Primary Metals has completed planned mine improvements at its Panasqueira tungsten mine in Portugal. Capital expenditures on improvements totalled €9.1 million (C$13.7 million) over the past two fiscal years and included major acquisitions of new mining and processing equipment, as well as development of the new underground D9 mine ramp to access new tungsten reserves.
The commitment to these improvements over the past two years has created a solid foundation for the continued long-term operation of the mine. Management’s decision has been justified by the recent announcement of increased tungsten reserves at the mine. The combined proven and probable reserves and indicated resources now total over 5 Mt with a grade of 0.261% WO3 (tungsten trioxide) containing 1.34 million MTU of WO3. The current tungsten price is around $260 per MTU). There is also an additional inferred resource and extensive exploration potential at Panasqueira.
Planned expenditures for the fiscal year ending March 31, 2008, are budgeted at €800,000 (C$1.2 million), a significant reduction in cash requirements compared to the previous two years. Capital expenditures include purchases of minor equipment, improvements in underground mine crushing and development activities, building maintenance and miscellaneous items.
Capital expenditures during the past two years have included acquisition of Europe’s largest fleet of low profile underground mining equipment including six low profile LHD units and five low profile underground jumbo drilling rigs. The fleet is now fully operational on level 3 of the mine, the main production level, and the original equipment is being used on mine level 2.
A new development programme to access new tungsten ore has been addressed with the completion of the D9 ramp between levels 2 and 3 of the mine. Historically, development work at the mine had been neglected due to limited cash flow during an extended period of low tungsten prices. This situation has now been resolved, with tungsten prices trebling since 2004.
The underground mine hoist has been refurbished with new cables and the underground conveyor belt has been replaced. A new fine ore storage bin has also recently been completed that trebles the ore storage capacity for the process plant.
The process plant has been refurbished and new equipment, including a Knelson concentrator, a hydrosizing unit, roll crusher and new duplex tungsten concentrating tables, and extensive pumps, pipes and spare parts have been provided to improve the mill efficiency and operating schedules.
Management is confident in the improved performance and efficiency of the mine and processing plant and has taken further steps to improve the profitability of the operation. As a result of the reduced requirement for development work, the labour force at the mine has been reduced from 315 to 285 with plans for further reduction to 265 by the end of 2007. Greater selectivity of mining will be possible with the new equipment and the completion of the D9 development ramp, and an increase in mined ore grade is expected compared to recent levels. Tungsten prices remain strong and management anticipates some increase in demand and tungsten price in the future. Overall, these factors should combine to result in improved profitability, as well as an extended life, at the Panasqueira tungsten mine.
Primary Metals owns a 100% interest in the mine and is currently annually producing some 100,000 MTUs of tungsten trioxide in concentrates. Tungsten is currently trading at around $260/MTU. The Panasqueira mine has a long history of production of high-quality wolframite concentrates and is the dominant producer of high-grade tungsten concentrates outside China.
