TIDMORM
RNS Number : 9398G
Ormonde Mining PLC
02 June 2017
This announcement contains inside information
Ormonde Mining plc
("Ormonde" or "the Company")
Barruecopardo Tungsten Project
Construction Update
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.
Detail
Construction Schedule
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 EUR16 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.
Metal Prices
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.
Enquiries to:
Ormonde Mining plc
Steve Nicol, Managing Director Tel: +353 (0)1 8253570
Capital M 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 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
For more information please visit www.ormondemining.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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