REG - Tungsten West PLC - Development and Economic Plan for Hemerdon
30/05/2025 07:00
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RNS Number : 6974K Tungsten West PLC 30 May 2025
30 May 2025
Tungsten West Plc
("Tungsten West", the "Company" or the "Group") Development and Economic Plan
for Hemerdon
Tungsten West plc (LON:TUN), the mining company focussed on restarting
production at the Hemerdon tungsten and tin mine ("Hemerdon" or the "Project")
in Devon, UK, has concluded its development and economic plan to restart
mining operations (the "Plan"), which is presented in this announcement.
The Company is releasing this Plan, associated summary economics, resources
and reserves ahead of the completion of a full updated feasibility study,
which is currently being prepared by AMC Consultants (UK) Limited ("AMC"),
supported by a leading team of industry experts including Lycopodium (ADP) on
mineral process design, Mining Plus on the Mineral Resources and AMC on the
Ore Reserves.
A presentation with more detail on the Plan will be available shortly on the
Company's website: www.tungstenwest.com (http://www.tungstenwest.com/) .
Plan Highlights:
· Tungsten West has a globally significant, fully permitted, shovel
ready tungsten resource that can be brought into production quickly and at low
cost to provide a source of strategic and critical minerals
· Hemerdon is expected to produce approximately 20% of global
supply of primary tungsten from outside the People's Republic of China
("China") and will commence operations approximately 12 months from funding
· Currently in discussions with several parties regarding the
financing of the Project, and the Company expects to complete its fundraising
by the end of 2025
· The Project has a significantly enhanced stakeholder and local
community engagement focus
· Project restart economics:
o Internal Rate of Return ("IRR") of 29.3%
o Net Present Value at a 7.5% discount rate ("NPV7.5%") of US$190 million
o Life of mine post-tax cash flow of US$456 million
o Base case 11-year life of mine, 4 years of subsequent stockpile reclaim
and an additional 12 years of on-going premium aggregate sales
· Mine expansion to target identified resources at Hemerdon
("Hemerdon Futures") to significantly further improve Project economics and
extend the operational life of mine, potentially to over 40 years, with
further near and far field regional growth opportunities
· The total financing requirement for restarting mining operations
at Hemerdon is currently estimated at US$93 million, benefitting from
approximately US$300 million of previously invested capital, including
significant open pit pre-stripping
· Financing to be deployed building a completely new crushing,
screening and ore sorting front-end, additional processing equipment modules
to enhance performance, cost and recovery, and a full refurbishment of the
pre-existing Mineral Processing Facility ("MPF") components
· Inclusion of environmental noise mitigation buildings and custom
enclosures on all potential low- frequency noise ("LFN") generating equipment,
removal of higher propensity LFN equipment, and utilisation of lower noise
generation mining truck trays and other equipment to improve sustainable
operations
· Pre-production commissioning process enables various sections of
the MPF to be commissioned and tested in phases, from the back end of the
circuit forward to the new-build front end, reducing the start- up project
risk
· Approval from the Environment Agency for limited trial running of
select components of the MPF for re-processing 2,500 tonnes of pre-deposited
tailings and other on-site material
· Capacity to process 3.5 million tonnes per annum ("Mtpa") of
primary ore feed at fully permitted production, to produce, on average 332,000
metric tonne units ("mtu") of tungsten trioxide (WO3) and 462 thousand tonnes
("kt") of tin ("Sn") in concentrate per annum
· Installed capacity capable of low capital expansion to
approximately 500,000 mtu of WO3 per annum
Jeff Court, CEO of Tungsten West, commented:
"The publication of the Plan serves as reflection of our strong intent and
focus to restart mining operations and tungsten production at Hemerdon. At
full capacity, Hemerdon is expected to produce over 20% of the global non-
China supply of tungsten and will significantly strengthen the developed
world's supply chain for this critical metal.
"This Plan offers a clear, staged and manageable approach to bring Hemerdon
back into production. Further to this, I look forward to the completion of the
updated feasibility study, expected in the coming months, which will confirm
the attractive economics and strong investment case for the Project,
bolstering our position in ongoing conversations with a range of funding
partners.
"I would like to thank our shareholders, loyal employees, internal and
external consultants and all our stakeholders for their continued support."
Background
Due to export restrictions imposed by China, there remains an extremely
limited supply of tungsten, in any form, currently being exported from China.
The market index (65% ammonium paratungstate, ("APT"), free on-board
Rotterdam) has breached US$400/mtu and the expectation is for further rises as
the market adjusts to this supply disruption. Underlying this more recent
trend, there is a significant and increasing gap between Western world demand
and supply for tungsten, which China has previously filled. The export
restrictions imposed by China further highlight the supply chain dependence of
the Western world for critical dual-use metals, such as tungsten, that find
application in key industries such as automotive manufacturing, defence and
energy generation.
Hemerdon, a construction-ready, fully permitted, world-class tungsten
resource, with significant tin and premium aggregate co-products, is extremely
well placed to meet this demand shortfall in a timely manner and has the
potential to generate over 20% of non-China tungsten supply. The significant
prior investment in Hemerdon of over US$300 million in infrastructure,
tailings storage and mine waste facilities, MPF and the significant
pre-stripping of the open pit, positions Tungsten West for a short lead time
to production of less than 12 months from the start of construction,
minimising the funding requirements to implement the Plan. The Plan envisages
restarting mining and production in late 2026, with a staged process to
pre-production commissioning leading up to this.
Project Economics
The economics of the Project provide an Internal Rate of Return (IRR) of 29.3%
and a NPV7.5% of US$190 million. The base case tungsten price used is
US$400/mtu which is the low-end range of current market prices. The
feasibility study is targeting a steady state all-in sustaining cash cost
("AISC") of production for tungsten of US$144/tonne ("t") (inclusive of
by-products) placing Hemerdon in the lower cost quartile of global producers.
Hemerdon Project 2025 Feasibility Study Key Parameters
Parameter Reference Data
Tungsten (APT Reference Price): US$400/mtu Sn: US$32,500/t
Premium Aggregate £19.00/t (ex-works)
Commodity price
Measured & Indicated: 163.7 million tonnes ("Mt") at 0.14% WO3 and 0.03%
Sn
Measured, Indicated & Inferred: 326.8Mt at 0.12% WO3 and 0.03% Sn
Total Mineral Resource comprising 39.7Mmtu of contained WO3
Mineral Resources
Ore contained in the Stage 3 open pit (excluding potential Hemerdon Futures
extensions into Stage 4 and 5 North and South Extensions)
Granite: 35.6Mt at 0.18% WO3 and 0.03% Sn (29.2Mt Proven) Killas: 35.0Mt at
0.11% WO3 and 0.03% Sn (7.7Mt Proven)
Total Ore Reserve comprising 70.7Mt at 0.15% WO3 and 0.03% Sn, for a total of
10.3Mmtu of contained WO3
Ore Reserve
Mining to the extents of the Stage 3 open pit (currently excludes Hemerdon
Futures)
Primary mining period of 11 years
Stockpile reclaim of an additional 4 years
On-going premium aggregate sales of a further 12 years
Potential future extension of the mining operation to Stage 4 and 5 via the
Mining and Processing Strategy Hemerdon Futures project accesses the larger extent of the Mineral Resource
material and significantly
extends the Project life to over 40 years
Granite Ore Processed: 35.6Mt at 0.18% WO3 and 0.03% Sn
LoM mining inventory with average head grade Killas Ore Processed: 22.1Mt at 0.11% WO3 and 0.03% Sn (we expect further
processing of Killas Ore Reserves, which will have been mined to stockpile,
but the strategy is subject to further review)
Ramp up (13 months): 2.7Mtpa
Steady state (Years 2-11): 3.5Mtpa
LoM processing profile Killas Processing (Years 12-15): 4.9Mtpa (plant throughput increased for lower
grade and recovery)
Premium Aggregate sales begin in year 1, increasing to an
average of 0.35Mtpa until year 15, after which they increase to 0.5Mtpa for a
further 12 years
WO3: 4.6Mmtu Sn: 6,442t
Premium Aggregate (sales): 10.9Mt
LoM total production Premium Aggregate (production): 30.8Mt Total Aggregate (production): 45.8Mt
(payable metal and aggregates)
WO3: 332,000mtu Sn: 462t
Steady-state annual production Premium Aggregate (sales): 0.35Mt
(average payable metal years 2-11) Premium Aggregate (production): 1.9Mt
LoM post-tax free cash flow US$456 million
Annual post-tax-free cash flow US$32.6 million
(average years 2-11)
Pre-production capital and operating costs US$93.0 million
AISC costs Steady state US$144/mtu
Total Project US$167/mtu
Post-tax NPV7.5% US$190 million
Post-tax IRR 29.3%
There is further scope for the extension of the current open pit towards the
north and south via the Hemerdon Futures project, whereby the Company plans to
extend the current operations along the already defined JORC resource, which
remains open at depth and along strike in the southern direction. The Hemerdon
Futures project is anticipated to extend the total operational life, including
stockpile reclaim and premium aggregate sales, to over 40 years. This
additional up-side will be included in the upcoming feasibility study and
further enhances the Project economics beyond those incorporated in this Plan.
Further to this, there are additional near and far field opportunities for
even further Project extensions.
Funding
The total financing requirement for restarting mining operations at Hemerdon
is currently estimated to be US$93.0 million not including any
financing-related charges (the "Restart Financing"). The Company has already
held discussions with a number of government-backed funding agencies in the
UK, US and EU. In addition, the Company has opened discussions with specialist
mining funders as well as with end-users and intermediaries of tungsten. The
Company expects to close the Restart Financing by the end of 2025.
The Company is seeking additional funding to support activities through to
securing full Restart Financing. It is expected to issue Tranche H of the
Convertible Loan Notes ("CLN") shortly to meet this funding requirement (the
"CLN Financing"). Hannam & Partners is acting as financial adviser and
broker in connection with the Restart.
Financing and the CLN financing, and any interested party should contact
Hannam & Partners at the contact details set out below.
Key Design and Operational Improvements
The Company and its internal and external consultants, including a specialist
metallurgical peer review team of Gary Patrick, James Turner and Mike
Hallewell, have focussed heavily on addressing the risks identified from prior
operations at Hemerdon, whilst looking to optimise the process from the
previous feasibility studies of the Company. A summary of the key improvements
incorporated into the Plan are:
· Advancing pit design stages to target fresh granite ore as a
priority to ensure a better quality and more consistent ore feed
· More flexibility for in-pit ore sourcing, with an increased
number of smaller excavators
· Increased run-of-mine ("ROM") blending capability and stockpile
rehandle to ensure a stable feed for the MPF
· Addition of a new-build front-end crushing and screening facility
using standard jaw and cone crushers, replacing the not fit-for-purpose hybrid
rolls crushers originally installed
· Buffer crushed ore stockpile to increase the flexibility within
the MPF to minimise downtime
· Removal of the redundant historic scrubber from the circuit which
generated excess fines material
· Integration of new technologies of ore sorters and In-line
Pressure Jigs ("IPJs") to significantly reduce the required throughput and
provide an uplift of the mined head grade prior to down-stream processing
· Material not accepted for further down-stream processing by the
ore sorters is made available for sale as premium aggregates to the
construction market
· Refurbishment of the existing fines circuit and inclusion of an
ultra-fines recovery module to further improve recovery prior to tailings
disposal
· Full refurbishment of the utilised components of the existing MPF
facility
· Significantly reduced dependency on previously installed three
stage Dense Media Separation ("DMS") units to a single stage through use of
ore-sorters and IPJs to pre-concentrate ore
· Inclusion of environmental noise mitigation buildings and custom
enclosures on all potential LFN generating equipment as part of the MPF
Environmental Permit issued in June 2024, and removal of higher propensity LFN
equipment from the MPF
· Incorporation of sunken crushing and screening units, reduced
mine and front-end crushing operating hours and utilisation of lower noise
generating mining truck trays and other ancillary equipment to further
mitigate the impact on the local community
Various risk mitigation initiatives have also been employed to manage project
execution risk, including advanced discussions with an experienced UK
engineering procurement and construction ("EPC") contractor on a guaranteed
maximum price basis to build and commission the new front end-crushing and ore
sorting facility. An announcement on this development is expected in due
course.
In addition to this, the Company will run a phased pre-production
commissioning process, enabling various sections of the MPF to be commissioned
and tested in phases, from the back end of the circuit forward to the
new-build front end. To this end, the Company has received approval from the
Environment Agency for limited trial running of select components of the
refinery and the fines gravity circuit, with approval to recover and re-
process a significant quantity (2,500t) of pre-deposited tailings from the
tailings storage facility. The Company also intends to process a further 100t
of fines material as part of this initiative, included in the 2,500t trial
quantity.
The Company remains fully engaged with the Environment Agency on several
facets of the project advancement, and management strongly welcomes the
collaborative and supportive approach and engagement it has received at all
levels within the Environment Agency.
At fully permitted production, the mine has the capacity to process 3.5Mtpa of
primary ore feed and produce, on average over the primary mining period,
approximately 332,000mtu of WO3 and 462kt of Sn per annum. Installed
name-plate capacity for the operation will be in excess of 500,000mtu of WO3
per annum, which can be realised with minimal capital spend, providing further
expansion and optimisation potential in the future.
The Company is progressing discussions with a number of pre-existing and new
offtake customers to provide enhanced security of supply and further
optimising the project risk and overall economics.
Mineral Resources & Ore Reserves
The updated Mineral Resource Estimate ("MRE") is summarised below. This is for
a total contained quantity of tungsten of 39.7Mmtu including in-pit, granite
stockpiles and tailings.
The Hemerdon project is one of the largest, if not the largest, CRIRSCO
compliant tungsten resource globally with an active advancement plan. In
addition to this, Hemerdon also has significant quantities of co-product tin,
also a critical metal.
Hemerdon Mineral Resources
Measured Indicated Inferred
Domain
Tonnes (Mt) WO3 (%) WO3 Sn (%) Sn (kt) Tonnes (Mt) WO3 (%) WO3 Sn (%) Sn (kt) Tonnes (Mt) WO3 (%) WO3 Sn (%) Sn (kt)
(Mmtu) (Mmtu) (Mmtu)
Granite 34.3 0.18 6.0 0.03 11.2 76.6 0.15 11.3 0.02 17.4 28.4 0.12 3.4 0.03 7.5
Killas 8.5 0.11 1.0 0.03 3.0 43.7 0.10 4.4 0.03 12.8 131.5 0.10 13.0 0.02 32.0
Granite Stockpiles 0.6 0.18 0.1 0.05 0.3 0.0 0.00 0.0 0.00 0.0 0.0 0.00 0.0 0.00 0.0
Sub-Total (1) 43.4 0.17 7.1 0.03 14.5 120 0.13 15.7 0.02 30.2 159.9 0.10 16.4 0.02 39.5
Mine Waste Facility (2) 0.0 0.00 0.0 0.00 0.0 0.0 0.0 0.0 0.00 0.0 3.2 0.18 0.6 0.02 0.8
Total 43.4 0.17 7.1 0.03 14.5 120 0.13 15.7 0.02 30.2 163.1 0.11 17.0 0.02 40.3
Measured & Indicated Measured, Indicated & Inferred
Domain
Tonnes (Mt) WO3 Sn (%) Sn (kt) Tonnes (Mt) WO3 Sn (%) Sn (kt)
WO3 (%) (Mmtu) WO3 (%) (Mmtu)
Granite 110.9 0.16 17.3 0.03 28.6 139.3 0.15 20.7 0.03 36.1
Killas 52.2 0.10 5.4 0.03 15.8 183.7 0.10 18.3 0.03 47.7
Granite Stockpiles 0.6 0.18 0.1 0.05 0.3 0.6 0.18 0.1 0.05 0.3
Sub-Total (1) 163.7 0.14 22.8 0.03 44.7 323.6 0.12 39.1 0.03 84.1
Mine Waste Facility (2) 0 0.00 0.0 0.00 0.0 3.2 0.00 0.6 0.02 0.8
Total 163.7 0.14 22.8 0.03 44.7 326.8 0.12 39.7 0.03 84.9
· The Qualified Person for the MRE up to Sub-Total (1) is
Zoe Scannell BSc (Hons), MSc, MCSM, FGS, QMR MIMMM, MAusIMM who was working
for Mining Plus (UK) during the preparation of the MRE and currently an
employee of Bara Consulting Ltd. The MRE has an effective date of 30th August
2024.
· Tailings MRE listed as Mine Waste Facility, as per note
(2), in the MRE summary table and was carried out by Dr Matthew Field of
Mining Plus in 2021. NOTE: the Qualified Person for the non-Mine Waste
Facility items, Zoe Scannell, was not involved with the Mine Waste Facility
MRE reporting.
· The preceding statements of Mineral Resources
DOESconform to the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (JORC Code) 2012 Edition.
· All tonnages reported are dry metric tonnes.
· Rounding as required by reporting guidelines may result
in apparent differences between tonnes, grade and contained metal content.
· MRE tonnes reported is that material which sits within
a conceptual pit shell used to support RPEEE, generated using the following
assumptions and parameters; WO3 MTU price of USD$500, payability (78%),
royalty (2.25%), transport cost (£211), recovery (55.6% - Granite, 50.5%
Killas), mining cost (£3.06/t - Granite, £4.26/t - Killas), processing cost
(£6.50/t - Granite, £4.60/t - Killas), G&A (£2.24/t - Granite, £1.58/t
Killas) above a cut-off grade of 0.064% WO3 EQ (equivalent) for Granite and
0.063% for Killas. (WO3_EQ is calculated as (Sn*0.379)+WO3 ).
Hemerdon Ore Reserves
Proven Probable Total
Ore Type
Tonnes (Mt) WO3 (%) Sn (%) Tonne (Mt) WO3 (%) Sn (%) Tonnes (Mt) WO3 (%) Sn (%)
Granite Oxide 0.7 0.12 0.06 0.0 0.12 0.01 0.7 0.12 0.06
Granite Transition 5.5 0.17 0.04 0.0 0.13 0.05 5.5 0.17 0.04
Granite Fresh 23.0 0.19 0.03 6.4 0.19 0.03 29.4 0.19 0.03
Granite Total 29.2 0.18 0.03 6.5 0.19 0.03 35.6 0.18 0.03
Killas 7.7 0.11 0.04 27.3 0.11 0.03 35.0 0.11 0.03
Total 36.9 0.17 0.03 33.8 0.12 0.03 70.7 0.15 0. 03
· The Competent Person for the Ore Reserves is Alan
Turner BSc, MSc, MIMMM, CEng of AMC Consultants. The mineral reserves have an
effective date of 1(st) May 2025.
· The preceding statements of Ore Reserves DOES conform
to the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (JORC Code) 2012 Edition. Ore Reserves are
estimated using an APT price of US$350/mtu WO3 and tin price of US$30,000/t
Sn.
· All tonnages reported are dry metric tonnes.
· Minor discrepancies may occur due to rounding to
appropriate significant figures.
Competent Persons statements
The information in this RNS that relates to Mineral Resources (excluding
Tailings Mineral Resources) is based on information compiled by Ms Zoe
Scannell, a Competent Person who is a Member of the Australian Institute of
Geoscientists, Fellow of the Geological Society of London and Member of the
IOM3 (QMR). Ms Scannell is employed by Bara Consulting Limited, and
independent of Tungsten West. Ms Scannell has sufficient experience that is
relevant to the style of mineralisation and type of deposit under
consideration and to the activity being undertaken to qualify as a Competent
Person as defined in the 2012 Edition of the 'Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves'. Ms Scannell
consents to the inclusion in this RNS of the matters based on her information
in the form and context in which it appears.
For more information on the Project, including the JORC Table 1, please see
the following page of the Company's website:
https://www.tungstenwest.com/project (https://www.tungstenwest.com/project)
This announcement contains inside information for the purposes of Article 7 of
Regulation 596/2014 as amended by the Market Abuse (Amendment) (EU Exit)
Regulations 2019.
Ends
For further information, please contact:
Enquiries
Tungsten West Strand Hanson
Alistair Stobie (Nominated Adviser and Financial Adviser)
James Spinney / James Dance / Abigail Wennington Tel: +44 (0) 207 409 3494
Tel: +44 (0) 1752 278500
BlytheRay
(Financial PR)
Tim Blythe / Megan Ray Tel: +44(0) 20 7138 3204
Email: tungstenwest@blytheray.com (mailto:tungstenwest@blytheray.com)
Hannam & Partners
(Broker)
Andrew Chubb / Matt Hasson / Jay Ashfield Tel: +44 (0)20 7907 8500
Follow us on X @TungstenWest
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