Ormonde Mining has raised £3.4 million (€4.04 million) through the placing of new equity at 10 pence per share.

The majority of the funds will be used for preliminary engineering works at its Barruecopardo tungsten mine in western Spain.

About £0.5 million will be paid to Siemcalsa for Ormonde’s 2011 acquisition of the final 10 per cent interest in tungsten project. Ormonde now owns 100 per cent of the mine.

Last month, the company established the mine would generate €270 million over nine years.

The independently

commissioned report showed the project would cost €48 million to develop and, based on a price of $350 a metric tonne unit, would give a return of €30 million a year over nine years.

Ormonde is scheduled to switch on its mining plant at Barruecopardo early in the third quarter of next year.

Analysts have said that the share placing will give a good degree of comfort to shareholders, providing a platform that will better enable the company to secure the final funding for the mine’s development.

The funding will also help to ensure the mine’s development proceeds to schedule.

The remaining funding is likely to be raised through a debt equity package or through a joint venture, analysts say.