US fund Oaktree Capital is poised to take a majority stake in Ormonde's Spanish tungsten mine after shareholders in the Irish-listed company voted overwhelmingly in favour of the deal.
Close to 94 per cent of Ormonde's shareholders voted for a proposal that will see Oaktree and the company split ownership of the tungsten mine at Barruecopardo in Spain 70 per cent-30 per cent in return for €90 million in debt and equity.
Ormonde chairman, Mike Donoghue, welcomed the result. "We can now move forward with a comprehensive funding package into the development of Barruecopardo as an important tungsten mining operation," he said.
Potential rival bidder, Almonty, which last week argued that it was offering Ormonde Mining’s investors better value for their shares, said it had no further interest in the company.
Under the Oaktree deal’s terms, Barruecopardo will be transferred to a new joint venture in which the US private equity player will take a 70 per cent stake in return for €40.1 million in equity and a €50.3 million loan.
Ormonde will own 30 per cent of the venture and receive €1 million annually in management fees, which it says should be enough to cover its working capital needs.
Ahead of the extraordinary general meeting at which the proposal was passed, Ormonde’s board told shareholders it favoured the deal because it provided a comprehensive funding package, covered its working capital needs and allowed for an evaluation of an expansion at Barruecopardo.
Development
The board argued that it represented the best available opportunity to guarantee the development of the mine while keeping significant shareholder value.
However, Almonty argued that its offer gave better value to Ormonde's investors, to whom it was giving the choice of taking either cash or shares in the Canadian group, which owns a number of tungsten mines. Its chief executive, Lewis Black, said his group's offer was worth 4 pence sterling a-share as against 2.65 pence implied by the Oaktree deal.
Almonty conceded defeat in recent days when it emerged that Ormonde's second biggest shareholder, Swiss fund Tiberius Asset Management, had sold its shares to veteran investor Tom Anderson.
The Irish company has been seeking finance for Barruecopardo for three years. It began talks with Oaktree in 2014.
