Ormonde Mining Share Discussion Threads

[dolores123] 04/12/2017 11:06

Good price to buy at and or top up. Momentum should speed up next year.

[steelwatch] 29/11/2017 12:30

SP Angel

Tungsten APT European US$275-285/mtu vs US$271-285/mtu last week


Ormonde Mining* (LON:ORM) 2.1p, Mkt Cap £10m –

Progress report from Barruecopardo

• Ormonde Mining reports on progress of the preliminary civil engineering work at Barruecopardo with the earthworks for the water dams recently completed, and the concrete footings for crushing and screening plant underway.

• Preliminary mining of waste from the open pit area has already started and the first of the process plant equipment has been delivered to site with continuing plant shipments expected.

• The company notes that there are now approximately 100 people deployed on site, of which 32 are from Barruecopardo and the surrounding communities.

• Plant erection and construction is expected to start in early 2018.

Conclusion: The completion of the preliminary civil engineering works at Barruecopardo ahead of the winter should ease the task of the plant construction team early in the new year. The inclusion of a significant local component in the workforce is an important part of the long term integration of the project into the area and its economy and is likely to have been welcomed both by the communities themselves as well as their civic and political leaders.

*SP Angel acts as Broker to Ormonde Mining

[bazaoil] 28/11/2017 13:01

Very good news on the progress.
- Construction going to timescale.
- Funding in Place
- Tungsten price consolidated.
- Over 100 people currently working on site
- Possible Chinese APT price jump in January which would feed on to European Prices
- only 7/8 months to commissioning.
ALL good!

My average holding is only 0.018 but I wish I could afford to top it up now with the share price so low. Xmas along with a higher tax bill than predicted is holding me back for now.

[bazaoil] 28/11/2017 13:01

Very good news on the progress.
- Construction going to timescale.
- Funding in Place
- Tungsten price consolidated.
- Over 100 people currently working on site
- Possible Chinese APT price jump in January which would feed on to European Prices
- only 7/8 months to commissioning.
ALL good!

My average holding is only 0.018 but I wish I could afford to top it up now with the share price so low. Xmas along with a higher tax bill than predicted is holding me back for now.

[dolores123] 28/11/2017 08:07

More good news today on the construction progress.

[gosoftly7] 22/11/2017 18:15

Don't forget that these production figures are based on a 5 day week. If they operate in a similar manner to all other mines, they will move to a 7 day week as soon as they can - 40% uplift.

Plants are normally over designed so that they can make the nameplate tonnage - so pushing the plant could add a further 10-20%.

[dolores123] 22/11/2017 14:17

So a future share price of 10 or even say 12p might not be impossible given the possible future output and an improving tungsten price.

[12vic] 22/11/2017 14:09

Thanks Bizana . Good to see some figures on paper which back up what we've all been thinking for some time.
So 5.3 - 8.7p but no mention of how this would change dependant on production levels, which could do with some clarification.
These are at low EVA/EBITDA multiples which again is positive and underlines the value.

Thanks for posting.

[bizana] 22/11/2017 11:50

Ormonde Mining Resource

Mine build fully underway; value discount to unwind

November 20 2017 | Job Langbroek | 15 page(s) | Print or Download PDF



Davy View

Ormonde is a relatively simple enterprise. Its primary asset is a 30% share in a new low-cost tungsten mine in Europe that is currently under construction. When completed and based only on reserves and resources established by drilling completed so far, the mine will produce more than 15 years of positive cash flow. Assuming there are no construction delays and it manages its minority role successfully, net asset value (NAV) and multiple analysis (at the current price of tungsten) indicates that Ormonde is very good value at these price levels.

Mine build – timing looks very good

During the summer, Ormonde announced that the shareholders in the project company had elected to move into the full mine build phase. Although this timing is later than initially expected, the decision appears to dovetail with a recovering tungsten price. Moreover, this price recovery mirrors the global economic cycle, providing comfort that pricing will remain supportive during the important ramp-up phase of production.

Valuation review

Discounting project cash flows at a baseline price of $250/MTU to the start of 2018, we estimate that Ormonde is worth $32.5m or 5.3p per share. However, using a price of $300/MTU, just above current trades, implies a net present value (NPV) value of 8.7p per share. At a price of $250/MTU, the average gross annual cash flow over the life of the mine is $21.7m; this rises to $34m at $300/MTU. This indicates the group is trading on an EV/EBITDA multiple of 5x at a price of $250/MTU and 3.2x at $300/MTU. We value only the group’s tungsten project.

Some issues remain, but clear value opportunity exists

The Oaktree investment in the project was at both an equity and debt level. With full project development now underway, this funding structure requires a successful build-out and debt retirement programme as quickly as possible. The discount to our estimated NAV per share and the relatively low multiples probably reflect a number of factors, including Ormonde’s minority position in the mine or the risk of a structurally weak US dollar. All things being equal, we feel that this will reduce materially as the project nears completion and first tungsten concentrates are successfully and profitably produced.

[12vic] 20/11/2017 19:49

Thanks Steelwatch. Hopefully a sign of support. You can see how the market will be uncertain with the proposed changes due in January. If I was a producer in China my short term position would be not to sell at the moment - surely in a few months time my current inventory would be worth more ?
In theory then the western producers product becomes more valuable if the Chinese tax regime pushes up the price on the major source. Lets say China produces around 85% of the worlds tungsten, then surely the other 15% available must rise in price.
I'm second guessing this though as not really certain how the mechanics work out,for instance will the taxes apply to straight tungsten production or predominantly only the transition to APT. However this pans out, I think there will be more volatility going forward and perhaps we will see continued price variations as we have over the last 6 months.

[steelwatch] 20/11/2017 12:49

..but not according to share price Angel:

Tungsten APT European US$271-285/mtu vs US$275-285/mtu last week

[steelwatch] 19/11/2017 10:50

There appears to be a slight uptick in the European APT chart above to back your post vic.

[12vic] 19/11/2017 10:18

Should have mentioned on the Tungsten price, there is still Chinese activity yet to filter through which may play out for western producers throughout 2018

1. From Jan 2018 there will be new Environmental tax law in China , the expectation is that this will particularly impact on Tungsten APT prices and there is some suggestion this could add anything up to $300 per tonne on APT. Just how accurate these predictions are and what the associated impact on tungsten concentrate price will be remains to be seen.

2. Environment policy continues to remain tough especially for smaller producers. Tungsten miners with less than 60,000 tpy capacity are due to be closed to meet supply reform.

3. This tends to support a consensus that the chinese production quota will be maintained at around 90,000 tpy. For the last 3 years domestic concentrate usage for Chinese Apt production has averaged at 140,000 tpy. Never had a significant maths qualification but this does seem weighted towards tighter supply. However needs to be considered in context of the changes at point 1 which may reduce APT production in China ?

I'd imagine some uncertainty in the market until the effects of above are established.

Please see MB for full information.

[12vic] 17/11/2017 19:05

Welcome Bazaoil.
Guessing that a lot of speculators jumped on board to ride the tungsten price up and have then taken their money out on the way down. You are right though in that the reflection on the share price is overdone.
Traditionally this share tends to drop off over the winter months and it may be that things wont really start to pick up again until towards the end of 1st quarter next year.
I'm convinced that the patient investor will see some good returns here, so it really comes down to your time frames and whether you are willing to see this through.
My view is that this lead up to production is only the first phase of a much bigger story for the company.
The gamble rests on the tungsten price, but if the shares hit my average price again I'll be buying some more.
If your looking for inspiration , remember our 10% share holder who has been topping up at around 2.4p .

[steelwatch] 13/11/2017 15:51

Tungsten APT European US$270-280/mtu vs US$275-285/mtu last week

[12vic] 09/11/2017 11:45

Micnoc I think divis are longer term than 2018, just making sure when they do come there's no tax and likewise CGT on my holding to worry about.

I don't see an issue with the construction, the company is developing to the published timeline and infrastructure will follow the earth moving. Expect things to carry on a pace through the new year.

[micnoc2015] 08/11/2017 22:43

Extent of the development? TBH I am not very impressed by the latest pictures on ormonde she site, they are just moving earth around. I don't see much in the line of infrastructure.

[micnoc2015] 08/11/2017 20:39

@12vic just curious what has made you anticipate dividends? Surely not in 2018?

[dolores123] 07/11/2017 14:05

Sounds like an excellent move 12vic. Tax free divis very welcome.

[12vic] 07/11/2017 13:33

Thanks Dolores,
I've been using the price fluctuations over the last month to move part of my holdings from a standard share account into my stocks ISA - anticipating dividends to come :)
Had been worried the market might catch me out , but have just finished and managed to increase holding in process.
I remain here for the long term and will continue to hold and possibly buy more should the bargain prices continue.

[dolores123] 07/11/2017 13:15

Nice one 12vic

[12vic] 07/11/2017 13:04

I agree. Against the flow today have just topped up some more.

[admiral jellicoe] 07/11/2017 13:03

Oil price is rising above 60$, due to large geo-political risks in Nigeria, Venezuela and the recent regime change which is occurring in Saudi Arabia.If these risks remain present, then oil prices will stay higher for longer which hopefully will start more activity in Exploration and Production and hopefully see higher demand for products which contain tungsten.Here's hoping anyway!