Final Results

RNS Number : 7329E

Ormonde Mining PLC

06 June 2012

 



6 June 2012

Ormonde Mining plc

("Ormonde" or "the Company")

Final Results for the year ended 31 December 2011

DUBLIN & LONDON: 6 June 2012 - Ormonde Mining plc announces its final results for the year ended 31 December 2011.

HIGHLIGHTS

·    Barruecopardo Tungsten Project's Definitive Feasibility Study reported in February 2012, confirming the project's technical feasibility and exceptional economics

·    Discussions advanced with several interested parties in relation to off-take arrangements and funding Barruecopardo; successful conclusion to these anticipated over the coming months

·    Early July submission for the final permitting documentation; plant commissioning now scheduled for Q4 2013

·    Tungsten prices remained strong during the year, following significant price increases resulting from global supply constraints

·    Geophysical surveys on new La Zarza permit areas identified several targets, which are being tested by the current drilling programme

·    Documentation to support the transfer of the La Zarza mining rights to Ormonde submitted in December 2011 and application under review by the Provincial administration

·    Very encouraging results from initial drilling on our Joint Venture Gold projects, leading to an expanded drilling programme 

Mike Donoghue, Chairman, commented:

"A significant milestone was reached over the last year, with the completion of the Definitive Feasibility Study on our Barruecopardo Tungsten Project.  This study demonstrated the technical feasibility and exceptional economics of this world class tungsten asset.  Its completion has enabled us to advance earlier discussions with interested parties in relation to funding the project to a stage whereby we anticipate finalisation of funding arrangements over the coming months."

Enquiries to:

Ormonde Mining plc

Kerr Anderson, Managing Director  Tel: [phone]

Bankside Consultants

Simon Rothschild  Tel: [phone]   Mob: [phone]

Murray Consultants

Ed Micheau  Tel: [phone]  Mob: [phone]

Davy (Nomad / ESM Adviser)

Eugenée Mulhern / Roland French  Tel: [phone]

Fairfax I.S. PLC (Joint Broker)

Ewan Leggat / Katy Birkin  Tel: [phone]

CHAIRMAN'S REVIEW

The objectives that your Company set itself at the end of 2010 were: to complete the feasibility study evaluation for our Barruecopardo Tungsten Project and advance its permitting and funding to ensure development; to secure new exploration ground and recommence exploration on La Zarza through the Antofagasta Joint Venture; and to advance the evaluation of our gold licences in the Salamanca and Zamora Provinces.  I am pleased to report that we have made good progress on all of these objectives, and in particular on our flagship Barruecopardo Project.

The feasibility study on the Barruecopardo Project in the Salamanca Province was carried out during the year and the results reported in late February 2012. The outcome was very positive, demonstrating a technically viable, initially open pit mining operation which would benefit from low capital costs and low operating costs.  This will result in a project with exceptional economics at prudent tungsten prices, well below both recent and future prices forecast by international metals market research companies. With this milestone achieved, Ormonde is in a position to advance the remaining objectives during 2012, including capital funding and off-take arrangements, permitting and mine development.

The feasibility study has facilitated due diligence on the project. This in turn has enabled earlier discussions with several third parties in relation to capital funding and off-take arrangements to be advanced, whereby the Directors are confident of finalising these arrangements over the coming months.

The final stage of pre-development, the detailed engineering design work, will be initiated as soon as the current metallurgical testwork is completed. This testwork serves two objectives, firstly to provide larger testwork runs to meet the needs of the process plant manufacturers so that they can supply equipment performance guarantees, and secondly to supply sufficient samples to facilitate agreement with concentrate off-takers.  Completion of this work will allow for the commencement of the detailed engineering stage ahead of mine development.

The first stage of permitting, the Documento Inicial, was completed successfully during 2011 and the final permitting documentation, incorporating all responses and guidance provided by the relevant regulatory bodies to the Documento Inicial, is now being readied for submission in early July.  While this planned submission is somewhat behind the schedule previously envisaged, its timing reflects the detailed work in incorporating the proposed mining operation as defined in the feasibility study (along with a comprehensive Environmental Impact Assessment), currently being updated to reflect recent modifications to Spanish legislation applicable to mining operations.  It is this final submission which will be reviewed by all relevant regulatory departments prior to a decision on the granting of a mining concession on Barruecopardo, and therefore ensuring that it fully addresses and anticipates all requirements is essential to facilitate the granting of the mining licence.  As a consequence, the project development schedule has now been extended such that plant commissioning has moved from Q3 to Q4 2013.

The external environment for tungsten remains healthy. Uncertainty in the global economy has resulted in a slight easing of APT prices from the US$440-450 per mtu "plateau" during 2011 to an average price of some US$410 during the last few months.  Medium to long term price forecasts remain firm.

Two fundamental structural problems appear to have developed in the tungsten industry; firstly the supply-demand imbalance resulting in significant supply shortages, and secondly the reliance on Chinese supplies of intermediate powders such as APT is being brought into sharp focus by the fact that Chinese exports of APT are predicted to reduce and possibly be phased out over the coming years (as previously happened with the supply of Chinese tungsten concentrates).  The withdrawal of Chinese primary concentrates from the market place affected the secondary powder processors and encouraged them to become more involved upstream with primary mine producers.  However, the reduction in Chinese APT supply will directly affect the much larger downstream tungsten tool and steel manufacturers and one is starting to see these manufacturers moving upstream to become involved with primary producers.

These supply issues have been highlighted by the EU in its report "Critical Raw Materials for the EU" (May 2010) where tungsten was listed as a "critical raw material" due to its "high economic importance and high relative supply risk" and more recently by the British Geological Survey who have ranked tungsten in the joint highest position in its "Current Supply Risk Index" of metals which are of economic value.

At our La Zarza Copper Project, documentation to support the transfer of the mining rights from the underlying holder Nueva Tharsis to our Spanish subsidiary Ormonde Espana SL was compiled and submitted in December 2011. Ormonde is presently liaising with the Mines Department in Huelva as this application is progressed.

Four new investigation permits, which cover substantial areas along strike of the La Zarza system, were issued during 2011 and incorporated into the Antofagasta joint venture activities.  An airborne geophysical (electro-magnetic) survey and a ground gravity survey were completed over the permit areas and a significant number of targets identified.  Early in 2012 a drilling programme was initiated over these targets and this programme is expected to conclude in the summer of 2012.  

In March 2011, the Company entered into a joint venture with Aurum Mining Plc ("Aurum") to further explore four permit areas held by Ormonde in the Salamanca and Zamora Provinces.  Aurum is spending €500k to earn a majority position in these permits.  An initial three-hole drilling programme carried out by the Joint Venture during 2011 encountered very encouraging results on the El Facho gold structure in Zamora.  This led on to a larger nine-hole programme to test the extent of the El Facho structure, which was completed in March 2012.  Results from the first holes of this programme support the initial drilling and we await the remaining results.

The Company expended a total of €4,320,818 on its activities during 2011, as detailed in the Accounts.  The Company has reported a loss of €966,369 for the year which has narrowed from a loss of €1,088,451 in 2010.  The Company is well-funded for its current activities ahead of capital funding for Barruecopardo having successfully raised £3.39 million in a placing announced in March 2012.

I would like to thank our shareholders, staff and advisers for their continued support during 2011.

Michael J. Donoghue

Chairman

6 June 2012

Consolidated Statement of Comprehensive Income

Year ended 31 December 2011

		2011		2010
		€000's		€000's
Administrative expenses		(982)		(1,061)
Exploration costs written off		-		(32)
OPERATING LOSS		(982)		(1,093)
Interest receivable and similar income		15		6
LOSS FOR THE YEAR BEFORE TAXATION		(967)		(1,087)
Taxation		1		(1)
LOSS FOR THE YEAR		(966)		(1,088)
Minority Interest		-		-
RETAINED LOSS FOR THE YEAR		(966)		(1,088)
EARNINGS PER SHARE
Basic loss per ordinary share		(€0.0030)		(€0.0043)
Diluted loss per ordinary share		(€0.0029)		(€0.0043)

Consolidated Statement of Financial Position

As at 31 December 2011

		31/12/11		31/12/10
		€000's		€000's
ASSETS
NON-CURRENT ASSETS
Intangible assets		16,764		12,443
Tangible assets		4		21
		16,768		12,464
CURRENT ASSETS
Trade and other receivables		427		150
Cash and cash equivalents		1,990		1,944
		2,417		2,094
TOTAL ASSETS		19,185		14,558
EQUITY AND LIABILITIES
EQUITY
Called-up share capital		10,151		9,042
Share premium account		24,174		20,889
Capital conversion reserve fund		29		29
Capital redemption reserve fund		7		7
Share based payment reserve		778		664
Foreign currency translation reserve		1		1
Profit and loss account		(17,313)		(16,347)
Attributable to equity holders		17,827		14,285
Minority interest		-		-
		17,827		14,285
NON-CURRENT LIABILITIES
Trade and Other Payables		21		-
		-		-
CURRENT LIABILITIES
Trade and Other Payables		1,337		273
		1,358		273
Total Liabilities		1,358		273
TOTAL EQUITY AND LIABILITIES		19,185		14,558

Consolidated Statement of Cash Flows

Year ended 31 December 2011

			2011		2010
			€000's		€000's
	CASH FLOWS FROM OPERATING ACTIVITIES
	Loss for the year before taxation		(967)		(1,087)
	Adjustments for:
Foreign exchange (loss)/gain			-		-
Depreciation			3		6
	Exploration costs written off		0		32
	Movement on share-based payment reserve		114		432
	Investment revenue recognized in profit or loss		(14)		(6)
			(864)		(623)
	MOVEMENT IN WORKING CAPITAL
	(Increase) in debtors		(277)		(41)
	Increase /(Decrease)in creditors		1,084		(501)
Income taxes paid			1		(1)
NET CASH (USED IN) OPERATING ACTIVITIES			(56)		(1,166)
	CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds of issue of share capital		4,394		3,468
	CASH FLOWS FROM INVESTING ACTIVITIES
	Expenditure on exploration activities		(4,321)		(842)
	Movement in property, plant and equipment		15		(19)
Interest received			14		5
	NET CASH (USED IN) INVESTING ACTIVITIES		(4,292)		(856)
	NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS		46		1,446
	CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		1,944		498
	CASH AND CASH EQUIVALENTS AT END OF YEAR		1,990		1,944

Consolidated Statement of Changes in Equity

Year ended 31 December 2011

			Share
			Based
	Share	Share	Payment	Other	Retained
	Capital	Premium	Reserve	Reserves	Losses	Total
	€000's	€000's	€000's	€000's	€000's	€000's
Balance at 1 January 2010	7,447	19,016	232	37	(15,258)	11,474
Loss for the year	-	-	-	-	(1,089)	(1,089)
Recognition of share based payments	-	-	432	-	-	432
Proceeds of share issue	1,595	1,873	-	-	-	3,468
Balance at 31 December 2010	9,042	20,889	664	37	(16,347)	14,285
Balance at 1 January 2011	9,042	20,889	664	37	(16,347)	14,285
Loss for the year	-	-	-	-	(966)	(966)
Recognition of share based payments	-	-	114	-	-	114
Proceeds of share issue	1,109	3,285	-	-	-	4,394
Balance at 31 December 2011	10,151	24,174	778	37	(17,313)	17,827

1.   The basic loss per share and the diluted loss per share have been calculated on a loss after taxation of €966,369 (2010: loss of €1,088,451) and a weighted average number of Ordinary Shares in issue for the year of 324,000,975 (2010: 250,388,186) for the basic loss per share and 325,921,230 (2010: 253,686,797) for the diluted loss per share.

 

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FR UVRARUBANRUR