CHAIRMAN'S REVIEW

It is pleasing to be in a position to report that we had a successful year, with progress at the Barruecopardo Tungsten Project in Spain proceeding along planned lines against a backdrop of very positive tungsten market sentiment, such that we can look forward to bringing the Barruecopardo Mine on stream towards the end of 2018. 

Barruecopardo

Early in 2017, Saloro SLU, the Barruecopardo Project operating company in which Ormonde holds a 30% interest, successfully completed the process of land acquisition over the remaining lands required to develop the Project. The last steps in this process consisted of the compulsory acquisition of certain land blocks and, in order to avoid a lengthy court acquisition process for these remaining blocks, the Regional Government of Castilla y León decided to avail of the "urgent" occupation regulations, fast-tracking Saloro's access to and use of this remaining land. This process required a vote by the Regional Government and it was satisfying to see the Government deliver on this, demonstrating the strong goodwill and support for the Barruecopardo Project locally. Following a few subsequent procedural steps, by early 2017 Saloro had access to and rights over all of the land required for the development of a mine at Barruecopardo.  

Construction work on site during 2017 can be divided into two half year periods. During the first half of 2017, when tungsten APT prices were hovering around the US$200/mtu mark, showing a tentative recovery from the US$160-180/mtu range of 2016, construction activity at Barruecopardo was reduced to a steady, measured rate. The logic of this approach was to ensure that Saloro did not commence production at a time of low metal prices, when its debt would be at a maximum and revenue constrained. As the first half of the year progressed, our assessment as to the market fundamentals required to support increasing tungsten prices improved significantly, with Saloro responding in June 2017 by accelerating the development and implementation of the Barruecopardo Project through a new fast-track schedule.

This strategy has worked well, with APT prices rising from around US$230/mtu in June 2017 to just under US$300/mtu at the end of the year. Subsequently, over the past six months, the APT price has been rising steadily from around US$300/mtu in January to US$352/mtu in mid-June.  As a result, we can now look forward to delivering our initial tungsten production into a strong market, where there is a shortage of concentrate supply to feed APT plants.

Activity on site during the earlier part of 2017 was largely centred around construction of access roads and the various water dams which will be used to store water from the existing open-pit and to provide process water for the new plant. Activity during the second half of the year moved onto general civils works, construction of offices, workshops and process plant concrete footings. During this period most of the priority 1 and 2 fixed-plant was manufactured.

Since the year-end, activities have ramped up further, and are now at the stage where this fixed-plant is being assembled and in the process of being erected in position. Installation of the primary crusher has been completed and installation of the secondary, tertiary and quaternary crusher and screening circuits and crushed ore stockpile feed/outlet, is well advanced. The ore-feed conveyors are being assembled and erected. Work on the concentrate circuits and water treatment plant is progressing and the high-tension sub-station and power-line are being advanced.

We are very pleased with the performance of the construction programme to-date, with process plant commissioning due to commence around the end of September 2018. We look forward, following the completion of mine commissioning, and on commencement of production, to Barruecopardo delivering global markets with a secure and strategic supply of tungsten that is independent of output from China.

Other Projects

We continue to seek the divestment of our La Zarza interests. Against a background of overall renewed investment interest in copper and the lack of available advanced projects, this process has attracted interest from several parties and we continue to advance discussions with potential investors.

At the Salamanca and Zamora gold properties, where Ormonde (in joint venture with Shearwater Group plc) holds a 47% and 42% interest, respectively, the investigation permits are presently going through the process of being renewed for a further 3-year period. No new work programmes have been carried out during the renewal process.

Corporate and Financials

The Company has reported a loss for the year of €0.1 million , compared with a loss of €2.29 million for 2016 .   This significant reduction in annual losses was a result of a reduction in losses from the Company's share in its associate investment (the group in which the Barruecopardo Project is held) and there being no impairment required to the holding value of Group assets in 2017 (impairment of €2 million in 2016).

Finally, I would like to thank shareholders, management, staff and other stakeholders for their patience and support as we made this journey from exploration to mine development. We believe substantial progress has been made and we very much look forward to commencing production later this year.

Michael J. Donoghue

Chairman

Consolidated Statement of Comprehensive Income

Year ended 31 December 2017

Consolidated Statement of Financial Position

As at 31 December 2017

Consolidated Statement of Cashflows

Year ended 31 December 2017

Consolidated Statement of Changes in Equity

Year ended 31 December 2017

1. The basic loss per share and the diluted loss per share have been calculated on a loss after taxation of €101,000 (2016: loss of €2,287,000) and a weighted average number of Ordinary Shares in issue for the year of 472,507,482 (2016: 472,507,482) for the basic loss per share and 472,507,482 (2016: 472,507,482) for the diluted loss per share.