Ormonde Mining's losses widen ahead of 'challenging' year

Ormonde Mining's shares slid on Wednesday after reporting a wider annual loss on the back of a jump in administrative expenses and after notifying that initial ore mined from the Barruecopardo Tungsten Project's northern starter pit has been lower grade than anticipated.

The tungsten miner's loss before tax for 2018 came in at €1.6m, widening from a loss of €0.1m for the year before, as administrative expenses rose by 34% to €1.0m and its share of losses on associate investment climbed from €86,000 to €0.8m.

The AIM traded company holds a 30% interest in Barruecopardo, which is now wholly operated by its Saloro subsidiary after having been completed, with the mine now transitioning to its first year ramp-up phase of production.

However, lower than expected grades encountered in the northern starter pit at Barruecopardo prompted a switch to the southern starter pit and an acceleration of the planned waste stripping over the main orebody.

Michael Donoghue, Ormonde's chairman and interim managing director, said: "During 2018, the joint venture advanced the Barruecopardo Tungsten Project from an abandoned mine site to a newly constructed, state-of-the-art, tungsten processing facility. Although the operation is still in its infancy, it is nevertheless satisfying to see the project transformed into an operating mine using modern mining and processing techniques and supporting a local community."

Donoghue added that, looking forward, the lower grade ore encountered will make the remainder of this year "somewhat challenging" as Saloro's profitability and cashflows will continue to be constrained during the mine's ramp-up phase, although he added that progress made to date on processing of this lower grade material should stand the project in good stead.

"Initial low grade production from starter pits is likely to constrain profitability and cashflows until later in the year when the current waste removal programme will allow access to the broader, higher grade mineralisation within the main orebody," said analysts at SP Angel.

Ormonde Minding's shares were down 20.22% at 2.90p at 1220 BST.