Back in February, the company hit a road block when a third party appealed against a few of its compulsory land purchase plans. The objection to the land purchases was subsequently rejected by the relevant authorities but in the view of the project developers, the appeal was vexatious, and the possibility exists of further appeals further down the road.
Ormonde said independent 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.
Based on this, the project partners have now adopted an optimised construction schedule for the project, focusing on lands already owned or rented by the company, which will see commissioning in late 2017, as opposed to 2016, as originally hoped.
IN DEPTH: Ormonde Mining's plans for Barruecopardo
Ormonde said that by the time the mine starts producing, the price environment for tungsten should be much more favourable, thereby reducing risk and optimising project valuations.
Tungsten ammonium paratungstate (APT) prices have recently risen to US$210 per tonne, which is 29.6% above the low of US$162 seen in January of this year.
The outlook for tungsten in the short term is moderately positive; however, medium-to-longer term forecasts predict substantial price rises, Ormonde’s statement said.
Saloro, the project operating company, 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 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,” said Steve Nicol, Ormonde’s managing director.
“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,” Nicol added.
Shares in Ormonde Mining fell 6.7% to 1.26p on the news, suggesting that the project delay had been largely priced in by the market.