bizana
22 Jan 2018
Proactive Investor today Shares in Ormonde Mining plc (LON:ORM) are trading at almost double the price they were at a year ago. The reason is simple: a growing appreciation for the company’s key asset, a 30% stake in the Barruecopardo tungsten project in Spain.Ormonde and 70% partners Oaktree Capital have been pushing ahead with construction at Barruecopardo following a strengthening in tungsten prices last year.Operations are directed by the mine subsidiary’s Board, comprised of representatives of Ormonde and Oaktree Capital, with day to day operations being managed by Ormonde’s former managing director Steve Nicol, who relinquished his board position in the summer to dedicate his 100% focus on project delivery.The rationality of this doesn’t take much digging into. One way or another Ormonde has been on the ground in Spain for nearly two decades, and Steve Nicol himself has lived there for many years.What’s more, the man who was hired to boost the Ormonde management after Nicol’s sideways move, Fraser Gardiner, used to run Ormonde’s exploration operations in Spain before he was tempted away to join Citadel in Saudi Arabia.Back in Europe now, Gardiner is picking up where he left off at Ormonde, or at least up to a point. Construction work Barruecopardo will be left in the capable hands of Nicol.But the corporate level-work is now the province of Gardiner and chief financial officer Paul Carroll, while Nicol’s managerial positions and the old exploration portfolio that Gardiner was so familiar with revert to his control.Still, Barruecopardo is likely to grab all the limelight for the foreseeable future, given that commissioning is planned for the third quarter of this year. With production costs slated at just US$119 per metric tonne unit, against the current European price of over US$300, that limelight is likely to be well deserved as margins will be exceptional.The costs of getting Barruecopardo into production aren’t extortionate either, with a Capex of just over €50 mln. So all told, this looks like being an asset that should well reward its investors, albeit that Oaktree now holds the majority.There’s still work to be done before those rewards start coming in, though.“We are proceeding full steam ahead,” says Carroll. “The construction of the plant is on schedule.”Gardiner concurs. “Equipment started to arrive on site in December and we’ll be starting the installation of the equipment in the first quarter,” he says. “We’ll be commissioning before the end of the third quarter, with production expected around the end of the year.”And what will happen after that?Of course, Oaktree will play a key role in deciding, but Ormonde’s position has recently been neatly outlined in research conducted by the Irish broker Davy.Ormonde as an investment, argues Davy, seriously dials up with an extra US$100 on the tungsten price. And that extra US$100 is not far off doubling the value of Ormonde either.Davy starts by discounting project cash flows at a baseline price of US$250 per metric tonne unit to the start of 2018, leading it to estimate that Ormonde is worth US$32.5 mln or 5.3p per share.But then it gets interesting. Using a price of US$300 per mtu, just above current trades, Davy calculates the net present value at 8.7p per share.In turn this leads to the comparison that at US$250 per mtu the average gross annual cash flow over the life of the mine is US$21.7 mln, rising to US$34 mln at US$300 per mtu. This indicates that Ormonde is trading on an EV/EBITDA multiple of five times at a price of US$250 per mtu and 3.2 times at US$300 per mtu.And remember, it’s a small market.“Outside of China we’re a decent-sized player,” says Carroll - once up and running, Barruecopardo will be well and truly on the tungsten industry map. With funds, such as those managed by Oaktree, generally having an average investment horizon of 5-7 years, it seems likely Oaktree will seek an exit at some point.
BigBobby20
14 Jan 2018
APT prices edging up A happy, healthy and prosperous New Year to all Ormondistas.I see Charlotte Radford in Metal Bulletin (Jan. 12) lists sales of tungsten APT at between $314-319 per mtu. Holding, or, with a fair wind behind us, rising above this level will do us nicely.The price of tungsten now has some critical mass and even a modest 10% hike in the course of Q1, Q2 and Q3 (which takes us through to production in Q4) would mean APT selling prices of $350.00. Nice work if you can get it....BB20
tellthetale
04 Jan 2018
hi bobby/biz i have been in ormonde a while avg about 5 cent ,hope to break even by oct without investing more do you think its possible
BigBobby20
04 Jan 2018
Re: Davy Thanks, Bizana, for posting the additional material from Davy, which makes eminently good sense and is heartening. I have felt for some considerable time that people have not stacked up the plus features, which are many (including a compliant backer who needs ORM management as much as ORM needed the funding, attractive WO3 grades and straightforward processing, low opex, rising market demand--to name just a few). Davy does a good job of explaining why the SP is still on its knees and the company therefore undervalued. The answer has to be that many potential investors would be enthused by what they see (or by what is coming soon) but that Ormonde is, quite simply, not on their radar. If someone can tell me of another well run company with funding and sales assured for a product that is in demand, and where an investment promises to grow significantly cover the next 12-15 months, I am keen to hear of it. In the meantime, at these levels, I feel we have a chance to stock up at bargain basement prices (in my case lowering my average as I go). As always, time will tell.BB20
bizana
03 Jan 2018
BB20 Many thanks BB20 for your comprehensive post. I am in broad agreement with your views.I have revisited Davy's November NAV which was extracted from a comprehensive, 15 page, review of Ormonde and the metrics used in arriving at a valuation. Some other extracts:On Valuation: "...the discount to our estimated NAV per share and the relatively low multiples probably reflect a number of factors, including Ormonde's minority position in the mine or the risk of a structurally weak US$. All things being equal we feel that this will reduce materially as the project nears completion....""...admittedly, Ormonde is relatively small and is also a single asset venture; however, it is not clear to us why it should trade at such a low multiple, especially as the next phase of pricing is likely to be upwards. The low multiple appears to ignore this and provides no indication that any of this is discounted into the valuation.There is also a good argument that the mine will mirror narrow vein tungsten plays, which typically continue to establish additional resources through appraisal - ensuring mine life extensions ...Initially, the project will be completed to c. 70% of its capacity..."There follows a detailed analysis of the global market and China's dominant role.Western markets/supply/demand:" One of the major inputs into the direction that pricing will take over the next few years will be the perceived shortage in new Western projects that are financed and ready for development. This is shown in sharp relief when the level of demand in Europe, which is 18% of global consumption, is compared to just 4% of primary production. Moreover, the fact that 50% of European demand is met by recycled materials shows the extent that European primary supply is short relative to demand.""Taken together, the consensus view is that the next few years will see a continuation of the price recovery underway...""Minority Issues:Ormonde is a minority partner in the Barruecopardo project.It holds this interest through a 30% equity position in Salero, the project company. The majority partner has provided both the debt and equity and, apart from one renegotiation, the deal is substantially as negotiated originally. However, Ormonde does not control the mine. Nevertheless, as its partner is an investor and not a mining specialist, Ormonde has a high propirtion of the intellectual property involved in the project. This may be why the larger partner required the former CEO of Ormonde to assume the leadership role in Salero. This is understadable from a larger investor point of view, especially with both debt and equity in the project, and also puts it and Ormonde on a level "know how" basis"
BigBobby20
29 Dec 2017
Re: Saloro.com Hi Bizana (and all others of the faithful band)I'm sorry not to have responded sooner to your post and invitation to offer my thoughts concerning the Saloro website, particularly the mission statement. The run up to Christmas has been particularly hectic for me and I wanted to have a closer look at the contents of the website before responding.I must confess that I had forgotten about this website and have only a vague recollection that I stopped by at some time in the past to look at it. It's good being spoiled for choice and having, as you rightly point out, what serves as an additional 'mine of information' alongside the Ormonde webpages. These I do look at regularly and find to be well put together and often illuminating. Inevitably, there is, of course, some overlap. (The fascinating drone video, for example, is common to both sites.) But the Ormonde site has the very helpful graphic of time lines, set out side by side, leading to commissioning and production, which the Saloro website seems to lack. I notice, as another minor negative, that press releases appear to be neglected on the Saloro site (nothing showing since the 2015 publications) and that the language used in some of the pages has not always been edited carefully. On your main point (the mission statement), I think the BoD has shown through its history an awareness of opportunities. The gold reserves and copper prospect would serve as good (though not lucrative) examples. My guess is that the logical onward travel for Ormonde/Saloro would be (a) an early move to explore licensed areas surrounding Barruecopardo and (b) possible take over opportunities (tungsten) in Spain and/or Portugal. I have wondered also, of course, whether the UK operation in Devon would be a good fit. For now, I think eyes are firmly fixed on the challenges of the bustling Barruecopardo site and the commissioning that should take place in the late summer or early autumn. Once production is under way and a flow of income is established, minds will turn perhaps to expansion of one kind or another.I have just re-read the Davy report NAV values for Ormonde that you posted a few weeks ago, which make compelling reading. So much so that I was moved to pick up a new tranche of shares at 10.18am today. I wondered about a 'fill or kill' purchase but opted for a straight buy 'at best'. This short delay cost me a few percentage points extra (2.2p) but the deal still reduces my average to 3.6p-- a price that I expect to see double (or better) by this time next year. All best wishes for the New Year to active posters and silent stalwarts who have kept the faith over the last few years. I do believe 2018 will be the year that the project comes to fruition and Ormonde is finally established as a successful tungsten miner. In my view, those buying in now could within fifteen months find themselves with a treble or quadruple bagger, given the present SP. Upwards and onwards!BB20
bizana
22 Dec 2017
Saloro.com BB Have you seen saloro.com ?It is literally a mine of information. I would be most interested in your thoughts on it's mission statement on page 1 of the "home" page with regard to "assessing other global ....."Happy ChristmasBizana
BigBobby20
19 Dec 2017
Re: APT (Bizana) O/T Hi Bizana.Glad to hear that my brief O/T chat here with Scholomo led you to check out Versarien. The company has so much going for it, as you will already know, and a few putative rivals are likely to fade away now that ISO standards are published and will doubtless feature in contracts. I had built up a decent shareholding in VRS before Lombard Odier depressed the price by unloading many millions of shares. (I wonder what LO shareholders will think of that...) The drop in price to below the fundraising (at 15p) encouraged me to readjust my portfolio and to add significantly to my VRS holding. Just in time.... A NASA rocket take off is not too far fetched to describe what happened next. I think many of us will be wearing a broad smile during the festive season. And there are so many NDAs (c. 120) that might (but then might not) come good. As the man at the top recently tweeted: "It's not Christmas yet..."Anyway, I'm very happy to find that I was not seen as a ramper and that two of our merry band here at ORM got themselves aboard. This time next year we should have plenty to smile about here as patient ormondistas. A happy Christmas to all invested here. Let's raise a glass to a smooth passage towards tungsten production in the coming year.BB20
bizana
18 Dec 2017
APT Yes indeed Euro APT $293-300BB20,That was an astonishing post you made re VRS.Knowing you were not a "ramper" I did my research and decided to invest.The results have been phenomenal. Many many thanks.And best wishes for 2018 to you and our little group of Posters on this site.Bizana
BigBobby20
06 Dec 2017
APT prices edging back up./ Charlotte Radcliffe of Metal Bulletin reports European prices of APT back up to circa $300 per mtu. Supplies also very tight in China and expected to stay that way over December.Wishful thinking gets us nowhere fast but, if market prices for APT hold or improve over the next 9-10 months, this should impact favourably on the SP as we approach commissioning, just as the recent Davy updates ;posted by Bizana forecast. I shall be topping up if the SP slips a little more over the next few weeks. (Looks more and more like a no brainer to me.)BB20
BigBobby20
29 Nov 2017
Progress report Michael Donaghue, interim managing director, says construction works are progressing well and is upbeat about developments. Ground work, including the dam, well advanced and plant erection expected to start early in the New Year. In short, everything appears firmly on track for the Q3 commissioning of the Barruecopardo mine.BB20
bizana
22 Nov 2017
Davy 21 Nov Valuation Ormonde Mining ResourceMine build fully underway; value discount to unwindNovember 20 2017 | Job Langbroek | 15 page(s) | Print or Download PDF Davy ViewOrmonde 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. ORMONDE picture:
bizana
21 Nov 2017
Davy (Joint Broker) today Ormonde MiningMine build fully underway; value discount to unwindJob Langbroek | Morning briefing | Read Important DisclosuresOrmonde 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.
BigBobby20
15 Nov 2017
Re: Latest tungsten APT prices Hi Scholomo:Yes, inevitably zig, then zag. And commodity prices generally have pulled back after their giddying rise. In the case of ORM, we are still (as over a number of years) having to wait for shovels in the ground, though the months are sailing by and first production is now less than a year away. I still expect that we shall have an SP of two or three pence higher as we approach commissioning of the mine. Given the current price (and perhaps some slippage in the SP still to come), that will be heartening for those who have kept the faith and perhaps added at these depressed levels. The Metal Bulletin reports are showing a significant retreat in the prices for APT compared with recent peaks but it may be that things are now stabilising. Anna Xu, of Metal Bulletin, has an article which claims that China has announced it will be adding a fairly hefty environmental tax to APT, effective from January 1, 2018, which will add up to 2,000 yuan ($301) per tonne. It would be reasonable to assume that this will help to keep prices buoyant. BB20.
scholomo
15 Nov 2017
Re: Latest tungsten APT prices Hi bobbyYou were quite right when you said that the Sp is is going to be influenced by the falling Tungsten price
