REG - Tungsten West PLC - Hemerdon Project Update EPCM Contract signed

Tungsten WestAnnouncement

03/03/2022 07:00

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RNS Number : 5120D  Tungsten West PLC  03 March 2022

03 March 2022

Tungsten West Plc

 

("Tungsten West", the "Company" or the "Group")

Hemerdon Project Update

EPCM Contract signed

Tungsten West plc (LON: TUN), the mining Company focussed on recommencing
production at the Hemerdon tungsten and tin mine ("Hemerdon" or the "Project")
in Devon, England, is pleased to provide a project update, following the
achievement of a number of significant milestones.

 

Since successfully listing on the AIM Market of the London Stock Exchange,
Tungsten West has been advancing the development of Hemerdon which is one of
the most advanced mining projects in England and is expected to be a key
future global supplier of tungsten and tin. Tungsten is classified as a
conflict mineral and given there is a significant risk that the EU and the US
will not have sufficient access to tungsten concentrates in the near future,
it is also classified as a critical mineral, making Hemerdon a highly
strategic asset to the Western Hemisphere. Currently the three major sources
of tungsten concentrate are China, Vietnam and Russia.

 

The Company has now signed the Engineering Procurement and Construction
Management ("EPCM") contract with Fairport Engineering Limited ("Fairport"),
which is advancing the design and build of the Project. Tungsten West has
taken receipt of important long-lead equipment items, including the innovative
X-Ray Transmission ("XRT") Ore Sorters, with the rest of the long-lead items
ordered and scheduled for delivery within the Company's timetable. The Company
has also made a number of key personnel appointments as part of its planned
growth to ensure it has the skills needed for a successful construction and
ramp-up.

 

 

Key Highlights:

 

·      EPCM contract signed with Fairport, an experienced contractor
with a proven track record in delivering successful projects, particularly in
the UK

·      The detailed design work for the front end of the processing
plant is well advanced

·      Key hires for project delivery and operation have been made

·      Long lead items have been ordered, with some already delivered,
including:

o  Seven TOMRA XRT ore-sorters manufactured and delivered to the UK

o  Crushers and screens all under fixed-price contracts

·      Inflationary cost pressures remain within the Company's bankable
feasibility study ("BFS") contingency limits

·      Commodity prices are robust and significantly in excess of those
assumed in the BFS model:

o  Ammonium Para-Tungstate at $335 - $345 per MTU (10kg) versus modelled
price of $275

o  LME tin at $45,000 versus modelled price of $24,000

o  In steady state production Tungsten West is estimating production of 3,500
t.p.a. (3,500,000 MTU p.a.) of tungsten in concentrate and 500 t.p.a. of tin
in concentrate

·      The Company has a strong balance sheet and cash position

·      Conditions precedent for the drawing down of the Orion Mine
Finance royalty and project debt facilities are on track and advancing well

 

Max Denning, Tungsten West CEO, comments:

 

"We are extremely pleased with progress at site, particularly the onboarding
of Fairport Engineering to undertake the detailed design and construction of
the project. We are looking forward to working with Fairport as we move
towards restarting full production at Hemerdon, with a substantially improved
processing route, through the introduction of XRT ore-sorting and upgraded
processing equipment. The Company has assembled a strong projects and
operations team, and we remain confident in our progress.

 

"Fundamentals around our core commodities, tungsten and tin, are strong and
support even better project economics compared to our feasibility study at
Hemerdon. The Project is, and will increasingly become, a highly strategic and
important project to the UK and European supply chain of critical minerals."

 

Paul Fitton, Fairport Engineering Chairman, comments:

 

"Fairport Engineering is extremely pleased to have been appointed under the
EPCM contract to design, deliver and construct this prestigious project in the
UK, particularly following recent events placing further importance on the
production of 'conflict' minerals. We have established a full team on site and
the design process is progressing on schedule."

 

EPCM Contract Awarded

 

After a competitive process Tungsten West is pleased to announce the choice of
Fairport as the Hemerdon Project EPCM contractor.

 

UK based Fairport Engineering was founded in 1982 and has developed over time
to become one of the leading bulk materials handling and processing
specialists in the country. They are experienced in delivering projects in
multiple industries, including Power, Biomass, Alternative Fuel, Coal,
Quarrying, Minerals, Cement, Advanced Recycling, Waste, Ports and other heavy
industries. Former clients have included: Scottish and Southern Energy, Cemex,
Saint-Gobain, Lafarge, Tarmac, RWE nPower, Hanson, EDF, Brunner Mond, Tate
& Lyle, Imerys, ABP, Peel Ports, and Lytag.

 

 

 

Equipment Orders

 

The upgrade and refurbishment of the existing processing plant at Hemerdon is
centred around the optimisation of the existing concentrator circuit as well
as the introduction of a new crushing and screening circuit that will then
feed into a new X-Ray Transmission Ore Sorting Stage. These upgrades will
streamline processing, minimise plant downtime and improve recovery rates.
After significant test work, Tungsten West engaged TOMRA to supply the 7 units
that are required to treat the run of mine throughput. This consists of 6 duty
and 1 standby units. Orders and deposits for these units were placed in Summer
2021 and the Company is delighted to announce that the units have now been
delivered to the UK and await final transfer to Hemerdon where they will be
installed in the front end of the processing plant.

 

About XRT Sorting:
https://www.tomra.com/en-gb/sorting/mining/sorting-equipment/com-series/com-xrt/how-it-works-xrt
(https://www.tomra.com/en-gb/sorting/mining/sorting-equipment/com-series/com-xrt/how-it-works-xrt)
 

 

 

Screens

 

6 new screens and 11 vibrating pan feeders have been ordered from Vibramech of
South Africa at fixed prices.  These will replace the existing large screens,
which caused the low frequency issues, and were a key contributor to plant
downtime under Wolf Minerals. Delivery is expected in Q2 2022.

 

 

Tungsten and Tin Market Update

 

Tungsten prices have increased steadily since the BFS was completed. The
latest Fastmarkets assessment of European APT prices stand at $335-$345 per
MTU. (1 MTU = 10 kg). The Tungsten West BFS financial model is based on an APT
price of $275 for the first year of operation, rising to $325 by year 5.
Annual production at Hemerdon is forecast to be 3,500 t.p.a. (3,500,000 MTU
p.a.) of tungsten in concentrate with a 78% payability, meaning at current
prices, forecasted annual tungsten revenues are $92.8m

 

Tin prices have been one of the best performing commodities over the last 12
months. Latest LME cash prices stand at over $45,000 per tonne. The Tungsten
West BFS financial model is based on a LME Tin price of $24,000 per tonne.
Short term annual production from Hemerdon is forecast to be 500t of contained
tin in concentrate with a 95% payability, meaning that at current spot prices
annual revenue is be expected to be $21.4m per annum.

 

Key Hires

 

The senior management team required to deliver the Hemerdon project is now in
place with the following key roles having been filled:

 

·      Aggregates Managing Director

·      Project Manager

·      Construction Manager

·      Technical Services Manager

·      Process Plant Manager

·      HR Manager

·      Aggregates Technical Manager

 

 

Orion Royalty and Project Finance Facility

 

 As set out in the Company's AIM Admission Document, a number of conditions
precedent (CPs) are required to be met in order to draw down on the $21m Orion
Mine Finance royalty and on the $28m project finance facility. Satisfaction of
these CPs is well advanced and once completed will enable first draw down.

 

 

 

For further information:

 

 Tungsten West                       Strand Hanson

 Max Denning                         (Nominated Adviser and Financial Adviser)

 Tel: +44 (0) 203 178 7385           James Spinney / James Dance

                                     Tel: +44 (0) 207 409 3494
 Camarco                             Hannam & Partners

 (Financial PR)                      (Joint Broker)

 Gordon Poole / Emily Hall           Andrew Chubb / Nilesh Patel

 Tel: +44(0) 20 3757 4980            Tel: +44 (0)20 7907 8500

 Email: tungstenwest@camarco.co.uk
                                     VSA Capital

                                     (Joint Broker)

                                     Andrew Raca/Maciek Szymanski (Corporate Finance)

                                     Andrew Monk (Sales)

                                     Tel: +44 (0)20 3005 5000

 

 

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