme during the year enabled the Company to fast-track its
evaluation of this high-grade tungsten project.As a result, we have been able to carry out an initial resource estimate, preliminary
metallurgical testwork and complete an
Order-of-Magnitude Study, which shows that Barruecopardo has the potential to generate
significant cashflows at relatively modest capital
investment levels.
The initial resource estimate, based on drilling results up to January 2008, is 1.0
million tonnes at an average grade of 0.7% WO3
(tungsten oxide), in the JORC Inferred Resource category. The Company believes, however, that
the Barruecopardo resource potential, down to
an arbitrary depth of circa 350 metres, is of the order of 3-4 million tonnes, with the
mineralisation open along strike. Moreover, the
directly adjacent Valdegallegos vein system shows promise, with the single hole drilled there
to date having encountered a high grade vein
assaying 2.7% WO3 over 0.9 metres.
The Company intends to fast-track development of this project and to constrain initial
exploration to the definition of a resource
adequate to sustain a 7 to 10 year mine life at production rates of around 90,000 metric tonne
units ("mtu") of WO3 per year. We believe it
reasonable to expect that the resources at Barruecopardo will expand as drilling progresses
during the operational stage and, assuming
continued success, that this start-up production rate could be increased as the project
develops. In essence, our strategy is to pursue a
fast-tracked and limited capital cost entry to production, with subsequent expansion post
start-up.
In addition to the drilling, a second stage metallurgical testwork programme is already in
progress and the Company envisages that the
evaluation phase of the Barruecopardo Project should be completed during 2008. Initial
tungsten production is targeted for the end of 2009.
Looking at the bigger picture, the longer term prognosis for the tungsten industry appears
positive. In this respect it should be noted
that Ormonde's proposed initial 90,000 mtu production rate would represent over 10% of current
western world production. The tungsten
industry is currently undergoing structural changes, partially due to strong demand, but
equally from industry changes within China, which
traditionally has produced around 80% of world tungsten. China has recently ceased to export
tungsten and has indeed become both a net
importer of tungsten and an investor in western tungsten projects.
These changes are resulting in both tungsten price support and in consolidation within the
industry, with investment and/or acquisition
of many tungsten projects by end-users and a move towards vertical integration, from mine
concentrate production, to tungsten powder
production and end-product manufacturing. A case in point is the acquisition by Sojitz, the
Japanese conglomerate, of the Panasqueira
Tungsten Mine in Portugal for C$57 million. Panasqueira is a mature underground mine with
production of circa 100,000 mtu a year as
concentrates from a 0.2% WO3 head-grade.
In this favourable market situation, we believe that Ormonde's Barruecopardo Project, by
virtue of its high grade, large resource
potential, simple metallurgy and very accessible location, is well placed to proceed into
production, generating significant cashflow and
adding value to shareholders' equity.
La Zarza
The Feasibility Study on the La Zarza Deposit evaluated an underground mining project with
a 600,000 tonne per year production rate,
producing saleable concentrates from multiple ore types.
The economics of the proposed development were impacted by higher than anticipated capital
costs, particularly fixed capital costs. This
was due to a combination of factors, including the general mine capital cost increases being
experienced across the industry, site specific
design aspects required by the flexible but complex process plant design needed to treat
multiple ore types, and related high mine
dewatering costs.
However, we believe that these problems may be largely overcome through a rescoping of the
project, with the initial development for the
mining and treatment of the upper level copper-gold ores only and a staged capital investment
strategy. The feasibility study made key
recommendations along these lines, which the Company is now actively pursuing.
The copper-gold only option for La Zarza is supported by the recent strengthening of the
copper price and, more critically, by the now
accepted perception among resource banks that high copper prices are here to stay. Resource
banks are forecasting that the recent highs of
US$8,000 per tonne of copper may in fact be a medium term base price, with higher peak prices
ahead.
Salamanca Gold
Drilling on two of our gold prospects during 2007 returned positive results. At Sierro our
first hole, drilled on a gold-in-soil
geochemical anomaly some 800m long by 400m wide, returned gold over a 62 metre interval
averaging 0.5 grams per tonne ("g/t") gold, within a
newly-defined sheeted vein system. This thick gold intersection is deemed by the Company to be
extremely encouraging and further drilling is
being carried out on this prospect.
At Pino de Oro, a prospect containing multiple gold-bearing structures, where previous
drilling has encountered grades of between 1.6
and 65.0 g/t over intervals of 1m to 11m, new drilling by Ormonde yielded results including
1.0 metre grading 18.9 g/t and 3.0 metres
grading 4.3 g/t gold. Drilling on the first of several structures at Pino de Oro has now
established gold at shallow depths with
mineralisation intersected over a strike length of at least 500 metres and open in various
directions.
During 2008 we intend to increase the level of activity on our gold prospects in Salamanca
with the objective of further investigating
the potential of Sierro and extending the mineralisation at Pino.
CORPORATE
We were deeply saddened by the sudden and untimely death of Dr Paul Mihalop, one of our
Directors, in November. Paul served as a
Director of Ormonde with great enthusiasm and distinction since his appointment in 2005; his
experience and perspective will be missed.
We welcome Mr Steve Nicol to the Board. His appointment will ensure a commensurate balance
on the Board as we progress into mine
production and the balance of our activities moves from exploration into mining. Steve was the
project manager for the La Zarza Feasibility
Study and has accepted the position of Chief Operating Officer with Ormonde, where he will
have responsibilities for both the La Zarza and
Barruecopardo projects.
FINANCIAL REVIEW
During 2007 the Group expended a total of EUR4.25 million on exploration and development
activities. We report a loss of EUR580,071 for
the year (2006: a loss of EUR597,267).
In summary I believe that Ormonde is increasingly well positioned to advance into
production and thereby increase shareholder value. I
would like to thank shareholders, staff and advisers for their continued support in pursuing
the Company's objectives.
Michael J. Donoghue
Chairman
12 May 2008
Consolidated Income Statement
Year ended 31 December 2007
2007 2006
EUR000's EUR000's
Administrative expenses (650) (601)
Exploration costs written off - (82)
OPERATING LOSS (650) (683)
Interest receivable and similar income 71 83
LOSS FOR THE YEAR BEFORE TAXATION (579) (600)
Taxation - -
LOSS FOR THE YEAR (579) (600)
Minority Interest (1) 3
RETAINED LOSS FOR THE YEAR (580) (597)
EARNINGS PER SHARE
Basic loss per ordinary share (EUR0.0034) (EUR0.0037)
Diluted loss per ordinary share (EUR0.0032) (EUR0.0034)
Consolidated Balance Sheet
As at 31 December 2007
2007
2006
EUR000's EUR000's
ASSETS
NON-CURRENT ASSETS
Intangible assets 10,408 6,157
Tangible assets 8 10
10,416 6,167
CURRENT ASSETS
Trade and other receivables 568 593
Cash and cash equivalents 2,441 3,391
3,009 3,984
TOTAL ASSETS 13,425 10,151
EQUITY AND LIABILITIES
EQUITY
Called-up share capital 6,617 5,885
Share premium account 17,507 14,347
Capital conversion reserve fund 29 29
Capital redemption reserve fund 7 7
Share based payment reserve 143 143
Foreign currency translation reserve 1 3
Profit and loss account (11,151) (10,570)
Attributable to equity holders 13,153 9,844
Minority interest 2 (3)
13,155 9,841
CURRENT LIABILITIES
Trade and Other Receivables 270 310
Total Liabilities 270 310
TOTAL EQUITY AND LIABILITIES 13,425 10,151
Consolidated Cash Flow Statement
Year ended 31 December 2007
2007 2006
EUR000*s EUR000*s
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss for the year before (650) (683)
taxation
Adjustments for:
Depreciation 13 12
Exploration costs written off - 82
Unrealised exchange gain/loss 2 -
Decrease/(Increase) in debtors 25 (22)
(Decrease)/Increase in (40) 74
creditors
NET CASH FROM OPERATING (650) (537)
ACTIVITIES
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds of issue of share capital 3,826 4,389
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditure on exploration activities (4,187) (2,431)
Purchases of tangible fixed (10) (4)
assets
Interest received 71 83
NET CASH FLOW FROM FINANCING (300) 2,037
ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (950) 1,500
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,391 1,891
CASH AND CASH EQUIVALENTS AT 2,441 3,391
END OF YEAR
Consolidated Statement of Changes in Equity
Year ended 31 December 2007
Share
Based
Share Share Payment Other Retained
Capital Premium Reserve Reserves Losses Total
EUR000's EUR000's EUR000's EUR000's EUR000's EUR000's
Balance at 1 January 2006 5,484 10,360 - 39 (9,972) 5,911
Loss for the year - - - - (598) (598)
-
Recognition of share based - - 143 - - 143
payments
Foreign exchange adjustments - - - - - -
Proceeds of share issue 401 3,987 - - - 4,388
Balance at 31 December 2006 5,885 14,347 143 39 (10,570) 9,844
Balance at 1 January 2007 5,885 14,347 143 39 (10,570) 9,844
Loss for the year - - - - (580) (580)
Foreign exchange adjustments - - - (2) (1) (3)
Proceeds of share issue 732 3,160 - - - 3,892
Balance at 31 December 2007 6,617 17,507 143 37 (11,151) 13,153
* The basic loss per share and the diluted loss per share have been calculated on a
loss after taxation of EUR580,071 (2006 = loss
of EUR597,267) and a weighted average number of Ordinary Shares in issue for the period of
171,484,445 (2006 = 162,488,775), for the basic
loss per share and 183,984,445 (2006 = 175,588,775) for the diluted loss per share.
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