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

cobalt_thackaringa-757.jpg
December 22 2016
Cobalt Blue Holdings (Proposed ASX:COB) continues on its path to listing on the Australian Securities Exchange. The company will be focused on the Thackaringa Cobalt Project, which is strategically located 23 kilometres south-west of the world class mining centre of Broken Hill within New South Wales.
nevada
January 06 2017
Sienna's property is located in the deepest sections of a basin that's hosts lithium production from brine.
Kibo brings global power and construction heavyweights into the picture at Mbeya
September 19 2016
Kibo Mining is signing up some big names to help it develop the Mbeya coal and power project in Tanzania

© Proactive Investors 2017

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.