CHAIRMAN'S REVIEW

During 2018, Saloro SLU ("Saloro"), the Spanish operating company in which Ormonde has a 30% interest in partnership with Oaktree Capital Management, transformed its 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 progress through its construction stage, to become an operating mine, employing modern mining and processing techniques and supporting a local community.

Barruecopardo

Saloro has overseen the construction of the mine in line with the Project's capital expenditure budget, and construction timeframes have also been advanced broadly in line with the project construction schedule, with final installation and commencement of commissioning occurring during Q1 2019. Following the handover of the processing facilities from the engineering contractors, the Project is now wholly operated by Saloro.

Over this period, the Saloro team has grown steadily with employee numbers increasing during process plant commissioning as plant operators were hired and trained and the local Saloro management team expanded. This management team has significant tungsten mining experience and is therefore well placed to configure and optimise the early mining and processing operations, and steer the Project through the Year-1 ramp-up period into steady-state production.

During this ramp-up period, ore feed to the plant was scheduled to be limited to two small starter pits at the northern and southern fringes of the main orebody, with production gradually building up to design levels towards the end of the first year ramp-up period as waste stripping eventually exposes the main orebody located below the historic open pit. Initial ore mined from the northern starter pit has been lower grade than anticipated and so mining operations are now targeting higher grade ore sources by moving to the southern starter pit area. At the same time, the stripping of around 80 vertical metres of waste rock from the east wall of the historic pit is to be accelerated to bring forward access to the main orebody, where the tungsten mineralisation is present as a much broader, more continuous high-grade zone. These updates to the mine plan are currently being scheduled and costed and will dictate the short-term profitability and cashflows of the operation during the ramp-up period. Ahead of their completion, and to ensure continued compliance with the debt facility terms, Saloro has recently agreed a waiver with its debt provider in relation to a financial covenant which had been due to be tested on 30 September 2019.

Meanwhile, the process plant is operating well, with the throughput rates operating up to design capacity, more than sufficient to meet the Project's target of 1.1 million tonnes per annum. Despite ore grades to-date being significantly below the average reserve grade, the Project has begun to regularly produce tungsten concentrates which meet targeted specification. Furthermore, ongoing refinements to the processing circuits continue to be implemented and these should stand the Project well as processed grades become more representative of the ore reserve. From end 2019 and thereafter, with access to the main orebody established, operating cashflows are projected to increase very significantly.

Tungsten Market

APT prices climbed up from a low of US$195/mtu (metric tonne unit) early in 2017 to break through the US$300/mtu level at the beginning of 2018 and push onwards to a peak of US$352/mtu by June 2018, driven primarily by news of production cuts in China due to mine and plant shutdowns following environmental inspections. Prices have declined steadily thereafter and although they have steadied somewhat of late, they remain weak, currently trading in the $255/mtu to $265/mtu range.

In the medium to long-term, as Barruecopardo ramps up to full production, the potential for a healthier outlook based on primary supply issues is supported by independent market research. While world reserves of primary tungsten are depleting and some significant tungsten mines have closed in recent years, new mine production has not kept pace. Funding for early stage tungsten exploration, which carries the largest risk of inadequate return, is scarce and capital funding for development of minor metal projects has been difficult in recent years.

Looking at the broader picture, two reputable metal research groups are suggesting short to medium term tungsten supply deficits and price rises. While the tungsten supply-demand fundamentals in the western world are relatively transparent and the deficit predictions in this market seem well founded, the situation in the Chinese market remains less transparent, but a summary of the Chinese situation by one forecaster is encouraging: "there is potential for a supply deficit in 2019 and 2020 as output from existing mines looks set to decline; ore grades at some of the larger and older Russian and Chinese mines are falling as resources become depleted. Importantly, there are no plans in China to bring online new tungsten mines to replace these depleted deposits".

Outlook

In the short term at Barruecopardo, as the Project mines lower grade sources and pulls forward waste mining so as to access the main higher grade ore body, we expect that Saloro's profitability and cashflows will continue to be constrained in this ramp-up year. Nevertheless, looking beyond, we see a robust outlook once mining reaches the higher grade ore and steady-state processing operations are attained, both anticipated towards the end of 2019. Should a tungsten concentrate supply deficit emerge, as has been forecast, this could also result in higher prices for Barruecopardo's product.

Also looking forward, whilst Ormonde's main focus will continue to be managing our interest in the Barruecopardo joint venture, we do see scope during the coming year for our management team to start developing new ideas and opportunities which add value for the Company, both within and outside our current range of interests. Two immediate objectives will be to complete the disposal of our La Zarza interests and take a fresh look at our Spanish gold exploration holdings and new licence application areas, in western Spain which have been identified as having gold exploration potential.

Financials

The Ormonde Group has reported a loss after tax for the year of €1.65 million, compared with a loss of €0.1 million for 2017. This includes a share of the loss on its associate investment (the group in which the Barruecopardo Project is held) amounting to €0.78 million, and an impairment to the holding value of Group assets of €0.6 million related to La Zarza.

Finally, I would like to thank all our stakeholders, including the Company's shareholders, management, employees, directors and advisors for their continued support and dedication.

Michael J. Donoghue

Chairman

Consolidated Statement of Comprehensive Income

Year ended 31 December 2018

Consolidated Statement of Financial Position

As at 31 December 2018

Consolidated Statement of Cashflows

Year ended 31 December 2018

Consolidated Statement of Changes in Equity

Year ended 31 December 2018

1. The basic loss per share and the diluted loss per share have been calculated on a loss after taxation of €1,649,996 (2017: loss of €101,000) and a weighted average number of Ordinary Shares in issue for the year of 472,507,482 (2017: 472,507,482) for the basic loss per share and 472,507,482 (2017: 472,507,482) for the diluted loss per share.

2.   The financial information prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") as adopted by the European Union included in this preliminary statement does not constitute the statutory financial statements for the purposes of Chapter 4 of part 6 of the Companies Act 2014.  Full statutory statements for the year ended 31 December 2018 prepared in accordance with IFRS, upon which the auditors have given an unqualified report, have not yet been filed with the Registrar of Companies.  Full financial statements for the year ended 31 December 2017 prepared in accordance with IFRS and containing an unqualified report, have been filed with the Registrar of Companies.