Ormonde Mining plc (LON:ORM) has entered an agreement to sell its 30% stake in the Barruecopardo tungsten mine in Spain for around £5.1mln (€6mln).
Mike Donoghue, chairman and interim managing director of the AIM-listed miner, said that while the disposal would come as a “disappointment for many shareholders”, the mine had encountered significant setbacks during ramp-up operations which had left it seeking further funding.
Ormonde also said that low initial ore grades and delays in accessing the main orebody of the mine had resulted in overall production and related revenues being “substantially lower than the 2012 feasibility study forecasts for the current stage of ramp-up”, necessitating the need for the additional funds.
“Having assessed the options open to Ormonde to address this funding requirement, in light of the performance of the mine to date, the current tungsten market, difficulties or risks in raising capital and the potential consequences for Ormonde were its share of funding not to be provided, the board has determined that a sale of its interest in the Barruecopardo Mine is in the best interests of shareholders”, Donoghue said.
If the disposal is approved by investors at an upcoming emergency general meeting on 12 February, Ormonde will sell the stake to Oaktree, the majority owner of Barruecopardo.
In early afternoon trading on Wednesday, Ormonde’s shares were 65.5% lower at 0.9p.