Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

UPDATE - Ormonde Mining unveils long-awaited financing package for flagship Barruecopardo mine

Ormonde Mining has unveiled a financing package for its flagship Barruecopardo tungsten project in Salamanca, Spain, which would see it on the road to production in the second half of 2016.
UPDATE - Ormonde Mining unveils long-awaited financing package for flagship Barruecopardo mine

---ADDS BROKER COMMENT----

Ormonde Mining (LON:ORM) has unveiled a financing package for its flagship Barruecopardo tungsten project in Salamanca, Spain, which would see it on the road to production in the second half of 2016.

It has entered into an exclusivity period with global investment manager Oaktree Capital on a deal, which would secure the project's development and would also allow the firm an early evaluation of a stage-2 expansion.

The exclusivity period runs until April 10 this year and Oaktree would hold a majority stake in the site.

Oaktree has also agreed to provide Ormonde with a US$1.5mln loan, repayable after six months from drawdown.

This will give working capital in the short term, while Ormonde finalises the project finance arrangements.

Kerr Anderson, Ormonde managing director, told investors the exclusivity arrangement followed a "considerable period" of exploring multiple avenues for funding. 

"Completion of the financing package for our flagship Barruecopardo Tungsten Project, would mean that Ormonde is in a position to rapidly advance the project through its development stage during 2015 and towards production in the second half of 2016."

The funding package will be split between debt and equity and Oaktree would hold a majority position in the project.

Ormonde would be manager and receive an ongoing management fee.

Substantial progress is currently being made on the site, including  power line construction designs underway and negotiations for water supply finalised.

A shortlist of construction sub-contractors has been drawn-up and statutory manager and environmental officers have been appointed, Ormonde revealed.

Resource focused broker SP Angel noted that original expectations had been for around 70% company debt with the balance of some form of equity for a total package of around €70mln.

"Without knowing the split between equity and debt it is difficult to judge whether the deal on the table from Oaktree Capital of debt at the PLC level and project equity is better than debt and equity at the PLC level," said John Meyer.

He reckons Barruecopardo is a valuable asset, which is now permitted and patient shareholders should hold on "to see the final terms on this package".

Interestingly, the analyst also noted that current tungsten prices are below the base case in the definitive feasibility study of US$350/mtu -  16% higher than the current spot price of US$292.5. 

However, he reckons that a US$350/mtu price for tungsten is supported by the supply/demand dynamics and Barruecopardo still stacks up even at a tungsten price of US$250/mtu.

"In addition the Euro is now much weaker when the DFS was set at US$1.30 against current spot of US$1.14 which will make the project cheaper to operate."

Ormonde Mining shares eased 9.6% to 2.825p.

Giles_55af4ddca6481.jpg
Why Invest In Ormonde Mining plc? Read More Here

Register here to be notified of future ORM Company articles
View full ORM profile

Ormonde Mining plc Timeline

Newswire
September 30 2016
Article
February 29 2016

Related Articles

6_Traders_at_work_582e3c2af1b55.jpg
November 17 2016
The exercise of options by Pantoro’s managing director provides the company with cash funding and shows that senior management believe in the company’s future.
Drilling. The Grid 5 target is believed to host the western continuation of the C10 and C10 South conductors being explored by Cameco nearby on the Fox Lake deposit trend
May 31 2016
"The fault zones are characterised by localised sandy-clay gouge, broken core, fracture controlled clay, weak sooty pyrite and moderate to locally strong quartz dissolution," said company president, Peter Dasler.
Kwale-workers.jpg
July 20 2016
Base Resources has a top quality mineral sands asset at Kwale and looks poised to benefit from a recovery in the market

© Proactive Investors 2016

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.