The company which owns Plymouth’s huge tungsten and tin mine made a £5m loss in just the past six months – but stressed the deficit was expected as it ramps up production at the Hemerdon site.
Tungsten West, in an announcement to investors, said the £4,990,226 pre-tax loss was in line with expectations for the early stage of the project. The figure, for the six months to the end of September 2021, follows a £7,981,783 loss for the 2020/21 financial year.
However, Tungsten West, which bought the mine out of receivership for £2.8m in 2019, said it is in a strong position going into 2022 and stressed the company had been successful in its primary objective for the first half of the current financial year, which was to prepare to raise the necessary funding to rebuild the processing plant at the mine and restart mining.
More on Plymouth’s tungsten mine Mining rebirth Full production Options explored InvestmentIn October 2021, the company was admitted to the AIM (alternaive investment market) of the London Stock Exchange, raising £39m from a share issue, and also agreed terms for a £36m loan from global investment firm Orion Resource Partners.
The Tungsten West team also hit a number of key “project milestones” including publicaton of a feasibility study which formed the basis of the redevelopment plan at Hemerdon.
Since March 2021 the firm has successfully begun the design and build phase at Hemerdon with Fairport Engineering Ltd appointed to perform interim design works before full-scale construction starts on site.
The Tungsten West maintenance team also undertook a comprehensive review to understand and address issues experienced by former operator Wolf Minerals and areas where problems were identified have been redesigned and will be sorted out during the re-build programme to improve significantly overall operations and reduce downtime.
Meanwhile, a mining services contract with Hargreaves Services Plc has been signed, securing an experienced mining contractor with significant prior experience of the project, as well as acting as specialist crushing subcontractors for the next 10 years of mining operations.
Tungsten West also entered into offtake agreements with Wolfram Bergbaau und Hutten AG and Global Tungsten and Powders Corp for purchasing a minimum of 78% of forecast tungsten production.
An offtake agreement was entered into with AfriMet Resources to purchase the tin concentrate which will be produced. The company also sold some low grade tungsten concentrate left on site by the former operator, for £67,870.
In December 2021, a new Aggregates Division commissioned a Terex Agg Wash 60 plant to maintain production on a temporary basis whilst a main plant installation is undertaken.
The company has been shipping aggregates since January 2021, utilizing existing stockpiles Wolf Minerals had deemed as waste. Current estimates show there is sufficient existing stockpiles of material to meet the Aggregates Division forecast sales until the planned recommencement of operations.
Sales of aggregates have already rasied £133,016 and the company has signed a distribution agreement with GRS Roadstone, a UK leading construction materials provider, to off-take the aggregates produced during future mining operations.
Tungsten West now employs 47 staff, which is 22 more than a year ago, and following admission to AIM, the company has been scaling up its workforce to enable it to re-build the plant and progress towards operational readiness.
“In this vein, a number of construction and engineering sector specialists have been recruited, including a select proportion who have previous experience of the Hemerdon project,” the report to the Stock Exchange said.
It also said that tungsten markets have remained steady throughout Q3 and Q4 2021, but said the near term outlook for prices will likely be driven by the ongoing Covid situation and any potential new lockdowns being announced due to the Omicron strain.
But the company said: “Global inventories remain low, and future restocking of tungsten rich drilling equipment from the oil and gas industry on the back of higher energy prices seems likely. This should underpin long term tungsten demand and prices.”
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It added: “Tin prices have performed spectacularly well throughout 2021 and continue to hover around all-time highs.”
And it said demand for aggregates continues to be strong, driven by regional and national construction and infrastructure projects in the UK.
“There continues to be a strong opportunity to substitute imported aggregates with domestic production from sites such as Hemerdon,” the company’s report said. “Recent supply constraints have led to considerable price increase for the products and we envisage the current prices being maintained over the next six months and beyond.”
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