TIDMORM
RNS Number : 3310B
Ormonde Mining PLC
16 June 2016
16 June 2016
Ormonde Mining plc
("Ormonde" or "the Company")
Final Results for the year ended 31 December 2015
DUBLIN & LONDON: 16 June 2016 - Ormonde Mining plc announces
its final results for the year ended 31 December 2015.
HIGHLIGHTS FOR THE YEAR AND POST YEAR
-- Robust and flexible USD 99.7 million funding package arranged
for the Barruecopardo Project through funds managed by Oaktree
Capital Management
-- Detailed engineering works well advanced with orders placed
for 100% of the longer lead time (priority 1) equipment and 60% of
the medium lead time (priority 2) equipment
-- Construction Management Contract signed with Fairport Engineering Limited
-- 85% of land blocks required to commence full project
development now owned or in long term rental agreements
-- Compulsory land acquisition of the remaining blocks
advancing, following an appeal of an administrative step in the
process being resolved in the Project company's favour
-- Optimised construction schedule for the Project agreed
between the Project partners, which sees commissioning in late 2017
and aligns first production with independent forecasts of improving
tungsten prices
-- Amendments to the Project's debt facility to take account of
the new optimised construction schedule agreed with the Project's
debt provider
-- Successful drilling programme completed which supports the
current resource interpretation and demonstrates the potential to
extend 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:
"The past year has been a successful one for Ormonde, with the
achievement of a $100 million financing package for the
Barruecopardo Tungsten Project in what was a very difficult funding
market for mining projects. This enabled the Project to advance on
multiple fronts, with orders being placed for all of the longer
lead time and most of the medium lead time equipment for the
Project, the signing of a construction management contract with
Fairport Engineering and the completion of a successful drilling
program which demonstrated the potential to extend the current nine
year mine life of the Project.
With an updated construction schedule having been recently
agreed with our Project partners, which sees commissioning of the
mine in late 2017, the next year should be an exciting one for the
Company as we develop the Project and move towards first
production."
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
CHAIRMAN'S REVIEW
For Ormonde Mining, 2015 was a milestone year. Following the
granting of the mining concession for the Barruecopardo Tungsten
Project ("Project") in late 2014, the scene was set to advance the
capital funding stage of the Project to conclusion. During this
period, the Board received an unsolicited non-binding proposal with
respect to a potential offer for the Company. Following careful
consideration, the Board concluded that the proposal lacked
substance and substantially undervalued your Company and the
Barruecopardo asset. In the end, Shareholders were provided the
opportunity to approve the capital funding proposals at an EGM,
where Shareholders voted overwhelmingly in favour of the Company's
US$100 million funding package, which I am pleased to say was
successfully completed in June 2015, thanks to the thoroughness of
your management team. With capital funding successfully in place,
this led in turn to the commencement of the detailed engineering
and equipment procurement stage of the Barruecopardo Project and to
the initiation of the final procedures for land acquisition.
Barruecopardo
The granting of the mining concession late in 2014 facilitated
Ormonde finalising its capital funding proposals in the early
months of 2015. The commodity, mining and capital markets were, at
that time, in the midst of a cyclical downturn and both
conventional sources of mine funding, the project debt markets and
the equity markets, were effectively closed to new projects. With
this in mind, your Company had engaged Swedbank Norway to advise on
what was considered a more flexible debt alternative. Your Board
considered that the issuance of a bond in combination with equity
from outside the market place was a more realistic and preferable
option.
A robust and flexible finance package of equity and debt was
eventually negotiated with Oaktree Capital Management, an
established US private equity fund, active in Europe, with circa
US$100 billion under management. The new equity component from
Oaktree was structured as a 70% beneficial interest in Saloro SLU,
the Project company which holds the Barruecopardo mining
concession, through the provision of a US$44.2 million equity
commitment. This level of equity served to ensure a robust funding
both in terms of size and mix, facilitating the debt component of
US$55.5 million, which included both a prudent contingency and a
cost overrun facility, and provided for a conservative debt to
equity funding ratio.
This funding structure, coupled with minority protection
clauses, Ormonde's position as manager and the flexibility on debt
repayments and distributions, made for a lower risk, realistic,
less dilutive, funding package. Your Board brought this package to
shareholders for their approval at an EGM in May 2015 and the
proposal was approved by 93% of those voting.
With funding in place, Saloro staff spent the latter half of
2015 pursuing the engineering design and plant procurement stage of
the Project. Fairport Engineering, who had previously been awarded
the detailed engineering contract, was authorised to commence this
work, with initial emphasis being on advancing sufficient design
work to be in a position to table tender documents for all the
priority 1 and priority 2 processing plant equipment and to enter
supply, or supply and construct, negotiations with relevant
equipment manufacturers. This stage of the work was largely
completed early in 2016, with 100% of the larger, longer lead-time
equipment orders (priority 1) and 60% of the medium lead-time
equipment (priority 2) orders placed.
During this period Saloro also awarded Fairport Engineering the
construction management contract for the Project. Considerable site
preparation works were also initiated under the direction of Saloro
staff.
Land access was also a key focus during the year. At the start
of the year approximately 85% of the land blocks required to
commence construction of the Project were held under "Option to
Purchase Agreements" (or long term rental agreements for the 10% of
municipal lands), with virtually all of these options exercised and
the blocks passing to the ownership of Saloro by the end of 2015.
Those remaining are proceeding through due process. Compulsory land
acquisition commenced early in the year on the 15% of land blocks
for which Option to Purchase Agreements had not been signed by that
stage (although some of these have since been purchased by
Saloro).
A step in the administrative process for the compulsory
acquisition was appealed by a third party late in the year and this
appeal has been rejected at the initial administrative appeal
level, reinforcing the Company's belief that the basis of the
appeal is entirely without merit. Avenues exist, however, for a
subsequent appeal to be launched at an administrative court, a fact
which has been taken into consideration by the Project partners in
the approval and adoption of an optimised construction schedule for
the Project which sees commissioning in late 2017. In line with
this optimisation of the Project schedule, Saloro has completed
negotiations with the Project's majority owner and debt provider in
relation to amending the debt facility agreement to reflect the new
and extended schedule. It is important to note that this optimised
schedule also aligns first production with what is being forecast
by independent third parties to be a more positive tungsten price
environment, reducing risk and optimising project returns.
Late in 2015 Saloro decided to initiate a limited drilling
programme with the objective of confirming extensions to the
mineralisation at depth beneath the main central part of the
planned nine year open pit, whilst also following up a potentially
expanded zone of mineralisation under the shallow northern end of
the pit which, was identified by drilling in 2012. It was pleasing
to see that the main objective was realised, with the central zone
mineralisation continuing with depth, suggesting that the objective
of the Saloro partners to eventually develop Barruecopardo into a
long life underground mine appears well based. Activities to
further support this belief will be advanced during the development
and early production stages.
Tungsten market
Turning to the tungsten market; 2015 saw this market succumb to
the general cyclical downturn the commodity markets have endured
since 2011, with the price per metric tonne unit (mtu) of tungsten
trioxide falling to a low of US$162 in January 2016. More recently,
with prices trending upwards in recent months to stand at $210/mtu
in mid-June 2016, independent price forecasts are more optimistic.
This price rise has coincided with a general commodity market
upturn seen over this period. The tungsten price remains driven by
supply-demand considerations, with demand being effected during
2015 by lower global GDP growth and a temporary fall in demand in
certain industries, particularly in the mining and oil/gas sectors,
where a significant reduction in US demand was seen arising from a
major reduction in the number of drill rigs in operation as low oil
prices took effect. This temporary reduction, which would be
expected to reverse as oil prices increase, was partly offset by
strong growth in the automotive and aerospace industry.
Supply is also increasingly being constrained by an agreed
cut-back in production by the eight largest tungsten mining groups
in China, which could progressively start to limit market supply in
2016, and by higher cost mine closures and the deferral of new
mining projects.
Other Projects
Whilst the primary focus of your Company during the year has
been the advancement of the Barruecopardo Project, the Company's
other projects are being maintained in good order.
Activity on our gold properties in Salamanca and Zamora
Provinces in Spain (in joint venture with Aurum Mining plc) was
necessarily minimal during 2015, but early in 2016 the joint
venture partners commissioned an independent review of the
exploration works carried out to date on these properties, with
this review both reaffirming the potential of these projects to
host significant gold mineralisation, whilst at the same time
identifying potential new drilling targets.
At La Zarza, we continue to explore avenues to divest this
project.
Corporate and Financials
It was with great sadness, in September 2015 that we reported
the death of Dr Kerr Anderson, a founder and leading figure in
Ormonde. The contribution that Kerr made to the Company was
invaluable and he is sadly missed by all at the Company.
In October 2015, Ormonde made a number of changes to its
management team, with Mr. Steve Nicol and Mr. Paul Carroll being
appointed to the positions of Managing Director and Chief Financial
Officer respectively, and I welcome them in their new positions.
Before taking these positions, both executives had served in senior
management positions within the Company. As management to both
Saloro and Ormonde, they are responsible for driving Barruecopardo
forward into production. I must also welcome Mr. Jonathan Henry as
a non-executive director of Ormonde, who brings widespread
experience in the capital markets together with prior experience in
the tungsten industry.
The Company has reported a profit for the year of EUR2.07M,
compared with a loss of EUR1.63M for 2014. A gain of EUR3.4 million
was recorded on the disposal of the Company's subsidiary interest
in Saloro as part of the Oaktree financing of Saloro. The year also
saw first operating income for the Company with EUR557k in
management fee income being received in relation to services
provided to Saloro since the closing of the Saloro financing on 19
June 2015 to year end. These items were offset principally by
administration expenses of EUR1.44 million (a reduction on the
EUR1.62 million costs from 2014), and a loss on associate
investment (Ormonde's share of Saloro loss) of EUR368k.
Finally, I would like to thank shareholders for their support
during the last year; a period where considerable success was
achieved in advancing Barruecopardo towards production.
Michael J. Donoghue
Chairman
Consolidated Statement of Comprehensive Income
Year ended 31 December 2015
2015 2014
EUR000's EUR000's
Turnover - Continuing operations 527 -
Administrative expenses (1,443) (1,625)
Investment Income 3,397 -
--------- -----------
Operating profit/(loss) 2,481 (1,625)
Interest receivable and similar
income - 4
Finance costs (42)
--------- -----------
Profit/loss for the year before
taxation 2,439 (1,621)
Taxation - (5)
--------- -----------
Profit/loss for the year after
taxation 2,439 (1,626)
Group share of loss on associate
investment (368) -
--------- -----------
Total comprehensive income/(loss)
for the year 2,071 (1,626)
========= ===========
EARNINGS PER SHARE
Basic earnings/(loss) per ordinary
share EUR0.0044 (EUR0.0036)
========= ===========
Diluted earnings/(loss) per
ordinary share EUR0.0044 (EUR0.0036)
========= ===========
Consolidated Statement of Financial Position
As at 31 December 2015
2015 2014
EUR000's EUR000's
ASSETS
NON-CURRENT ASSETS
Intangible assets 5,279 18,535
Property, plant and equipment 1 1
Investments 16,579 -
-------- --------
21,859 18,536
CURRENT ASSETS
Trade and other receivables 35 222
Cash and cash equivalents 653 511
-------- --------
Total Current Assets 688 733
TOTAL ASSETS 22,547 19,269
======== ========
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 (22,089) (25,234)
-------- --------
Equity attributable to Owners
of the Company 22,202 19,057
CURRENT LIABILITIES
Trade and Other Payables 345 212
-------- --------
Total Current Liabilities 345 212
-------- --------
Total Liabilities 345 212
-------- --------
TOTAL EQUITY AND LIABILITIES 22,547 19,269
======== ========
Consolidated Statement of Cash Flows
Year ended 31 December 2015
2015 2014
EUR000's EUR000's
CASHFLOWS FROM OPERATING ACTIVITIES
Profit/(Loss)for the year before
taxation 2,439 (1,621)
Adjustments for:
Depreciation - 2
Finance costs recognised in profit 42 -
or loss
Investment revenue recognised
in profit or loss - (4)
--------- ---------
Cashflow from operating activities 2,481 (1,623)
MOVEMENT IN WORKING CAPITAL
Movement in debtors 186 172
Movement in creditors 133 (59)
Income taxes paid - (5)
--------- ---------
Net cash generated by/(used in)
operating activities 2,800 (1,515)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest Paid (42) -
Proceeds of issue of share capital - 2,383
Other equity movement 1,074 -
--------- ---------
Cashflow from financing activities 3,832 868
CASH FLOWS FROM INVESTING ACTIVITIES
Net expenditure on intangible
assets (16) (1,408)
Movement of property, plant and
equipment - (2)
Interest received - 3
Acquisitions and disposals (3,306) -
--------- ---------
Net cash (used in) investing
activities (3,322) (1,407)
Share of loss in associate (368) -
--------- ---------
Cashflow from investing activities (3,690) (1,407)
NET INCREASE /(DECREASE) IN CASH
AND CASH EQUIVALENTS 142 (539)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 511 1,050
--------- ---------
CASH AND CASH EQUIVALENTS AT OF YEAR 653 511
========= =========
Consolidated Statement of Changes in Equity
Year ended 31 December 2015
Share
Based
Share Share Payment Other Retained
Capital Premium Reserve Reserves Losses Total
EUR000's EUR000's EUR000's EUR000's EUR000's EUR000's
Balance at 1 January
2014 12,197 28,837 837 37 (23,608) 18,300
Loss for the year - - - - (1,626) (1,626)
Recognition of - - - - - -
share based payments
Proceeds of share
issue 1,288 1,095 - - - 2,383
-------- -------- -------- -------- -------- --------
Balance at 31
December 2014 13,485 29,932 837 37 (25,234) 19,057
======== ======== ======== ======== ======== ========
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
Proceeds of share - - - - - -
issue
-------- -------- -------- -------- -------- --------
Balance at 31
December 2015 13,485 29,932 837 37 (22,089) 22,202
-------- -------- -------- -------- -------- --------
1. The basic earnings/(loss) per share and the diluted
earnings/(loss) per share have been calculated on a profit after
taxation of EUR2,071,000 (2014: loss of EUR1,626,000) and a
weighted average number of Ordinary Shares in issue for the year of
472,507,482 (2014: 455,692,724) for the basic earnings/(loss) per
share and 472,507,482 (2014: 457,108,369) 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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