Ormonde Mining cuts losses by 10%

Irish prospecting firm, Ormonde Mining has reported a near 10% slashing of annual losses to €1.63m.

The company’s 2014 results add further positivity to the Ormonde story. Last month, Ormonde’s shareholders voted in favour of a funding deal with US private equity firm, Oaktree Capital Management, that sees the latter take a 70% stake in the Meath-based firm’s main asset in return for a €90.4m/$99.7m investment.

The money will largely fund development of Ormonde’s flagship asset, the Barruecopardo tungsten project near Salamanca in western Spain. The funding comprises $44m of project financing and $55m in debt provision.

Speaking yesterday, Ormonde’s chairman Mike Donoghue said the company made “very significant progress” in the past year and is now “well-positioned” to develop a tungsten mine at Barruecopardo.

“The past year has been one of transformative progress for Ormonde,” Mr Donoghue remarked, noting the twin achievements of the project financing and the mining concession received from the Spanish authorities.

“These two major milestones transform Ormonde from an exploration to a mining company, as we now move into the development stage at Barruecopardo,” he added.

Davy Stockbrokers yesterday gave a strong welcome to Ormonde’s annual round-up, saying it notes “several significant steps forward”.

Davy’s exploration analyst, Job Langbroek said the aforementioned financing agreement represents “a very creditable achievement” in a severe bear market for resource stocks.

“Eventually, it will be recognised in the value of the equity,” he said.

He added: “While the pricing of tungsten does not help, at present, it is at levels reflecting the bottom or close to bottom of its trading cycle. It is also a point where other major western world producers are struggling to compete. All independent industry price specialists point to a higher longer-term price structure. This and the financing security, provided by the Oaktree investment, informs our view that the stock represents really good value at current levels.”

Last month’s shareholder vote killed off any lingering interest from Canadian firm, Almonty Industries, which had previously approached Ormonde’s board with a €27m non-binding takeover proposal.