Irish exploration group Ormonde Mining today announced a significant resource upgrade for its flagship tungsten project in western Spain.

The company, which is listed on junior markets in Dublin and London, said a feasibility study on its Barruecopardo tungsten mine in Salamanca had indicated a 60 per cent increase in projected production.

This would allow for an expanded production rate of 1.1 million tonnes of ore per year and had resulted in a substantial upwards revision in its annual cash flow forecasts, the company said.

At current market prices, the averaged annual pre-tax operating cash flows would be in the region of €30 million.

First production at the Ormonde mine has been slated for the second quarter of 2013, slightly later than previously planned, with capital costs identified at €40 million, including a 20 per cent contingency.

The project is expected to produce up to 8 per cent of non-Chinese tungsten.

The global price of tungsten, which is used in a number of industrial production processes, has skyrocketed by as much as 80 per cent over the last year due to the scarcity of supply.

In a broker’s note, Davy said the announcement showed steady and positive progress towards the next tungsten mine in Europe.

With current pricing in the order of $450 per metric tonne unit (MTU) and a cost per MTU of just over €100, the project has substantial downside protection.

Ormonde’s managing director Kerr Anderson said: “We now move forward with a project which will produce substantially more tungsten than previously envisaged.

“Barruecopardo remains a large scale, low capital and operating cost mine, providing a secure source of this strategic metal, generating significant annual net operating cash flows, and delivering sustainable benefits to the local community,” he said.

In May, Ormonde said it had narrowed its losses in 2010, reporting a deficit of €1.08 million for the year. This compares with a loss of €1.6 a year earlier.