Wolf is bullish about market prospects for tungsten mine
Wolf Minerals has described itself as "excited" about the Australia-based company's future over next two years, as its £150 million project to reopen its Hemerdon tungsten mine near Plymouth starts to become a physical reality.
In its annual financial report, Wolf's non-executive chairman John Hopkins said the company was "very pleased" with progress over the last year, which has seen it moving from an explorer-developer to a developer-constructor.
Set to begin extracting minerals in 2015, the Hemerdon mine will have a ten-year lifespan and produce 5,000 tonnes of tungsten concentrate and 500 tonnes of tin a year.
It is anticipated that its reopening will create up to 230 jobs and may support as many more within the local supply chain.
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During the year, Wolf brought together and sealed a complex funding arrangement, securing the £150 million to advance the Hemerdon project.
Two major finance deals involve international support from European banks, US and New Zealand based strategic shareholders, a commercial guarantee from the German government.
US and European clients are lined up to buy the minerals recovered in the Hemerdon operation. Under these off-take agreements, Wolf will supply them with 80% of the Hemerdon project's expected average annual tungsten output for a minimum of five years.
Wolf's shareholders will not receive a dividend however, with the group posting consolidated losses of AUS$4.7 million for its financial year to the end of June.
Wolf, which has a 10-strong UK head office, at the Tamar Science Park, began a construction contract with GR Engineering Services in June.
It said that with all things going to plan, the completed processing plant will be handed over June 2015 and recruitment will begin next year.
Wolf's UK operations manager, Jeff Harrison, said: "We've secured funding in difficult times and are on target to get on site by January."
It's anticipated that the 18-month construction works will support hundreds of jobs within the local economy.
The world tungsten market has strengthened this year, having risen having risen almost US $100 per metric tonne unit (the equivalent of 10 kilos) since December, to be worth around US$40,000 per tonne.
Wolf said that market conditions have made it difficult for many mining companies in general to secure funding, with many potential tungsten developers struggling to advance their projects.
Delays to these projects may well lead to a shortfall in the tungsten market just as the Hemerdon project comes on stream. Global tungsten demand is forecast to grow at between 6% and 7% annually.
Over 50% of tungsten is used in the production of machine tools. It also toughens specialist steels, is found in light bulbs and weights down a lever in mobile phones that causes handsets to vibrate.