• Ormonde has a 100% interest (subject to staged payments to local Spanish company Nueva Tharsis S.A.) in a mining concession at La Zarza which covers a total area of 12.8 square kilometres in the Iberian Pyrite Belt. The Mining Concession is currently held in the name of Nueva Tharsis S.A.
• Ormonde’s wholly owned subsidiary Ormonde España SL (“OESL”) has jointly with Nueva Tharsis S.A. submitted the documentation required by the regional and provincial mining authorities to transfer the mining concession at La Zarza from the past owner to Ormonde España SL thus facilitating a reactivation of mining activities at the site. This documentation, which included plans for an underground mining operation, was submitted in Q4 2011 and is currently being considered by the local Administration in Spain. The company is working closely with the local authorities on any matters related to this transfer application.
• In October 2009, Ormonde entered into an exploration joint venture agreement with Antofagasta Minerals S.A. on Ormonde’s La Zarza ground holdings.
• Antofagasta can earn a 51% interest in the La Zarza JV by spending US$7 million on exploration programmes and subsequent evaluation activities. Subsequent to completion of the earn-in, Antofagasta has the right to increase its interest to 75% by the completion of a feasibility study on a mining project that meets its investment criteria.
• Based upon work by the joint venture to-date, including geophysics, drilling and a new structural interpretation, a preliminary non-JORC compliant global mineral resource of some 61Mt, grading 0.8% Cu, 0.9g/t Au, 0.6% Pb, 2.0% Zn & 5.7g/t Ag, has been estimated.
• Ormonde has recently been awarded additional permits, covering a total area of 95 square kilometres, along strike to the east and west of the known mineral resources at La Zarza. These permits have been included in the joint venture and a 2011 work programme has been agreed by the joint venture.
• The US$1.3m work programme, fully funded by Antofagasta, commenced in August 2011 with a close line spaced airborne electromagnetic (VTEM) survey and a gravity survey which identified several targets. These targets are currently being tested by a 3,000 metre diamond drilling programme.
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, through its wholly-owned subsidiary Ormonde Espana SL, has a 100% interest, subject to staged payments to local Spanish company Nueva Tharsis S.A., in a mining concession which covers a total area of 12.8 sq kilometers. This concession is held by Nueva Tharsis, Ormonde’s underlying joint venture partner.
Current Status: Documentation required for the transfer of the Mining Concession has been submitted (Q4 2011). Joint Venture with Antofagasta Minerals S.A. on a larger project area.
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. Since the results of the feasibility study Ormonde has been reviewing various development options and this work together with sustained higher copper prices has resulted in a decision to apply for the transfer of the Mining Concession at La Zarza.. The application is supported by detailed documentation including plans for an underground mining development at the site, as required by the Huelva mining authorities, and was submitted in Q4 2011. The submission is currently under review by the Administration.
Ormonde, along with its Joint Venture partner Antofagasta Minerals S.A., is continuing to investigate the potential for additional copper resources along strike to the east and west of the La Zarza deposits. A detailed exploration programme is ongoing and is funded by Antofagasta.
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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 immediately adjacent Perrunal Mine,. 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.
The large massive sulphide body (over 110 million tonnes) at La Zarza/Perrunal was partially mined 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 underground 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 processing plant or 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 S.A.L., and has held a 100% interest in the venture since July 2007.
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Fig-2 No 5 Shaft and conveyor to rail line load-out station
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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).
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Fig-4 Cross-Section through La Zarza
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Fig-5 Longitudinal Section of La Zarza
A Mineral Resource Estimate, largely based on the closer spaced drilling in the Silicatado unit, was prepared by CSA Australia Pty Ltd in 2007 and reported under the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code 2004 edition). These 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).
In 2010, the Ormonde-Antofagasta JV prepared an in-house, preliminary, non-JORC compliant, global mineral resource estimate based upon a new structural interpretation for the combined Massive Sulphide and Silicatado units. This totalled some 61Mt grading 0.80% Cu, 0.9g/t Au, 0.56% Pb, 1.96% Zn and 5.7g/t Ag (1.34% CuEq cut-off). The estimate includes the results of four new holes drilled by the joint venture .This new resource includes the higher grade Silicatado portion of the deposit which formed the bulk of the CSA resource estimate in 2007.
In 2008, a feasibility study on developing a mine at La Zarza was carried out by internationall consultants under the management of Aker Kvaerner Engineering Services Ltd (now incorporated into Jacobs Engineering Group Inc). 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 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.
Feasibility 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. The Study recommended that options be investigated to improve the project economics including identification of further copper resources or a significant change to the scope of the project.
Ormonde subsequently entered into the joint venture with Antofagasta to investigate the possibility of defining a significantly larger copper resource at La Zarza.
In October 2009, Ormonde entered into an exploration joint venture agreement with Antofagasta Minerals S.A. on Ormonde’s La Zarza ground holding. Antofagasta can earn a 51% interest in the La Zarza JV by spending US$7 million on exploration programmes and subsequent evaluation activities. Subsequent to completion of the earn-in, Antofagasta has the right to increase its interest to 75% by the completion of a feasibility study on a mining project that meets its investment criteria.
Work programmes during the first year of the Joint Venture focussed on a new structural interpretation for La Zarza to assist in the exploration for additional massive sulphides. Re-logging and interpretation of some 12,400m of previous drilling has provided the basis for this new structural interpretation. Following geophysical surveying (42 line kilometres of electromagnetics), four holes (drilled to depths of between 591 and 766 metres for a total of 2,655 metres) were drilled, principally to test for mineralisation extensions to the west of La Zarza. Although intersecting strong chloritic alteration with varying development of sulphides, these holes failed to intersect massive sulphides.
The new structural interpretation formed the basis for an in-house estimation of an initial global resource by the Joint Venture. This new, unclassified, non-JORC compliant resource totals 61Mt, grading 0.80% Cu, 0.9g/t Au, 0.56% Pb, 1.96% Zn, 5.7g/t Ag (1.34% CuEq cut-off).
As a consequence of gaining a better understanding of the geology at La Zarza, Ormonde submitted applications to the provincial mining authority for additional permits, over a total area of 95 square kilometres, covering the potential strike extension of the La Zarza system and controlling structures. The permits have been granted, included in the joint venture and a work programme has been agreed by the joint venture.
The US$1.3m work programme, fully funded by Antofagasta, commenced in August 2011 with a close line spaced airborne electromagnetic (VTEM) survey and a gravity survey which identified several targets. These targets are currently being tested by a 3,000 metre diamond drilling programme.
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Fig-6 Airborne magnetic map showing new permit applications and the La Zarza concession area.
