Potential Divestment of the La Zarza Project
22 February 2013
Ormonde Mining plc
("Ormonde" or "the Company")
Potential Divestment of the La Zarza Project
The Board of Ormonde Mining ("Ormonde" or "the Company") is pleased to announce that it has entered into a binding Option Agreement ("the Agreement") with Spanish company Nueva Tharsis SA ("Nueva Tharsis") that could, subject to the successful completion of due diligence by 15 May 2013, lead to the divestment of the Company's interest in the La Zarza Copper Project ("La Zarza"). Ormonde, through its wholly owned Spanish subsidiary Ormonde España SL ("Ormonde España"), acquired a 100% interest in La Zarza from Nueva Tharsis in 2007 subject to staged payments by OrmondeEspaña, of which €1.3 million from a total of €2 million remains outstanding.
Under the terms of the Agreement entered into between the parties, Ormonde España will collaborate with Nueva Tharsis in the planned disposal of the entire mining assets and interests of Nueva Tharsis to a third party. In this regard, Ormonde has agreed to contribute the entire share capital of Ormonde España to this package for a total cash consideration of €5 million. Ormonde does not expect any material transaction costs in relation to this sale and on successful completion Ormonde would have no further obligations in respect of the €1.3 million owed by Ormonde España to Nueva Tharsis.
Four investigation permits held by Ormonde España along strike from La Zarza, which were explored in 2011 and 2012 under an option agreement with Antofagasta Minerals SA ("Antofagasta"), will be transferred out of Ormonde España to another Ormonde subsidiary and are not included in the Agreement with Nueva Tharsis. Ormonde intends to seek another joint venture partner to further explore this retained area.
Kerr Anderson, Ormonde's Managing Director, said:
"The potential sale of Ormonde España for €5 million, as part of a larger package of mining assets being disposed of by Nueva Tharsis, presents an opportunity for us. A successful due diligence process and completion of the divestment would enable Ormonde to be in a position to focus our management time and resources on the development of our flagship Barruecopardo Tungsten Project and on advancing our emerging gold projects."
Background
In 2004, Ormonde's wholly-owned Spanish subsidiary Ormonde España entered into a joint venture agreement with Nueva Tharsis, whereby Ormonde España could earn a 70% interest in La Zarza through the expenditure of €1.8 million on investigation works at La Zarza over a three year period. In 2007, following the completion of the earn-in expenditure, Ormonde España and Nueva Tharsis entered into a subsequent agreement whereby Nueva Tharsis assigned a 100% interest in La Zarza to Ormonde España, and Ormonde España acquired a 2.25% royalty interest held by Nueva Tharsis for staged payments totalling €2 million, of which €1.3 million remains outstanding.
A feasibility study was completed in 2008 on a potential underground mining project at La Zarza, and recommended that the possibility for further copper resources be investigated. Ormonde España entered into an option agreement with Antofagasta in 2009, whereby Antofagasta funded exploration activities with the aim of identifying sufficient additional copper resources at La Zarza to support a mining operation meeting their investment criteria. Following exploration programmes carried out on La Zarza and surrounding permit areas, Antofagasta withdrew from the agreement in November 2012.
Activities funded by Antofagasta included the drilling of several targets in 2012 on investigation permits granted to Ormonde España in 2011 by the provincial authorities. Drill hole UC002 on one of these targets intersected altered and brecciated volcanics over an interval of 147 metres, with pyrite mineralisation throughout but most intensely developed in the upper 40 metres. The style and vertical extent of the mineralisation is that of a stockwork. These permits will be transferred out of Ormonde España to another subsidiary of Ormonde's and are not included in the Agreement with Nueva Tharsis, and the Company intends to seek a joint venture partner to further explore this new area.
In September 2011 Ormonde España jointly with Nueva Tharsis presented a request to the Andalucia Regional authorities for the reactivation of the Mining Concessions at La Zarza. This request has been archived pending further information requested by the Administration, with Ormonde España continuing to work through this process to effect said reactivation, which is not a condition of the transaction detailed above.
Ormonde will issue a further announcement in due course in the event that this transaction proceeds and the disposal of its interests in La Zarza is effected.
Enquiries to:
Ormonde Mining plc
Kerr Anderson, Managing Director Tel: +353 (0)1 8253570
Bankside Consultants
Simon Rothschild Tel: +44 (0)20 7367 8888 Mob: +44 (0)7703 167065
Murray Consultants
Ed Micheau Tel: +353 (0)1 4980300 Mob: +353 (0)86 803 7155
Davy (Nomad / ESM Adviser)
Eugenée Mulhern / Roland French Tel: +353 (0)1 6796363
ENDS
About Ormonde
Ormonde Mining Plc is admitted to trading on the AIM market in London & the ESM market in Dublin. Ormonde is a mineral development and exploration company focused on Spain (Ticker: ORM).
Ormonde's key activities include:
Barruecopardo Tungsten - Ormonde is developing a low cost mining operation at Barruecopardo to become a major, secure European supply of tungsten.
La Zarza Copper- polymetallic massive sulphide deposit in the prolific Iberian Pyrite Belt of southern Spain.
Gold Explorationin several highly prospective areas of western Spain which includes its joint venture agreement with Aurum Mining plc (AIM: AUR), where Ormonde currently has a 40% interest in the Pino de Oro project in the Zamora Province and a 46% interest in the Peralonso and Cabeza projects in Salamanca Province of western Spain. Ormonde is Manager of the Joint Venture.
This information is provided by RNS
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