REG - Tungsten West PLC - Restarting Hemerdon Mine and Directorate Changes

Tungsten WestAnnouncement

19/07/2022 07:00

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RNS Number : 8909S  Tungsten West PLC  19 July 2022

Tungsten West Plc

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

Restarting the Hemerdon Tungsten and Tin Mine

 

and

 

Directorate and Management Changes

 

 

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, England, has concluded a re-evaluation of the options for bringing
the Hemerdon Mine back into production and announces its new development plan
(the "Plan").

 

The Plan has been developed in response to Global crises in power and diesel
prices and the general inflationary environment for construction materials
faced by the Company. Accordingly the Company has undertaken a re-optimisation
of the March 2021 Feasibility Study ("BFS") in light of these increased cost
input factors.

The Board of Tungsten West has reviewed the Plan and has also received a
preliminary independent assessment from consulting metallurgist Mike Hallewell
of MPH Minerals Consultancy Ltd, who concurs with the Plan in all material
aspects.

 

The Board has now given its approval to proceed with detailed engineering
design and to commence construction of the Hemerdon Project with immediate
effect.

 

The Plan continues to envisage restarting production during H1 2023.

 

 

Development Plan:

The Plan has been developed after a three-month technical and commercial
review of the assumptions that underlaid the BFS. Evaluation of different
approach options has resulted in a new ramp-up schedule, new crushing
strategy, new operating parameters for ore sorting, a re-purposing of
equipment within the processing plant, and the production of a different
specification of final tungsten concentrate product. The result of the Plan is
a lower cap-ex requirement and a much lower diesel and power consumption
whilst still delivering profitable operating margins.

 

The revised plan for the Project has been reviewed on a preliminary basis by
Mike Hallewell (BSc, F.I.M.M.M., F.S.A.I.M.M., F.M.E.S, C.Eng) of MPH Minerals
Consultancy Ltd.  The Company intends to continue investigating trade-off
studies, continued value engineering and detailed cost estimates for the
Project whilst it finalises the detailed design and front-end engineering for
the Project. MPH will continue to work with the Company in further
optimisation and implementation of the Plan.

 

The Project continues to benefit from current planning permission, a
pre-stripped open pit along with significant infrastructure and sunk costs
from previous operators. Under Tungsten West's ownership a complete
refurbishment and upgrade of the processing plant has been undertaken with
large sections of this project now complete.

 

 

Crushing: The BFS planned refurbishment of the existing primary and secondary
crusher building has been replaced with the planned installation of a newly
located semi-mobile crushing circuit utilising direct tip into the primary
crusher. This reduces cap-ex, but more importantly op-ex by removing RoM pad
double handling of ore.

 

 

Ore Sorting: Under the BFS seven ore sorters were planned to operate accepting
30% of the ore mined whist rejecting the remaining 70% as waste ("30% accept
rate") which would result in recovering circa 88% of the tungsten at that
stage. The new plan utilises just four ore sorters which will be run at an
expected 9% accept rate for a circa 76% stage recovery. This allows a lower
volume of higher grade ore to be processed at the concentrator stage which
again reduces both op-ex and cap-ex.

 

 

Processing Plant Changes: Due to the lower accept tonnages being fed into the
processing plant the current primary dense media separators are able to be
replaced with repurposed secondary and scavenger dense media separators. This
substantially reduces op-ex and cap-ex. Due to the higher grade feed into the
plant stage recoveries are expected to improve during this stage. In addition,
Tungsten West intends to produce a 45% WO-(3) concentrate rather than the
previously planned 52% product by removing the reduction kiln from the
refinery process. This will result in a slightly lower payability (circa 2
percentage points lower) but this is more than offset by increased recoveries
due to the forecast losses in the kiln. Approximately 1.4 million litres per
annum of diesel consumption is removed by not using the kiln.

 

The overall effect of the above changes is to reduce energy consumption within
crushing, ore sorting and the processing plant by circa 30%.

 

 

New Mine Plan: Hemerdon will aim to process 2.1 mtpa of ore in year one, 2.6
mtpa in year two, before ramping up to steady state production of 3.5 mtpa
throughput in year three (the BFS envisaged year one at 2.7 mtpa rising to
steady state throughput of 3.5 mtpa.) This targets WO(3) in concentrate
production of 2,200t, 3,000t, 3,900t, and tin in concentrate production of
320t, 430t and 600t in years 1, 2, and 3 respectively. A significant amount of
waste stripping is able to be deferred to year 2 under the new mine plan,
accelerating time to positive cash flow.

 

 

Beneficial cost impact of the Plan:

 

Final cost estimates and the associated definitive construction schedule for
the Plan are still being received but the internal cap-ex estimate is in a
£26m - £36m range. Of this, £3.1m has already been spent on new equipment.
This compares to the BFS capex estimate of £35 million. At the time of the 21
April 2022 announcement due to the inflationary environment caused by the
prevailing economic conditions the capex estimate for the BFS plan had
increased to £54m.

 

 

Management Changes:

 

Tungsten West announces that CEO Max Denning will leave his role and the Board
with immediate effect. Max was a co-founder of Tungsten West and the Board
thanks him for his significant contribution during the Company's formative
years.

 

Executive Vice-Chairman Mark Thompson has assumed the responsibilities of the
office of the CEO. Mark Thompson was a co-founder of Tungsten West and has
previously held senior management positions at commodity trader Trafigura and
its investment division Galena Asset Management, global private equity fund
Apollo Management as well as several junior mining and exploration companies.
He is currently a director of TSX listed Meridian Mining and an advisor to LSE
listed First Tin.

 

An operations and project delivery consultant is being engaged to strengthen
management capabilities and reporting during the construction phase. Their
remit will be to build the Hemerdon Project on time and on budget, with due
regard for the safety of employees and contractors during construction
together with the quality and operability of the completed facility.

 

Financing:

 

As of 30(th) June 2022, Tungsten West had cash on hand of £22.9 million.
Allowing for contingencies and working capital costs the Company will seek to
raise debt or other non-equity capital to execute the development of the
Project without additional dilution for shareholders. The company is in
discussions with financing partners to provide this additional capital.

 

 

Further Updates

 

The company will update the market with final capex estimates and life of mine
financial metrics as soon as it is able to do so. Further updates will be
provided on a regular basis detailing construction progress.

 

 

Investor Presentation Webcast

 

Senior management of Tungsten West will host an investor presentation on
Friday 22(nd) July at 2pm to further explain the revised development Plan.
Investors can access the webcast via the following:
https://stream.brrmedia.co.uk/broadcast/62d598f10485375c36e3fc4b
(https://stream.brrmedia.co.uk/broadcast/62d598f10485375c36e3fc4b) . A
recording of the webcast will be available on the Company website a few hours
following the conclusion of the webcast, as will the accompanying
presentation.

 

 

Tungsten West's Executive Vice-Chairman, Mark Thompson, commented:

 

"In the face of some input costs multiplying in just a couple of months, I am
very glad that we were able to pause development of the Hemerdon Project when
we did. The Tungsten West team have demonstrated immense professionalism and
capability in re-optimising the development plan within just three months. I
remain convinced of the deep and strategic value of the Hemerdon deposit in
light of current geopolitical events where security of supply of critical
minerals becomes ever more relevant.

 

Our new plan reduces capital expenditure, lowers the ongoing operating costs
by streamlining processes for greater energy efficiency, and maximises the
operating margins. We can do all of this whilst maintaining the optionality to
revert to the original plan should conditions allow in the future.

 

On a personal note I would like to thank Max for all of his energy and hard
work over the last three years and I wish him well in his future endeavours."

 

 

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.

 

Enquiries

 

 Tungsten West                                                            Strand Hanson

 Mark Thompson                                                            (Nominated Adviser and Financial Adviser)

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

                                                                          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                                                 +44 (0)20 7907 8500

 Email: tungstenwest@camarco.co.uk (mailto:tungstenwest@camarco.co.uk)

                                                                          VSA Capital Group plc

                                                                          (Joint Broker)

                                                                          Andrew Raca / Andrew Monk

                                                                          +44 (0)20 3005 5000

Follow us on twitter @TungstenWest

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