Final Results 2013

RNS Number : 3056J

Ormonde Mining PLC

11 June 2014

 

11 June 2014

Ormonde Mining plc

("Ormonde" or "the Company")

Final Results for the year ended 31 December 2013

DUBLIN & LONDON: 11 June 2014 - Ormonde Mining plc announces its final results for the year ended 31 December 2013.

HIGHLIGHTS FOR THE YEAR AND POST YEAR END

·    Significant advances in permitting for Barruecopardo, resulting in the receipt of the Project's Environmental permit.

·    Off-take agreement signed with Noble Group for 100% of the tungsten concentrate produced from the Barruecopardo open pit mine during its initial five years of operation.

·    Appointment of Swedbank as advisor in relation to a €50 million senior bond financing for Barruecopardo.

·    Award of the Barruecopardo Engineering Design Contract to Fairport Engineering.

·    Tungsten prices forecast to remain strong over the coming years.

·    Further positive results from drilling on our gold projects in Salamanca.

Mike Donoghue, Chairman, commented:

"We have made considerable progress at our flagship Barruecopardo Tungsten Project over the last year and into 2014, including the achievements on permitting with the receipt of the Environmental Permit, the appointment of Swedbank as advisor in relation to a €50M senior bond financing, and the signing of an offtake agreement with Noble Group, expected to generate net revenues, if the current tungsten price (APT) of around US$375 per metric tonne unit were to be applied, in excess of US$350 million over the Project's initial five years of production. 

In addition, Ormonde engaged Fairport Engineering to provide Engineering & Design services for the Project, positioning us ready to order key equipment items and advance development upon receipt of the Mining Concession and a successful conclusion to project financing activities."

Enquiries to:

Ormonde Mining plc

Kerr Anderson, Managing Director  Tel: [phone]

Bankside Consultants

Simon Rothschild  Mob: [phone]

Murray Consultants

Mark Brennock  Tel: [phone]  Mob: [phone]

Davy (Nomad / ESM Adviser)

Eugenée Mulhern / Roland French  Tel: [phone]

SP Angel Corporate Finance LLP (Joint Broker)

Ewan Leggat / Katy Birkin  Tel: [phone]

CHAIRMAN'S REVIEW

2013 was an eventful year for your Company with very considerable initiatives taken and ongoing progress made at our flagship Barruecopardo Tungsten Project. These have to date resulted in the receipt of the Environmental Permit; the appointment of Swedbank as advisor in relation to a €50M senior bond financing; the signing of an offtake agreement with Noble Group for the tungsten concentrates produced over the Project's initial five years of production; and the advancement of engineering and design work required to enable the ordering of priority one equipment orders; all achieved despite an unsolicited preliminary approach from a tungsten producer seeking to acquire Ormonde in a share for share exchange. This approach caused the Company to enter an 'offer period' under the Irish Takeover Rules, causing the activity of the Company to be curtailed to an extent during this period.

Barruecopardo

Our permitting and environmental submissions to the Salamanca Provincial Authorities of the Region of Castilla y Leon were presented in Q3 2012 and following successful completion of the public consultation process and internal reviews by the Provincial Authorities, our submission was forwarded, with a positive recommendation, to the Regional Environment Department in July 2013. A review of the submission was then completed by that Department, leading to a favourable recommendation in the "Report on the Nature Network" ("IRNA). This was followed shortly thereafter by the issuing of the Environmental Impact Declaration ("EID") for the Project. The receipt of the EID represents a major milestone, in effect being the Project's environmental permit, and one of the final steps required to enable the Mining (Exploitation) Concession to be granted by the Director General for Energy and Mines. It is understood that a review of the historic mining concessions (Barruecopardo was last operated in the 1980's) is now being completed as part of the finalisation of the documentation for the Mining Concession. We now await the issuance of the Mining Concession, anticipated shortly.

While the permitting process has been proceeding, and indeed prior to this during the feasibility study stage, Ormonde has developed appropriate contacts in the capital markets, particularly with lenders who have capability and experience in arranging or providing debt to resource projects. In this regard, as progress was made in the permitting process, the Company decided to appoint Swedbank Norway (a subsidiary of Swedbank) as advisor in relation to a €50 million senior bond financing. Swedbank has considerable experience and distribution capability in the bond market, working as lead or sole broker in  a number of such issues each year, a significant portion of which are in the resource sector.

For minor metals such as tungsten, debt providers need sufficient comfort that there will be a buyer for the metal produced. To ensure that such comfort was available, Ormonde developed contacts with most tungsten concentrate offtakers and marketing agents over the last few years and the progress made during 2013 and early 2014 opened up the opportunity to finalise our tungsten offtake arrangements prior to committing to the capital funding arrangements. This led, in April this year, to the Company entering into a binding offtake agreement with Noble Resources International Pte. Ltd a wholly-owned subsidiary of the Noble Group, a global market-leading commodities supply-chain manager of energy products, metals, minerals & ores and agricultural products, with total revenues of US$98 billion in 2013. Under the agreement, Noble will purchase 100% of the tungsten concentrate produced from the Barruecopardo open pit mine during its initial five years of operation. Thereafter, Noble and Ormonde will extend the offtake through negotiation or enter into an arrangement whereby Noble will provide marketing agency services to Ormonde for the tungsten concentrate produced.

With various aspects of the Project making significant advances, Ormonde was in a position to move forward on other fronts, the most critical from a timing perspective being engineering design works, essential to ensure that the orders of key equipment for the mine processing plant can be placed without further delay following completion of project financing. During 2013, discussions were held with appropriate engineering firms, possessing the relevant mineral processing experience, with a view to selection of a firm to carry out the detailed engineering design work for the development of a mine at Barruecopardo. This lead to the signing of a contract with Fairport Engineering Limited, an experienced UK-based engineering firm involved in the aggregates, cement, and minerals processing industries, from engineering design to turnkey project delivery. Fairport has extensive design and development experience within the UK and continental Europe, involving the gravity separation and concentration of minerals. Stage-1 of this engineering design work is presently in progress. In addition, the project team in Spain has been busily preparing all matters onsite to ensure readiness when the Mining Concession is received. This work includes the continuation of land acquisition arrangements, via a lease with option to purchase agreements, with contingency preparations in place to initiate compulsory acquisition of outstanding lands, as necessary, upon receipt of the Mining Concession.

With permitting nearing completion, capital funding being progressed, engineering design work underway, offtake arrangements secured and onsite preparations well advanced, Ormonde has made considerable progress during the past 12-15 months having regard to its available resources.

Looking briefly at the tungsten market, the tungsten price averaged around US$375 per mtu of APT during 2013 and is currently trading at around that price. The serious constraints on discovering and developing new tungsten mining projects, the continuing increasing global demand, coupled with the lack of substitution options, supports the view that the supply-demand dynamic will remain supportive of a strong price into the future. Projections by independent market research for annual global growth in demand range between 3% and 5%, and 3 to 5 year price forecasts are above US$400 for much of that period, with one metals analyst, Tungsten Market Research, forecasting prices in the range of US$475-510 over the period 2015-18.

Other Projects

Drilling results reported from both the Peralonso and Cabeza de Caballo Prospects in the first half of the year in our gold joint venture with Aurum Mining plc yielded encouraging results, including shallow high-grade drillhole intersections of 2 metres grading 10.2 g/t gold and one metre grading 33.2 g/t gold from Peralonso.  At Cabeza de Caballo, low-grade gold mineralisation was intersected in the first holes to be drilled on the prospect, within an extensive vein system.  Both prospects warrant further drilling.

At La Zarza, our efforts were concentrated on the conclusion of an arrangement that would see a potential divestment of the Company's interest in the Project.  Discussions are on-going in this regard.

Corporate and Financials

I referred at the outset to the unsolicited approach made by another tungsten company. That approach, in August 2013, by Almonty Industries, was rejected by the Board as it was regarded as opportunistic and lacking in both strategic and economic merit for Ormonde shareholders at a key time when the Company was making significant progress towards the development of Barruecopardo. Although the resultant offer period arising under the Irish Takeover Rules did complicate certain activities, we remained focused throughout the offer period and following its termination at the end of January when Almonty failed to make an offer by the deadline imposed by the Irish Takeover Panel, we are now embarked on the final activities to enable development of our planned mining operation.

The Company has reported a loss for the year of €1.81m, compared with a loss of €4.48m for 2012. The Company raised approximately £1.07 million (before expenses) through a share placing in September 2013, and subsequent to the year end, the Company raised £2.0 million (before expenses) through a  share placing in April 2014 to progress engineering works, permitting and funding activities relating to Barruecopardo and for general working capital purposes.

In conclusion, I would like to thank shareholders for their patient support during the last year. I believe it has been worthwhile, with the substantial progress made, and I look forward to the period ahead as we take our Barruecopardo project into the development stage.

Michael J. Donoghue

Chairman

10 June 2014

Consolidated Statement of Comprehensive Income

Year ended 31 December 2013

		2013		2012
		€000's		€000's
Administrative expenses		(1,397)		(1,169)
Exploration costs written off		(418)		(3,335)
OPERATING LOSS		(1,815)		(4,504)
Interest receivable and similar income		7		23
LOSS FOR THE YEAR BEFORE TAXATION		(1,808)		(4,481)
Taxation		(1)		(5)
LOSS FOR THE YEAR		(1,809)		(4,486)
Minority Interest		-		-
RETAINED LOSS FOR THE YEAR		(1,809)		(4,486)
EARNINGS PER SHARE
Basic loss per ordinary share		(€0.0045)		(€0.0122)
Diluted loss per ordinary share		(€0.0044)		(€0.0121)

Consolidated Statement of Financial Position

As at 31 December 2013

		2013		2012
		€000's		€000's
ASSETS
NON-CURRENT ASSETS
Intangible assets		17,127		16,406
Property, plant and equipment		1		3
		17,128		16,409
CURRENT ASSETS
Trade and other receivables		394		559
Cash and cash equivalents		1,050		2,282
Total Current Assets		1,444		2,841
TOTAL ASSETS		18,572		19,250
EQUITY AND LIABILITIES
EQUITY
Issued share capital		12,197		11,636
Share premium account		28,837		28,192
Share based payment reserve		837		777
Capital conversion reserve fund		29		29
Capital redemption reserve fund		7		7
Foreign currency translation reserve		1		1
Retained loss		(23,608)		(21,799)
Equity attributable to Owners of the Company		18,300		18,843
CURRENT LIABILITIES
Trade and Other Payables		272		407
Total Current Liabilities		272		407
Total Liabilities		272		407
TOTAL EQUITY AND LIABILITIES		18,572		19,250

Consolidated Statement of Cash Flows

Year ended 31 December 2013

			2013		2012
			€000's		€000's
	CASHFLOWS FROM OPERATING ACTIVITIES
	Loss for the year before taxation		(1,808)		(4,481)
Adjustments for:
Depreciation			2		2
	Exploration costs written off		418		3,335
	Movement on share-based payment reserve		60		-
	Investment revenue recognized in profit or loss		(7)		(23)
			(1,335)		(1,167)
	MOVEMENT IN WORKING CAPITAL
	(Increase) in debtors		165		(132)
	Increase /(Decrease)in creditors		(136)		(951)
Income taxes paid			-		-
NET CASH (USED IN) OPERATING ACTIVITIES			(1,306)		(2,250)
	CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds of issue of share capital		1,206		5,503
	CASH FLOWS FROM INVESTING ACTIVITIES
	Expenditure on exploration activities		(1,138)		(2,977)
	Movement in property, plant and equipment		-		(2)
Interest received			7		23
	Taxation		(1)		(5)
	NET CASH (USED IN) INVESTING ACTIVITIES		(1,132)		(2,961)
	NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS		(1,232)		292
	CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		2,282		1,990
	CASH AND CASH EQUIVALENTS AT END OF YEAR		1,050		2,282

Consolidated Statement of Changes in Equity

Year ended 31 December 2013

			Share
			Based
	Share	Share	Payment	Other s	Retained s	s
	Capital	Premium	Reserve	Reserves	Losses	Total
	€000's	€000's	€000's	€000's	€000's	€000's
Balance at 1 January 2012	10,151	24,175	777	37	(17,313)	17,827
Loss for the year	-	-	-	-	(4,486)	(4,486)
Recognition of share based payments	-	-	-	-	-	-
Proceeds of share issue	1,485	4,017	-	-	-	5,502
Balance at 31 December 2012	11,636	28,192	777	37	(21,799)	18,843
Balance at 1 January 2013	11,636	28,192	777	37	(21,799)	18,843
Loss for the year	-	-	-	-	(1,809)	(1,809)
Recognition of share based payments	-	-	60	-	-	60
Proceeds of share issue	561	645	-	-	-	1,206
Balance at 31 December 2013	12,197	28,837	837	37	(23,608)	18,300

1.   The basic loss per share and the diluted loss per share have been calculated on a loss after taxation of €1,809,000 (2012: loss of €4,486,000) and a weighted average number of Ordinary Shares in issue for the year of 404,950,441(2012: 368,307,907) for the basic loss per share and 406,705,542 (2012: 372,209,018) for the diluted loss per share.

 

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