New Joint Venture with Antofagasta Minerals
Ormonde announced on 27th October 2009 that it had signed an agreement with Antofagasta Minerals S.A., on an exploration joint venture on Ormonde’s La Zarza ground holdings in the Huelva Province of southern Spain.

Key Terms

• Antofagasta will extend the previous exploration by Ormonde to cover the entire extent of the 3km long La Zarza massive sulphide deposit, to evaluate the potential for this major body to host much larger resources of copper mineralisation.

• Antofagasta has the right to earn a 51% interest in La Zarza over a three year period by spending US$7 million on these expanded exploration programmes and subsequent evaluation activities, with a minimum commitment of US$1 million in the first year.

• Subject to completion of the earn-in, Antofagasta will have the right to increase its interest in La Zarza to 75% by the completion of a feasibility study on a mining project that meets its investment criteria.

Location: Huelva Province, Andalucia Region, in the Iberian Pyrite Belt mining district in southwest Spain, some 50 kilometers north of Huelva and 90 kilometers northwest of Seville.

Ownership: Ormonde has a 100% interest, subject to staged payments to Nueva Tharsis S. L., in a mining concession which covers a total area of 12.8 sq kilometers. This concession is held by Nueva Tharsis, Ormonde’s joint venture partner, and must currently be renewed on an annual basis by the submission of a detailed work programme for approval by the Junta de Andalucia. Mining concessions operate for 30 year periods and are renewable after the 30 years for a similar period.

Current Status: Joint Venture with Antofagasta Minerals S.A.

Ormonde acquired the La Zarza Project in June 2004 through a Joint Venture with a local company Nueva Tharsis, and has held a 100% interest since July 2007. The extensive drilling and metallurgical work programmes carried out by Ormonde culminated in a feasibility study on a 600,000 tonne per year (tpa) underground mining operation, treating four “ore-types” and recovering  copper, gold, silver, zinc and lead in four concentrates. This study was completed in the first quarter of 2008. The capital costs estimated in the study were higher than anticipated and resulted in a decision to investigate options to improve the project economics.

The Project is currently an exploration Joint Venture with Antofagasta Minerals. Click here for details....

• Fig-1 La Zarza Mine, Aguas Tenidas Mine, Rio Tinto Mine

The La Zarza area was historically mined for pyrite between 1867 and 1991 through two mines, the La Zarza Mine, and the adjacent Perrunal Mine, by both open pit and underground mining. The history of the underground operations at Perrunal is not well documented. However, records show that annual production at La Zarza peaked at 680,000 tonnes in 1930.

A large massive sulphide body (over 110 million tonnes) was partially mined at La Zarza by both open pit and underground mining for the production of pyrite to serve as a raw material to produce sulphuric acid (Fig-2 & 3). These pyrite mining operations avoided the adjacent base metal and gold “Silicatado” zones, the subject of Ormonde’s work, as the former were treated as a contaminant to the pyrite and the sulphur content of the latter was too low for acid production.

The La Zarza pyrite mine was developed for tracked extraction at a 600,000 tonne per year (tpy) production rate, with 5 main levels developed over a strike length of approximately 1,500m, from close to surface to a depth of approximately 180m. Underground mining involved large (500m long, 30m wide by up to 60m high) longitudinal, cut-and fill stopes in very competent ground. The pyrite was crushed underground, hoisted to surface via No 5 Shaft and transported, without any further treatment, by rail to Huelva for processing into sulphuric acid. As a result of this method of working, there was no tailings facility on site. The large underground stopes were backfilled with waste rock mined from a number of shallow surface pits. The underground mining operation was eventually supplemented by the development of an open pit operation adjacent to the main hoisting shaft. A downturn in the sulphuric acid market in the late 1980s forced the cessation of mining. The underground workings are presently flooded.

Unexploited gold and copper resources within the 'Silicatado' geological unit at the La Zarza Pyrite Mine were evaluated by SEIEMSA (a joint venture between BRGM and Normandy Mining) during the mid 1990s, but the then low prevailing metal prices limited the evaluation exercise.  Ormonde acquired the Project in June 2004 through a Joint Venture with a local company Nueva Tharsis and has held a 100% interest in the venture since July 2007.

• Fig-2 No 5 Shaft and conveyor to rail line load-out station
• Fig-3 Open Pit with No 2 Shaft on rhs

The overall geology at La Zarza consists of a sequence of volcanics and sediments which dip steeply to the north and which host the massive volcanogenic sulphides, which are up to 110 metres thick. This sequence is cut by steeply dipping thrusts which lie parallel to the stratification.

The mineralisation at La Zarza has been established as being contained in two east-west striking geological units:

• The Silicatado unit, a quartz-pyrite formation with a strike length of some 500 metres which contains gold-rich and copper-rich zones, the Gold-Silicatado and Copper-Silicatado respectively. Various drilling programmes have established that the Gold-Silicatado can be further divided into two “types”, the High Sulphur Gold-Silicatado and the Low Sulphur Gold-Silicatado. The Silicatado unit ranges up to 70metres in true thickness and is open at depth and to the north.
• The Massive Sulphide, a volcanogenic sulphide unit, which has a strike length of at least 1,500 metres and is up to 110 metres thick. This unit was previously mined for pyrite. Ormonde’s drilling has established that thick concentrations of base metals reaching economic grades are developed within this unit.  These base metal enriched areas include a Western Copper Massive Sulphide Zone located below the open pit and a Lower Zinc Massive Sulphide Zone. Both of these zones are open to the west and at depth.

The Structural and mining relationships from south to north and from footwall to hangingwall are shown on the cross-section (Fig-4) and on the longitudinal projection (Fig-5).

• Fig-4 Cross-Section through La Zarza
• Fig-5 Longitudinal Section of La Zarza

Drilling: Ormonde has expanded upon the previous drilling programmes carried out by SEIEMSA by completing a number of drilling programmes, totalling 17,122 metres in 63 holes. This drilling has:

• Defined the gold and copper bearing Silicatado resource to a JORC compliant Indicated Mineral Resourcе
• Defined a larger zinc resource in the Massive Sulphide unit on the lower western margins of the Silicatado
• Defined a copper resource in the Massive Sulphide unit on the upper western margins of the Silicatado

Metallurgical Testwork: A comprehensive series of metallurgical testwork programmes was carried out on all “ore-types”. This work demonstrated that saleable concentrates could be produced from all “ore-types” with satisfactory concentrate recoveries. At grind and regrind sizes of P80 of 10-20 microns, copper mineralisation yielded copper recoveries of around 90% to a 21% Cu concentrate and zinc recoveries of between 65% and 75% to a 50% Zn concentrate (head grade dependent). Zinc mineralisation yielded copper recoveries of around 60% and zinc recoveries of around 75% to concentrates grading 21% Cu and 50% Zn respectively, again head grade dependent. Zinc mineralisation also provided a lead concentrate recovering around 20% to a 40% Pb concentrate.

A Mineral Resource Estimate has been prepared by CSA Australia Pty Ltd and is reported under the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code 2004 edition). The Mineral Resources are as follows:

Indicated Resources

CATEGORY	Cut-off	Mt	Cu %	Pb %	Zn %	Au g/t	Ag g/t
Copper Silicatado	1.5% Cu	2.64	2.1	0.5	1.5	0.9	30.2
Gold Silicatado	2.0g/t Au	2.55	0.6	1.5	2.1	3.7	52.6
Zinc Massive Sulphide	3.5% Zn	4.39	0.6	1.0	4.4	0.8	35.2
Copper, Zinc and Gold Massive Sulphide		0.28	0.9	1.0	2.9	2.1	53.0
Total Indicated		9.88	1.0	1.0	3.0	1.6	38.9

Inferred Resources

CATEGORY	Cut-off	Mt	Cu %
Copper Massive Sulphide (West)	1.5% Cu	1.30	1.9

The La Zarza Mineral Resource estimate was completed under the overall supervision and direction of Mr. Gerry Fahey MAusIMM (CP), MAIG, who is a Competent Person as defined by the JORC Code (2004 Edition).

A feasibility study on developing a mine at La Zarza was carried out by internationally recognised consultants under the management of Aker Kvaerner Engineering Services Ltd. This study designed and costed:

• the mine dewatering facilities
• an underground mine with decline access
• a mechanised longhole open-stoping mining method at a 600,000 tonne per year production rate, with paste backfill
• a processing plant which would produce four concentrates, copper-gold, copper, lead and zinc
• a paste tailings and backfill plant
• related services and infrastructure at La Zarza.

Mining
The planned underground mine was designed for surface decline access and ore transportation by trucks at a rate of 600,000 tpy. Ground conditions in the mine area are known to be very good. Underground development would be by mechanised diesel-hydraulic mobile plant. Ore would be mined using long-hole and bench open-stoping mining methods, with use of paste backfill to minimise surface tailings and maximise ore recovery.

While it is expected that an underground mine at La Zarza would have negligible ground-water inflow during operations, the old workings are presently flooded and dewatering would be required prior to any underground development. In estimating the extent of this exercise, it was necessary to assume that the La Zarza workings will have a direct hydraulic connection to the adjacent, flooded, Perrunal Mine. Sampling to estimate the pH and metal content of the water in the old workings yielded very variable results. It was deemed necessary to assume the more adverse metal concentrations in the water when designing the water treatment plant.

Mineral Processing
The extensive metallurgical testwork carried out as part of the Feasibility Study resulted in considerable advances in the ability to produce clean copper-gold, copper, lead and zinc concentrates at good recoveries from the four mineralisation types at La Zarza  This testwork also indicated that a viable paste backfill could be produced from the finely ground tailings. The process plant design arising from the testwork is for a conventional comminution circuit comprising primary and secondary crushing followed by a three stage primary grinding circuit. The proposed 600,000 tpy capacity circuit comprises rod and ball milling followed by stirred mill detritors. Milling circuit discharge would feed into three sequential differential flotation circuits, each of which would have facilities for regrinding followed by concentrate thickening and pressure filtration to yield four saleable concentrate types.

A paste tailings and backfill plant is incorporated into the processing plant design.

Evaluation & Recommendations
The Study provided a mining plan and process plant design to recovery the base and precious metals in the La Zarza deposit and outlined a route designed to deliver saleable concentrates at good recovery levels of contained metal. The capital cost estimate in the case of the 600,000 tpy production rate was €86 million plus a €12 million contingent provision for dewatering. These costs were significantly higher than anticipated, and included a higher than normal proportion of fixed capital costs.