Research Alert

Contacts
Monday 4 September 2006
Vice Chairman
Stocks covered in this note
Richard Ratner 020 7107 8037
richardratner@seymourpierce.com
Stock/sector Analyst Mkt cap (€m) Recommendation Page
3,4,5
Research Team
Ormonde Mining Charles Kernot 48.8 Buy 2
Head of Research
Jim McCafferty 020 7107 8070
jimmccafferty@seymourpierce.com

Deputy Head of Research

Alan Matthews 020 7107 8021
FTSE All Share – recent performance alanmatthews@seymourpierce.com

Key Indices Close Daily % chge Research Analysts

3050
Derek Brown 020 7107 8068
3000
UK derekbrown@seymourpierce.com
2950 FTSE 100 5949.15 0.73
Gerald Farr 020 7107 8332
2900

FTSE All Share 3030.49 0.76 geraldfarr@seymourpierce.com

2850

Charles Kernot 020 7107 8069

2800 FTSE Mid 250 9702.1 1.05 charleskernot@seymourpierce.com
2750
5 12 19
J UN
26 3 10 17
J UL
24 31 7 14 21
AUG
28 TSE AIM 1049.01 0.25 Kevin Lapwood 020 7107 8337
FT SE ALL SHAR E - PR IC E IND EX

Sourc e: D AT ASTREAM kevinlapwood@seymourpierce.com

Sav I. Neophytou 020 7107 8034

Source: Datastream savneophytou@seymourpierce.com

Charles Peacock 020 7107 8001

charlespeacock@seymourpierce.com

Yan Song 020 7107 8004

yansong@seymourpierce.com

Amit Thakar 020 7107 8022

amitthakar@seymourpierce.com

Ian Wild 020 7107 8089

ianwild@seymourpierce.com

Please see regulatory disclosure notes at the end of this document

Research Alert Monday 4 September 2006

Ormonde Mining 3,4,5

Metals and Mining

BUY
La Zarza advances 19.5p
AIM ORM.L

• Ormonde Mining has released the results of a pre-feasibility Scoping

Study on the La Zarza project in southern Spain. No of shares (m) 168.0

• The study suggests that a mine operating at a rate of approximately Market cap (€m) 48.8

450,000t/year over a 10-year life should generate an internal rate of return

Net cash (€m) 4.5
(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 Enterprise value (€m) 44.3
prices of US$7,000/t and US$600/oz, respectively, would be 65%.
(%) 1m 3m 12m
FTA relative +19.7 +4.7 +71.5
• Cash operating costs for the mine are estimated at around €31/t, which is
in line with our expectations. Furthermore, given the existence of 12 month high/low (p) 23/8.75
considerable infrastructure on site, the pre-production capital costs are
Next news
expected to be in the region of a relatively low €26m (to a confidence of
Interims - 25 September 2006
+/-25%).
Business
• The results of this study have encouraged Ormonde to press ahead with a Exploration and development of mining
projects in Spain.
full bankable feasibility study on the project. This is scheduled for
completion in the middle of next year, after which time the company www.ormondemining.com
should be in a position to seek debt finance for part of the anticipated
capital costs. Price and price relative (-2y)
ORMONDE MINING ( LON) 4 /9 /0 6
24

• Given the Spanish location of the assets we anticipate that the group may 22

be able to qualify for development funding assistance from the local 20

authorities. This could be at up to 25% of the estimated capital costs of

18

16

the project (by reference to other mine developments in Spain), reducing 14

the amount of capital that would need to be sourced from banks or 12

shareholders.
10

6
S O N D J F M A M J J A S O N D J F M A M J J A

• Overall, we consider that this is good news for Ormonde as it moves

PR IC E
PR IC E R EL . TO FTSE AL L SH AR E - PR IC E IN D EX
So u r c e : D ATASTR EAM

ahead with the development of its various Spanish projects. Indeed, we

Source : Datqstream
anticipate additional newsflow over the next couple of months.
Contact
• We reiterate our recommendation and 24p target price. Buy.
Charles Kernot
Research Analyst
020 7107 8069
charleskernot@seymourpierce.com

Year end Sales Pre-tax Normalised EPS PER DPS Yield EV/Sales EV/EBITDA
31 Dec (€m) (€m) Net (€m) (€¢) (x) (€¢) (%) (x) (x)

2005A 0.0 -0.4 -0.4 -0.3 nm 0.0 0.0 0.0 nm

2006E 0.0 -0.4 -0.4 -0.3 nm 0.0 0.0 0.0 nm
2007E 0.0 -0.4 -0.4 -0.2 nm 0.0 0.0 0.0 nm

Source: Seymour Pierce Limited

3,4,5
Please see regulatory disclosure notes at the end of this document

Seymour Pierce Research 2

Key to material interests
1. The analyst has a personal holding of the securities issued by the company, or of derivatives
related to such securities.
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Distribution of ratings
Our research ratings are defined with reference to the amount by which we expect the absolute
return 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:

Proportion of Proportion of these provided with

Rating recommendations investment banking services
Buy 33% 61%
Outperform 24% 14%
Hold 28% 26%
Underperform 4% 10%
Sell 5% 0%

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