TIDMORM
RNS Number : 2041B
Ormonde Mining PLC
15 June 2016
15 June 2016
Ormonde Mining plc
("Ormonde" or "the Company")
Barruecopardo Update
The Board of Ormonde is pleased to provide the following update
on the Barruecopardo Project in Salamanca, Spain ("Barruecopardo"
or the "Project"). This follows the recent administrative appeal by
a third party in relation to an element of the compulsory land
acquisition process at Barruecopardo. While the relevant authority
has found against the appellant and in favour of the Project
operating company (Saloro SLU), this process has, as previously
announced, occasioned certain delays in the timeline for
Barruecopardo. Further detail in relation to this matter is
provided below.
-- Independent expert legal advice has now provided clarity on
the expected time period to completion of the compulsory
acquisition process, given the experience of the recently resolved
administrative appeal and the process of any subsequent
appeals.
-- As a result, the project partners (Ormonde and Oaktree) have
now approved and adopted an optimised construction schedule for the
Project, which will see commissioning in late 2017.
-- The optimised construction schedule also aligns first
production with a more positive forecasted tungsten price
environment, reducing risk and optimising project valuations.
-- Saloro has completed negotiations with the Project's debt
provider in relation to amendments to the debt facility agreement
(which remains undrawn) to reflect the new schedule, ensuring
continued compliance with the agreement, and continued availability
of the requisite capital.
-- The focus of activities on the ground can now turn to
implementing the new schedule including the commencement of water
dam construction works.
-- Tungsten APT prices have commenced a recovery recently rising
to $210 per metric ton unit, 30% above the low of $162 reached
during January 2016. The outlook for tungsten in the short term is
moderately positive, however medium to longer term forecasts
predict substantial price rises.
Steve Nicol, Ormonde's Managing Director, commented:
"The optimisation of the project construction schedule is a
balanced response to the contents of the expert legal advice
relating to the likely timelines for the compulsory acquisition of
the remaining land plots, and it more closely aligns first
production with a forecasted improvement in tungsten prices, with
the aim of optimising project valuation.
We will now commence implementation of this new staged
construction schedule, commencing with construction works on the
water dams, the continued installation of site services and other
construction readiness works, and I look forward to updating
shareholders on progress in these, and other areas, as the schedule
advances."
Detail
Expert Legal Advice
With the assistance of Saloro legal counsel, advice was sought
from a law firm with specialist expertise in administrative law and
this has provided clarity both on possible appeal procedures
associated with the current compulsory land acquisition process,
and associated timeline estimates. This information has been taken
into consideration by the project partners in the preparation of
the optimised construction schedule for the Project.
Saloro sought this advice after the administrative appeal by a
third party in relation to an element of the compulsory land
acquisition process resulted in a delay to the process. The Board
of Saloro considers this third party appeal to be merely vexatious,
a belief that has been reinforced by the negative finding on this
appeal (favourable to the Company's position) at the administrative
level of this appeal process.
Avenues exist, however, for a subsequent appeal to be launched
at an administrative court - a fact which has also been taken into
consideration by Saloro in the preparation of the optimised
construction schedule.
Optimised Construction Schedule
The project partners have approved for implementation an
optimised Project construction schedule which balances the most
likely scenarios with regard to possible compulsory acquisition
timelines whilst also aligning the Project targeted first
production date with expectations for a more favourable APT price
environment.
This optimised construction schedule sees a prioritising of
certain activities on lands already owned or rented by the Company,
with a corresponding temporary deferral of works on other lands,
including construction of the process plant. Significant components
of the construction activities will now be advanced consecutively
rather than concurrently. These changes to the Project timeline
result in Project commissioning now being set for late 2017.
Saloro has also agreed certain amendments to the debt facility
agreement in place (and undrawn) for the Project so as to ensure
continued compliance with this agreement.
Tungsten Metal Price
APT prices have started to gradually move in an upwards
direction from a low of $162 per metric tonne unit ("mtu") touched
in January 2016 following a period which saw significant price
reductions associated with a general weakening of the commodity
price environment coupled with a significant drop-off in usage of
tungsten in the energy sector, particularly relating to a
significant reduction in US oil related drilling activity.
Currently the APT price is $210/mtu which represents a 30%
increase since their January lows. While the medium to longer term
outlook is positive, with considerable price increases forecasted,
the short term price outlook is more moderately positive with
strong growth in certain use sectors (including aerospace and
automobile) being offset by ongoing weakness in other areas (eg.
energy).
A glossary explaining technical terms contained in this
announcement can be found at
www.ormondemining.com/en/investors/technical_glossary.
For more information please visit www.ormondemining.com.
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 Corporate Finance (Nomad / ESM Adviser, Joint Broker and
Financial Adviser) Eugenée Mulhern / Roland French Tel: +353 (0)1
6796363
SP Angel Corporate Finance LLP (Joint Broker)
Ewan Leggat Tel: +44 (0)20 3 470 0470
About Ormonde
Ormonde Mining plc is admitted to trading on the AIM market in
London and the ESM market in Dublin and is a mineral development
and exploration company focused on Spain (Ticker: ORM). In
partnership with funds managed by Oaktree Capital Management
("Oaktree") through the joint venture company Barruecopardo JV BV
(Ormonde 30%/Oaktree 70%), the parties are developing a low cost
tungsten mining operation at Barruecopardo in the Salamanca
Province to become a major European supplier of tungsten. Ormonde
also has other exploration projects for gold and copper.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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