TIDMORM
RNS Number : 5325I
Ormonde Mining PLC
20 June 2017
20 June 2017
Ormonde Mining plc
("Ormonde" or "the Company")
Final Results for the year ended 31 December 2016
DUBLIN & LONDON: 20 June 2017 - Ormonde Mining plc announces
its final results for the year ended 31 December 2016.
HIGHLIGHTS FOR THE YEAR AND POST YEAR
-- Revised construction schedule for the Project agreed between the Project partners, which sees commissioning of a world class tungsten mine in Q3 2018, and aligns first production with independent forecasts of improving tungsten prices
-- Completion of compulsory land acquisition process resulting
in access to and use of all lands required to enable the
development of the Barruecopardo Tungsten Project (the
"Project")
-- Approvals of equipment and plant construction contracts, thus
advancing the Project into an accelerated construction and
implementation phase
-- Amendments to the Project's debt facility to take account of
the revised construction schedule
-- Ormonde's current managing director, Steve Nicol, to step
down at the upcoming AGM to focus fully on development and
operations at the Project
-- Successful drilling programme completed which supports the
current resource interpretation and demonstrates the potential to
extend beyond the nine-year mine life at Barruecopardo through the
development of a "Stage 2" underground mine at the Project
Mike Donoghue, Ormonde's Chairman, commented:
"Having revised the Barruecopardo Project schedule during 2016
with the aim of ensuring that the Project comes online into a
strengthening tungsten price environment, the Project partners
decided in June 2017 to provide the required approvals to enable
the Project progress at full speed towards commissioning of a new
mine at Barruecopardo during the third quarter of 2018. This
exciting development comes after the successful completion, during
2016, of a process whereby all of the lands required to develop the
Project were secured, and is set against a backdrop of rising
tungsten prices and increasing demand for tungsten
concentrates.
"We very much look forward to the coming year, as the
Barruecopardo Project is developed to become an essential secure
new producer of tungsten concentrates to a market in much need of
new sources of primary supply."
Enquiries to:
Ormonde Mining plc
Steve Nicol, Managing Director Tel: +353 (0)1 8014184
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)
John Frain Tel: +353 (0)1 679 6363
SP Angel Corporate Finance LLP (Joint Broker)
Ewan Leggat Tel: +44 (0)20 3 470 0470
CHAIRMAN'S REVIEW
We are pleased to report that during 2016 your Company
successfully advanced the Barruecopardo Project through the
compulsory land acquisition stage and into the construction stage.
As guided during the year, progress was somewhat reduced compared
to original schedules with construction contracts having been
rescheduled to run consecutively rather than concurrently. This
strategy has proved timely as metal markets are now showing signs
of a sustained recovery, leading in June 2017 to the Project
company, Saloro SLU ("Saloro"), authorising the issuance of
outstanding approvals on various equipment and plant construction
contracts, such that Barruecopardo should now be coming on stream
into a more favourable global economic environment.
Barruecopardo
During 2016, the Barruecopardo operating subsidiary Saloro SLU
completed the acquisition of land for which title was clear and for
which lease with option to purchase arrangements were in place.
Most of the remaining land blocks required for construction had
title or boundary were required to be addressed through the court
compulsory acquisition procedures. As this could be a lengthy
process, Saloro sought to expedite matters by requesting the
Administration in Castilla y Leon to declare the remaining blocks
of land as required for the common good and in need of "urgent
occupation". This process required a vote of the Regional
Legislative Assembly, which was forthcoming. It was most satisfying
to see this strong commitment and support from the Government for
the Project. A few procedural steps remained after this vote, but
by December 2016, Saloro was the legal owner of all of the land
required for the development of a mine at Barruecopardo.
As this land acquisition process was being pursued, activity on
the engineering design, equipment manufacture contracts and
construction contracts was being advanced, albeit at a pace to
match the expected land acquisition process. All main, longer lead
time, processing plant has been identified and sized and contracts
let for manufacture. Procurement of most of the secondary items of
plant is similarly well advanced. Fairport Engineering, the company
expediting the plant design and procurement, has also been awarded
the Plant Construction Management Contract. These activities, when
synchronised with the recent decision by Saloro to issue the
outstanding approvals on various equipment and plant construction
contracts, advances the Project into an accelerated construction
and implementation phase, which sees mine plant commissioning
during Q3 2018. This timing leaves a healthy interval in which to
allow the commodity markets to consolidate their recent gains and
move onwards.
A short five-hole exploratory drilling programme around the
northern and central section of the proposed Barruecopardo open pit
was completed during 2016. The main objective of this programme was
to confirm extension to the tungsten mineralisation at depth
beneath the main central part of the planned open pit, whilst also
following up on a potentially expanded zone of mineralisation under
the shallow northern end of the open pit. The results of this
initial drilling program were most encouraging, lending support to
the concept of a future Stage 2 underground mine at the
Project.
Tungsten market
As the impediments to mine development are progressively removed
and we advance construction, it is perhaps timely to look forward
at the commodity markets and pricing. Tungsten pricing has
traditionally followed the business cycle and, given the long lead
times for mining projects, the base metal market may be a useful
guide to the market place. Copper had undergone a long decline from
$10,000/t in 2011 to around $4,500/t in late 2015, but a recovery
kicked in during 2016 and pricing is now approaching the $6,000/t
level. There has also been recoveries in the prices of other base
metals including zinc, lead, tin, and to a lesser extent nickel and
aluminium.
Clearly, the overall story is that Barruecopardo is now being
developed in a time of metal price recovery.
In looking at the standalone tungsten market, the situation at
the start of 2016 was somewhat confusing. The largest tungsten
producer in the west, the Canadian mine Cantung, closed in 2015 and
a number of the larger tungsten mines were clearly struggling with
limited reserves, technical issues and profitability. Moreover,
practically all advanced or resource based tungsten projects,
previously being touted for development, were either abandoned or
effectively mothballed. Against this background, there was an
upswing in tungsten APT prices from $160/mtu early in 2016 to
$220/mtu in May before dropping back to around $180/mtu during
August 2016. The reason for this became more evident as the year
progressed. The forecast primary supply shortage was indeed
developing, with tungsten concentrates very clearly being sought as
feedstock by the main APT producers, but it was equally clear that
there was a surplus of APT in the market place, depressing prices.
As industry practice is that mine produced concentrates are priced
relative to the APT prices, anomalies in the latter are imposed on
the former.
It became clear that until the surplus of APT, presumably
largely produced pre-2016 from China, is consumed, that the
fundamental true market supply-demand realities, based on primary
mine production, would not dictate pricing. This process appears to
be underway; tungsten APT prices have seen a slow but steady
increase to its current level of $223/mtu, with many indicators now
pointing towards a sustained increase in the tungsten price into
the future. What is clear is that tungsten concentrates are in
tight supply and are likely to become tighter as global economic
activity increases and no new tungsten mines are developed. China's
efforts to tighten up its tungsten industry, to enforce a crackdown
on illegal mining and to ensure cut-backs in tungsten mine
production, will also tend to reinforce this trend. In summary,
tungsten supply-demand dynamics and pricing now look more
favourable in advance of Barruecopardo coming on stream.
Other Projects
The focus of your Company during the year has been the
advancement of the Barruecopardo Project. The Company's Gold
projects are being maintained, whilst the La Zarza Project remains
under a review of disinvestment options with the directors deciding
it appropriate for the holding value of this asset to be impaired
by EUR2 million, to a book value of EUR3 million, to reflect their
current assessment of the asset's present value.
Corporate and Financials
The Company has reported a loss for the year of EUR2.41M,
compared with a profit of EUR2.07M for 2015. Although the Group
made a small operating profit for the year, however the effects of
the EUR2M impairment of its La Zarza asset and the share of loss in
its associate investment (the Barruecopardo Joint Venture B.V., in
which the Barruecopardo Project is held, and which is incurring
losses during the Project's developed stage), resulted in the
reported loss for the period.
Finally, I would like to thank shareholders, management, staff
and other stakeholders for your support during the last year; we
believe there is long-term value to be realised through the
Barruecopardo asset and we thank you for your patience as we
journey towards First Production.
Michael J. Donoghue
Chairman
Consolidated Statement of Comprehensive Income
Year ended 31 December 2016
2016 2015
EUR000's EUR000's
Turnover - Continuing operations 1,000 527
Administrative expenses (856) (1,443)
Investment Income 3,397
Impairment of intangible asset (2,000)
----------- ---------
Operating profit/(loss) (1,856) 2,481
Interest receivable and similar - -
income
Finance costs (42)
----------- ---------
Profit/loss for the year before
taxation (1,856) 2,439
Taxation (1) -
----------- ---------
Profit/loss for the year after
taxation (1,857) 2,439
Group share of loss on associate
investment (552) (368)
----------- ---------
Total comprehensive income/(loss)
for the year (2,409) 2,071
=========== =========
EARNINGS PER SHARE
Basic earnings /(loss) per ordinary
share (EUR0.0051) EUR0.0044
=========== =========
Diluted earnings /(loss) per
ordinary share (EUR0.0051) EUR0.0044
=========== =========
Consolidated Statement of Financial Position
As at 31 December 2016
2016 2015
EUR000's EUR000's
ASSETS
NON-CURRENT ASSETS
Intangible assets 3,300 5,279
Property, plant and equipment - 1
Investments 16,027 16,579
-------- --------
19,327 21,859
CURRENT ASSETS
Trade and other receivables 36 35
Cash and cash equivalents 694 653
-------- --------
Total Current Assets 730 688
TOTAL ASSETS 20,057 22,547
======== ========
EQUITY AND LIABILITIES
EQUITY
Issued share capital 13,485 13,485
Share premium account 29,932 29,932
Share based payment reserve 837 837
Capital conversion reserve fund 29 29
Capital redemption reserve fund 7 7
Foreign currency translation
reserve 1 1
Retained loss (24,497) (22,089)
-------- --------
Equity attributable to Owners
of the Company 19,795 22,202
CURRENT LIABILITIES
Trade and Other Payables 264 345
-------- --------
Total Current Liabilities 264 345
-------- --------
Total Liabilities 264 345
-------- --------
TOTAL EQUITY AND LIABILITIES 20,057 22,547
======== ========
Consolidated Statement of Cash Flows
Year ended 31 December 2016
2016 2015
EUR000's EUR000's
CASHFLOWS FROM OPERATING ACTIVITIES
Profit /(Loss)for the year before
taxation (1,856) 2,439
Adjustments for:
Depreciation 1 -
Impairment of intangible asset 2,000
Finance costs recognised in profit
or loss - 42
Cashflow from operating activities 145 2,481
MOVEMENT IN WORKING CAPITAL
Movement in debtors (1) 186
Movement in creditors (82) 133
Income taxes paid - -
--------- ---------
Net cash generated by/(used in)
operating activities 62 2,800
CASH FLOWS FROM FINANCING ACTIVITIES
Interest Paid - (42)
Proceeds of issue of share capital - -
Other equity movement - 1,074
--------- ---------
Cashflow from financing activities 62 3,832
CASH FLOWS FROM INVESTING ACTIVITIES
Net expenditure on intangible
assets (21) (16)
Movement of property, plant and - -
equipment
Interest received - -
Acquisitions and disposals 552 (3,306)
--------- ---------
Net cash (used in) investing
activities 531 (3,322)
Share of loss in associate (552) (368)
--------- ---------
Cashflow from investing activities (21) (3,690)
NET INCREASE /(DECREASE) IN CASH
AND CASH EQUIVALENTS 41 142
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 653 511
--------- ---------
CASH AND CASH EQUIVALENTS AT
END OF YEAR 694 653
========= =========
Consolidated Statement of Changes in Equity
Year ended 31 December 2016
Share
Based
Share Share Payment Other Retained
s s s
Capital Premium Reserve Reserves Losses Total
EUR000's EUR000's EUR000's EUR000's EUR000's EUR000's
Balance at 1 January
2015 13,485 29,932 837 37 (25,234) 19,057
Profit for the
year - - - - 2,071 2,071
De-recognition
of subsidiaries - - - - 1,074 1,074
Balance at 31
December 2015 13,485 29,932 837 37 (22,089) 22,202
-------- -------- -------- -------- -------- --------
Balance at 1 January
2016 13,485 29,932 837 37 (22,089) 22,202
Loss for the year - - - - (2,409) (2,409)
Balance at 31
December 2016 13,485 29,932 837 37 (24,498) 19,793
-------- -------- -------- -------- -------- --------
1. The basic earnings /(loss) per share and the diluted
earnings/(loss) per share have been calculated on a loss after
taxation of EUR2,409,000 (2015: profit of EUR2,071,000) and a
weighted average number of Ordinary Shares in issue for the year of
472,507,482 (2015: 472,507,482) for the basic earnings /(loss) per
share and 472,507,482 (2015: 472,507,482) for the diluted
earnings/(loss) per share.
This information is provided by RNS
The company news service from the London Stock Exchange
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