ORMONDE MINING BARRUECOPARDO TUNGSTEN PROJECT Project Permitted Project Funded Project Upside July 2015 1
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Company snapshot Ormonde in brief Listed in Dublin (ESM) and London (AIM) with a market capitalisation of ~ 9M* Ticker = ORM Issued shares: 472.5M Share price: 1.9p* Ormonde s projects are all located in Spain Barruecopardo Tungsten Project focused on the development of the Project, with mining concession and project funding in place Significant shareholders Shareholder % (Jun 2015) M&G Investment Management 8.89% Thomas Anderson 6.47% Rathbone Brothers plc 5.45% Goodbody Stockbrokers Nominees 5.25% Directors & Families 3.12% Project locations La Zarza copper-gold project Salamanca and Zamora gold projects Gold Projects Barruecopardo La Zarza SPAIN SPAIN * At 20 July 2015 3
Barruecopardo summary Barruecopardo is a permitted, fully-funded brown-field tungsten mining project located in western Spain Feasibility Study (DFS) completed with initial nine-year open pit mine life (2,600t WO 3 or 260,000 MTU/year, steady state) Simple and cost-efficient project design with low Capex and low Opex: Open pit mining and straight forward processing based on proven technology Opportunity exists to expand plant capacity with no additional Capex (increase from 5 to 7 day operation: +40%) Moving into the development phase of the project: Project fully funded through finance package with Oaktree Capital totalling US$ 99.7M, comprising a large equity component and a flexible debt package; project company = 70% Oaktree / 30% Ormonde Includes funding for early evaluation of potential Stage-2 underground mine Basic engineering completed and shortlist of companies to undertake construction activities prepared Detailed engineering commenced Expropriation commenced for lands without option to purchase agreements in place Targeting commissioning from Barruecopardo by end 2016 Extension of resources and reserves planned with the target of developing an underground mine and evaluating satellite deposits on prospective local ground holdings 4
Tungsten Tungsten (chemical symbol W) is a metal with outstanding properties: Highest melting point (3,400 C) and tensile strength of all metals Second strongest material after diamond Unique properties and limited substitutability makes tungsten critical for many industries (including mining) Key applications: Cemented carbides used in drilling tools and wear-resistant parts (55%) Alloy steels & alloys used primarily in tools (21%) Fabricated tungsten products such as electrical and electronic contacts (18%) Chemical applications and products (6%) Tungsten Pricing: Tungsten Concentrate (containing WO 3 ) produced by miners and refined by processors into Ammonium Para Tungstate (APT) APT prices quoted in metric tonne units or mtu of WO 3 (1 mtu = 10kg) Average APT price in June 2015 ~ US$235 per mtu (or US$23,500 per tonne) 5
The Chinese dimension and supply concerns China has a major impact on the tungsten market: ~65% of global primary consumption and ~85% of primary production Chinese domestic consumption increased by more than 140% over the 10 years to 2013 China is preserving depleting tungsten resources for domestic consumption through: Mining quotas, restricting new mining licences, a newly-introduced resource tax, and restrictions on export licences Consolidation of and increased control over tungsten industry - control and elimination of illegal mining is a priority Mining costs have increased significantly due to: Decreased mined grades and increased depth of underground mines Introduction of environmental considerations and significant labour cost inflation Chinese tungsten industry is also integrating vertically adding value through downstream processing and manufacturing Supply Concerns EU declared tungsten a critical raw material and the British Geological Survey ranks tungsten top of its Risk List Primary tungsten demand forecast to grow at 3%+ pa* from 2014-18 due to increasing global consumption Limited amount of new supply globally to meet this demand * Argus Media (Tungsten Research) 6
Supply and demand 120000 100000 80000 60000 40000 20000 Primary supply by region (tonnes W) actual & forecast 0 China Russia Canada Others "New Others" Source: Argus Media/Tungsten Market Research Questionable total new supply China s production = flat Primary supply was ~80,000t W in 2013 It is forecast that supply will struggle to keep up with demand: China s restrictions, consolidation of its industry, higher costs, deeper mining Many non-chinese projects with larger Capex budgets will likely experience difficulty raising construction finance US and Russian stockpiles that had historically supplemented supply are now mostly depleted A number of mature operations likely facing closure in the next few years Demand has historically correlated closely with global GDP growth Increased primary demand over the forecast period to 2018 is expected to be 3%+ pa (new supply each year equal to ~1.5-2 times Barruecopardo s annual production) World primary demand is forecast to be ~105,000t W by 2018, up from ~80,000t W in 2013 7
Tungsten price history US$/mtu for European APT APT price forecasted to move back above $350 in 2016-2018* due to supply/demand dynamics and implementation of China s new control measures $500 $450 $400 $350 $300 $250 $200 Chinese domestic demand increases and export quotas coming into effect Price rebound after GFC, plus stockpiling Weakening commodity price environment $150 $100 $50 * Argus Media 8
Operating/production costs global Supply Global tungsten production cost curve, 2014 ($/mtu WO 3 ) Barruecopardo production cost % of total output - cumulative Source: Argus Media Ltd, February 2015 9
Location PROJECT good LOCATION infrastructure 10
Barruecopardo operations Simple Mining: Open-pit, contract mining, utilising and benefiting from experienced mining contractors in the region Simple Processing: Simple gravity processing provides for a plant (1.1mtpa) that can operate efficiently and with added benefit of ~40% spare capacity Environmental Benefits: The new operation will significantly improve what is currently an abondoned mine site Self sufficent in water: water within the open pit will be cleaned and re-used during operations, meeting the full water requirement No tailings dam: no primary grinding of ore is required Water management system Waste dumps Plant Haul road New pit shell Cleaner Concentrate from Jig Testwork 11
Processing plant Crush to maximum liberation size of 5mm ROM Ore, 1.1 Mtpa, 0.30% WO 3 Pre-conc. Circuit Reject 98% of feed by Jigs/Spirals circuits -5 mm Jigs Jig tails 794 ktpa Upgrade circuits very small Spiral tails 297 ktpa +1 mm 807 ktpa -1 mm 293 ktpa Spirals Roll crusher Gravity upgrade to reject silicates -1 mm, 8,000 tpa Rod Mill Tables Upgrade circuit Flotation upgrade to reject sulphides Flotation Table tails to Spirals Final product dried and bagged Sulphide conc. 1,700 tpa Product >65% WO 3 4,000 tpa Simple processing plant based entirely on proven technology 12
Capex and Opex costs Barruecopardo Project Capex EURm Plant Engineering & Construction 32.5 Project Services (land, power-line, fencing, etc..) 4.5 Water Management Scheme 9.9 Mining Preparation 4.3 Environment (compensating measures) 0.4 Owners costs (Gen & Admin, Comms, PM Team) 1.9 Total Capex 53.6 Barruecopardo Project Opex USD/mtu EUR/mtu EUR/t % Mining (Ore) 19.1 17.4 4.08 17% DFS (Jacobs, 2012) reported project development Capex of 48.5M (including contingency) and Opex of 99.2 per mtu Basic engineering design by Fairport Engineering Limited indicates Capex of ~ 53.5M (including 10% contingency) principally due to scope changes in design from the DFS Updated quotation from single mining contractor indicates slight increase in mining costs, increasing Opex to 103.5/mtu Simple, small construction project, similar to quarrying operation No new technology Mining (Waste)* 70.4 64.0 15.03 62% Processing 18.7 17.0 3.99 16% G&A 5.6 5.1 1.21 5% Total Opex 113.9 103.5 24.3 100% *Strip ratio ore to waste of 6.3:1 Source: Cost estimates following basic engineering stage. Assumes EUR/USD exchange rate of ~1.10 13
Mineral Resources and Ore Reserves Total Mineral Resources Category Tonnes (millions) Grade (WO3%) Contained WO3 (mtu) Measured 5.47 0.34 1.86 million Indicated 12.33 0.26 3.20 million Inferred 9.59 0.23 2.20 million Total 27.39 0.26 7.12 million Ore Reserves within the Open Pit Category Tonnes (millions) Grade (WO3%) Contained WO3 (mtu) Proven 4.96 0.33 1.64 million Probable 3.73 0.26 0.98 million Total 8.69 0.30 2.61 million Source: CSA Global 14
Potential to extend mine life Barruecopardo resource in red and open pit shell in blue view looking upwards ( and west) towards ground surface Significant potential to extend life of mine: The planned open pit captures only ~40% of the current total Resources; pit optimisation at a $275 APT price at /$ rate of 1.3. This equates to a $233 APT price at /$ rate of 1.1 Drilling and relevant studies planned to extend the mine life The deposit is open along strike and at depth (deposit only drilled to average depth of ~200m) Clear potential to extend the mine life considerably post-commencement of mine production 15
Oaktree Project Financing Comprehensive Funding Package USD 99.7 million package, split favourably between a large component of equity of USD 44.2 million and project debt of USD 55.5 million The financing secures Barruecopardo s full funding requirement plus a significant budget to conduct the early evaluation of an underground mining Stage 2 expansion Ormonde will retain a 30% interest of the fully funded project with Oaktree holding 70% Flexible Debt Facility Flexible repayment terms allow for: o cash to be retained within the business and applied towards the fast track development of an potential underground mining Stage 2 expansion o the option of dividends to be distributed to Oaktree and Ormonde during the term of the facility 16
Oaktree Project Financing Minority Protection and Management Fee A number of important decisions requiring the consent of both parties provide minority protections for Ormonde Ormonde will receive an annual management fee of 1.0 million covering Ormonde s current working capital requirements Mitigation Against Further Dilution through The comprehensive funding package including a significant cost overrun provision A debt facility with an ability to retain cash to develop the business; and An annual management fee Value Addition Early evaluation of a potential Stage 2 underground expansion; objective of identifying potential longevity beyond the currently defined nine year open pit operation Additional exploration will be carried out on the licence areas in the vicinity of the Barruecopardo Mine where historic workings are located, with a view to identifying additional satellite feed sources to be processed at Barruecopardo 17
Development implementation Detailed schedule for the development of Barruecopardo prepared and updated to reflect ongoing progress Targeting commissioning by end 2016 Initial steps in the implementation revolve around: Commencement of Stage 2 Detailed Engineering Contract to enable placement of orders for priority equipment Advancing final (construction) design works for process plant and infrastructure, and for the water management system with the signing of the Stage 3 Construction Management Contract Negotiating and ordering of longer lead equipment While the above steps are advanced the land expropriation process will be advanced in parallel Subsequent to the expediting of these items, construction activities can commence on site Other key items include: Contracting senior personnel Connection to local electricity supply Negotiation of contracts including those for construction activities and open pit mining 18
Project Project outline Outline timeline Timeline H2 2015 H1 2016 H2 2016 PLANT ENGINEERING & CONSTRUCTION Detailed Engineering Procurement Construction & Installation Commissioning LAND Rental and Expropriation WATER MANAGEMENT Construction and Pit de-watering MINING PREPARATION Mining & Fill for ROM, haulage roads, contractor mob Commence open pit mining 19
Mining permit, strong team and local support Mining Concession granted by the Regional Government in November 2014 The concession is granted for an initial period of 30 years and may be renewed for two further periods of 30 years each Strong project team technical ability and excellent community relations Strong local support from the community and relevant authorities for a new mining operation Regional Minister of Economy & Employment attended Public Act celebrating the granting of the mining concession on 18 March 2015 Relations developed and maintained at local, provincial and regional levels, with high levels of support from the Regional Minister and Vice Minister of Economy & Employment, Director General of Mines and Mayor of Barruecopardo From left to right: Barruecopardo Mayor, Regional Vice Minister, Director General of Mines, Steve Nicol, Regional Minister, Pedro Villar, Tomas Vecillas 20
Barruecopardo Growth strategy 1. Deliver stable production based on the Barruecopardo DFS 2. Increase production and mine life through the investigation and evaluation of the depth extension of the current resource with the objective of establishing an underground (Stage 2) mine 3. Potential expansion through satellite body lying within the Mining Concession, Valdegallegos, and through investigation of additional potential satellites outside the Mining Concession 21
Production expansion potential underground (Stage 2) Conceptual Underground Access & Development BAR-81; 17m @ 0.30% WO 3 22
Production expansion potential - satellites Satellite Bodies on Mining Concession & Surrounding Permits 23
ORMONDE MINING BARRUECOPARDO TUNGSTEN PROJECT Project Permitted Project Funded Project Upside July 2015 24