(MENAFN- ProactiveInvestors)The money's in the bank the permits are falling into place and major items of plant will shortly be ordered. It all seems to be falling into place for Ormonde Mining (LON:ORM) which after a slow start on the markets many years ago has gradually been building up a head of steam at its Barruecopardo tungsten project in Spain. This is a brownfields site which ceased operations in 1982 and crucially for Ormonde the local population has felt its loss deeply. There is strong appetite for a resumption of mining which should spark a rejuvenation process for a town where the average age is 66. There's much work to be done yet of course. But with a multi-billion dollar hedge fund backing development a definitive feasibility study in place and a new managing director now settling in all the key components are in place. In fact Steve Nicol the company's managing director is new to the role only. He's actually played a key role in the development of Barruecopardo from concept to project poised for development as the key man on the ground in Spain. The passing of Kerr Anderson may have elevated Steve into his current role at an unexpected time but the succession is logical. Steve has all the local relationships in hand knows the project back to front and lives in Spain. If anyone can push this project forward and into production he can. The most recent news underlines that Ormonde is now moving into a new more aggressive phase. Within the last couple of days the company has announced progress on the acquisition of the land required for the project the completion of process flow diagrams the signing of an electrical connection contract the posting of an environmental bond and the commencement of a drilling campaign aimed at establishing the viability of mining once the open pit is mined out. 'Ormonde is on its way to becoming a tungsten producer' says Nicol unequivocally. 'The project is moving forward on time and on budget.' Construction is scheduled to get underway early in 2016 with open pit mining likely to commence at the end of the same year. It's an ambitious target but one that Ormonde has long been working towards. The plan is to produce around 260000 metric tonne units of tungsten trioxide (WO3) per year over an initial nine year mine life. It's a fairly simple operation that will use experienced and local mine contractors under the day-to-day supervision of the Ormonde management team. The key to it all says Nicol is that the ore is amenable to simple gravity processing. 'You only need to crush the ore to 5mm' he says. 'You don't have to pulverise the rock down to powder. That makes for higher recoveries and sets this project apart from every other project.' That's important because the tungsten price in line with most other commodities has been weaker of late. But the Barruecopardo product comes in right at the lowest end of the cost curve in tungsten at US$113.90 per metric tonne unit. The current price is just shy of US$200 so there's still plenty of margin on offer for Ormonde here. Not so other companies in the space like North American tungsten which is currently restructuring under Canada's Creditors Arrangement Act and laying off staff. 'It's a great time to be building a project' says Nicol. Less competitive projects are coming out of production while a select few new lower cost entrants like Wolf Minerals (LON:WLFE) and Ormonde bring on new projects that are geared to a lower pricing environment. But as always the situation is a little more nuanced than that. China which has historically accounted for the majority of the world's tungsten supply has pared back production. 'The supply coming out of China is not going up any more' says Nicol. 'Their mines are becoming higher cost dropping in grade and getting deeper. Many of their existing mines are in the red.' That points to likely pressures on supply. Against that tungsten demand has historically been correlated to global GDP which is forecast to rise by 3.3% next year according to the World Bank. And growth in the sectors that consume the most tungsten the automotive and aerospace industries is expected to grow by around 5%. It all points to a recovery in the tungsten price that could start to show through just as Ormonde is delivering its first production into the market. So with an ongoing exploration programme designed to secure the longer-term future of Barruecopardo already underway and with the support of joint venture partner Oaktree the outlook for Ormonde seems very positive. Watch this space for further updates
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