broker note, ormonde mining, 04/09/2006 (seymour pierce)
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8/15/2019 Broker Note, Ormonde Mining, 04/09/2006 (Seymour Pierce)
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Please see regulatory disclosure notes at the end of this document
Research AlertMonday 4 September 2006
Stocks covered in this note
Stock/sector Analyst Mkt cap (m) Recommendation Page
Ormonde Mining3,4,5
Charles Kernot 48.8 Buy 2
FTSE All Share recent performance
5 12 19 26 3 10 17 24 31 7 14 21 28
JUN JUL AUG
2750
2800
2850
2900
2950
3000
3050
FTSE ALL SHARE - PRICE INDEX
Source:DATASTREAM
Key Indices Close Daily % chge
UK
FTSE 100 5949.15 0.73
FTSE All Share 3030.49 0.76
FTSE Mid 250 9702.1 1.05
TSE AIM 1049.01 0.25
Source: Datastream
Contacts
Vice Chairman
Richard Ratner 020 7107 8037
Research Team
Head of Research
Jim McCafferty 020 7107 8070
Deputy Head of Research
Alan Matthews 020 7107 [email protected]
Research Analysts
Derek Brown 020 7107 [email protected]
Gerald Farr 020 7107 [email protected]
Charles Kernot 020 7107 [email protected]
Kevin Lapwood 020 7107 [email protected]
Sav I. Neophytou 020 7107 [email protected]
Charles Peacock 020 7107 [email protected]
Yan Song 020 7107 [email protected]
Amit Thakar 020 7107 [email protected]
Ian Wild 020 7107 [email protected]
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Research Alert Monday 4 September 2006
Seymour Pierce Research 2
Ormonde Mining 3,4,5
Metals and Mining
La Zarza advances
Ormonde Mining has released the results of a pre-feasibility Scoping
Study on the La Zarza project in southern Spain.
The study suggests that a mine operating at a rate of approximately
450,000t/year over a 10-year life should generate an internal rate of return
(IRR) of 36% on a geared basis. This assumes copper and gold prices of
US$4,400/t and US$550/oz, respectively. The IRR using spot metals
prices of US$7,000/t and US$600/oz, respectively, would be 65%.
Cash operating costs for the mine are estimated at around 31/t, which is
in line with our expectations. Furthermore, given the existence of
considerable infrastructure on site, the pre-production capital costs are
expected to be in the region of a relatively low 26m (to a confidence of
+/-25%).
The results of this study have encouraged Ormonde to press ahead with a
full bankable feasibility study on the project. This is scheduled for
completion in the middle of next year, after which time the company
should be in a position to seek debt finance for part of the anticipated
capital costs.
Given the Spanish location of the assets we anticipate that the group may
be able to qualify for development funding assistance from the local
authorities. This could be at up to 25% of the estimated capital costs of
the project (by reference to other mine developments in Spain), reducing
the amount of capital that would need to be sourced from banks or
shareholders.
Overall, we consider that this is good news for Ormonde as it moves
ahead with the development of its various Spanish projects. Indeed, we
anticipate additional newsflow over the next couple of months.
We reiterate our recommendation and 24p target price. Buy.
Year end
31 Dec
Sales
(m)
Pre-tax
(m)
Normalised
Net (m)
EPS
()
PER
(x)
DPS
()
Yield
(%)
EV/Sales
(x)
EV/EBITDA
(x)
2005A 0.0 -0.4 -0.4 -0.3 nm 0.0 0.0 0.0 nm2006E 0.0 -0.4 -0.4 -0.3 nm 0.0 0.0 0.0 nm2007E 0.0 -0.4 -0.4 -0.2 nm 0.0 0.0 0.0 nm
Source: Seymour Pierce Limited
3,4,5Please see regulatory disclosure notes at the end of this document
BUY19.5p
AIM ORM.L
No of shares (m) 168.0
Market cap (m) 48.8
Net cash (m) 4.5
Enterprise value (m) 44.3
(%) 1m 3m 12m
FTA relative +19.7 +4.7 +71.5
12 month high/low (p) 23/8.75
Next news
Interims - 25 September 2006
Business
Exploration and development of miningprojects in Spain.
www.ormondemining.com
Price and price relative (-2y)
ORMONDE MINING (LON) 4/9/06
S O N D J F M A M J J A S O N D J F M A M J J A
6
8
10
12
14
16
18
20
22
24
PRICE
PRICEREL.TO FTSEALL SHARE- PRICEINDEX
Source:DATASTREAM
Source : Datqstream
Contact
Charles Kernot
Research Analyst020 7107 [email protected]
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Seymour Pierce
Limited
Bucklersbury House
3 Queen Victoria StreetLondon EC4N 8EL
Switchboard: 020 7107 8000
Corporate Finance fax: 020 7107 8100Research + Sales fax: 020 7107 8102
www.seymourpierce.com
Important Notes
Our research recommendations are issued and approved for distribution within the UnitedKingdom by Seymour Pierce Limited only to market counterparties and intermediate customersas defined under the FSA rules. Our research is not directed at, may not be suitable for andshould not be relied upon by any other person. The information contained in our research iscompiled from a number of sources and is believed to be correct, but cannot be guaranteed. Itis not to be construed as an offer, invitation or solicitation to buy or sell any securities of any ofthe companies referred to within it. All statements made and opinions expressed are made asat the date on the face of the material and are subject to change without notice. Where pricesof securities are mentioned, these are the mid-market prices as at the close-of-business on the
business day immediately preceding the date of the research. The meanings of our researchratings, together with the proportion of our recommendations issued during the previous quartercarrying each rating, is set out on our website at www.seymourpierce.com. Seymour PierceLimited and/or its associated companies and ultimate holding company may from time-to-timeprovide investment or other services to, or solicit such business from, any of the companiesreferred to in research material. In addition, they and/or their directors and employees and/orany connected persons may have an interest in the securities of any of the companies in thereport and may from time-to-time add to or dispose of such interests. Details of the significantconflicts relating to the companies that we research are set out on our websitewww.seymourpierce.com, together with a summary of our policies for managing conflicts ofinterest. Seymour Pierce does not meet all of the FSA standards for managing conflicts ofinterest, as a result our research should not be regarded as an impartial or objectiveassessment of the value or prospects of its subject matter, though of course we will alwaysensure that it remains clear, fair and not misleading.
Seymour Pierce Limited is authorised and regulated by the Financial Services Authority, and isa member of the London Stock Exchange.
Key to material interests
1. The analyst has a personal holding of the securities issued by the company, or of derivativesrelated to such securities.
2. Seymour Pierce Limited or an affiliate owns more than 5% of the issued share capital of thecompany.
3. Seymour Pierce Limited or an affiliate is party to an agreement with the company relating tothe provision of investment banking services, or has been party to such an agreement withinthe past 12 months. Our corporate broking agreements include a provision that we will
prepare and publish research at such times as we consider appropriate.4. Seymour Pierce or an affiliate has been lead manager or co-lead manager of a publicly
disclosed offer of securities for the company within the past 12 months.
5. Seymour Pierce is a market maker or liquidity provider in the securities issued by thecompany.
Distribution of ratingsOur research ratings are defined with reference to the amount by which we expect the absolutereturn to change over the next 12 months:
Rating Definition
Buy Absolute return expected to increase by more than 10%
Outperform Absolute return expected to increase by between 5% and 10%
Hold Absolute return expected to change by between -5% and +5%
Underperform Absolute return expected to decrease by between 5% and 10%Sell Absolute return expected to decrease by more than 10%
As at 30 June 2006 the distribution of all our published recommendations is as follows:
Rating
Proportion of
recommendations
Proportion of these provided with
investment banking services
Buy 33% 61%
Outperform 24% 14%
Hold 28% 26%
Underperform 4% 10%
Sell 5% 0%