Research Alert

Monday 4 September 2006
Stocks covered in this note Stock/sector Analyst
3,4,5

Contacts

Vice Chairman Richard Ratner 020 7107 8037 richardratner@seymourpierce.com Mkt cap (€m) Recommendation Page

Ormonde Mining

Charles Kernot

48.8

Buy

2

Research Team Head of Research Jim McCafferty 020 7107 8070 jimmccafferty@seymourpierce.com Deputy Head of Research

FTSE All Share – recent performance
3050

Alan Matthews 020 7107 8021 alanmatthews@seymourpierce.com Key Indices UK FTSE 100 FTSE All Share FTSE Mid 250 Close Daily % chge Research Analysts Derek Brown 020 7107 8068 derekbrown@seymourpierce.com Gerald Farr 020 7107 8332 geraldfarr@seymourpierce.com Charles Kernot 020 7107 8069 charleskernot@seymourpierce.com Kevin Lapwood 020 7107 8337 kevinlapwood@seymourpierce.com Sav I. Neophytou 020 7107 8034 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

3000

2950

5949.15 3030.49 9702.1 1049.01

0.73 0.76 1.05 0.25

2900

2850

2800

2750 5 12 19 26 3 10 17 24 J UN J UL FT SE ALL SHAR E - PR IC E IND EX 31 7 14 21 AUG 28

TSE AIM

Sourc e: D AT ASTREAM

Source: Datastream

Please see regulatory disclosure notes at the end of this document

Research Alert Monday 4 September 2006

Ormonde Mining
Metals and Mining

3,4,5

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.

BUY 19.5p
AIM ORM.L

No of shares (m) Market cap (€m) Net cash (€m) Enterprise value (€m) (%) FTA relative 1m +19.7 3m +4.7

168.0 48.8 4.5 44.3 12m +71.5 23/8.75

12 month high/low (p) Next news Interims - 25 September 2006

Business Exploration and development of mining projects in Spain. www.ormondemining.com Price and price relative (-2y)
ORM ONDE MINING ( LON)
24 4 /9 /0 6

22

20

18

16

14

12

10

8

6 S PR IC E O N D J F M A M J J A S O N D J F M A M J J A

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

Source : Datqstream

Contact Charles Kernot Research Analyst 020 7107 8069 charleskernot@seymourpierce.com

Year end 31 Dec

Sales (€m)

Pre-tax Normalised (€m) Net (€m)

EPS (€¢)

PER (x)

DPS (€¢)

Yield (%)

EV/Sales (x)

EV/EBITDA (x)

2005A 2006E 2007E

0.0 0.0 0.0

-0.4 -0.4 -0.4

-0.4 -0.4 -0.4

-0.3 -0.3 -0.2

nm nm nm

0.0 0.0 0.0

0.0 0.0 0.0

0.0 0.0 0.0

nm nm 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. 2. Seymour Pierce Limited or an affiliate owns more than 5% of the issued share capital of the company. 3. Seymour Pierce Limited or an affiliate is party to an agreement with the company relating to the provision of investment banking services, or has been party to such an agreement within the 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 the company. 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 Buy Outperform Hold Underperform Sell Definition Absolute return expected to increase by more than 10% Absolute return expected to increase by between 5% and 10% Absolute return expected to change by between -5% and +5% Absolute return expected to decrease by between 5% and 10% 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 recommendations 33% 24% 28% 4% 5% Proportion of these provided with investment banking services 61% 14% 26% 10% 0%

Rating Buy Outperform Hold Underperform Sell

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