Tungsten West PLC, the mining company focussed on restarting production at the Hemerdon tungsten and tin mine in Devon in the UK has provided a comprehensive update on progress with financing and construction. As announced on July 19, 2022 the company committed to detailed engineering design and to commencing construction based on a new development plan, developed in response to global crises in power and diesel costs and widely publicised inflationary pressures.
The plan has been independently scrutinised and accepted by the company’s preferred funding partners. Tungsten West therefore has announced that it has signed a non-binding term sheet for a $30 million (approximately £26 million) royalty investment. “The company has confidence that the conditions precedent for the drawdown of the royalty investment as set out in the Term Sheet…can be met and has committed to pushing ahead with the construction of the Hemerdon Project and the enactment of the plan utilising its existing financial resources.”
Further refinements to the Plan have been made over the summer months and a construction schedule and final cap-ex budget is expected to be received from Tungsten West’s EPC contractor Fairport Engineering by the end of September 2022. The company will update the market with this information once finalised.
In the meantime enabling works have commenced, equipment orders have been placed, and a recruitment process enacted; all whilst the refurbishment of the processing plant has been, and remains, ongoing.
On equipment specifically, orders have been placed for a number of long-lead time items, including the new semi-mobile primary and secondary crushing circuit which is being supplied by Metso-Outotec. As previously announced the seven TOMRA ore sorters required for the plant upgrade have already been delivered in warehouse in the UK. Expressions of interest to purchase three of these units that are surplus to requirements under the new plan have been received from third parties. Construction of new screens and vibrating feeders as provided by Vibramech of South Africa is complete and they are in transit to the UK. The company has also signed a letter of intent with EPC Groupe for the provision of drill and blast services during the restart of mining operations.
Tungsten West has also identified a 50-acre site within 1.2 km of Hemerdon that is suitable for the installation of 9 MW – 12 MW of solar energy production and has commissioned a scoping study to be followed by a separate feasibility study into developing this project. The scoping study will be completed within four weeks and the feasibility study is expected before the end of December 2022. (Peak energy consumption for the processing plant is calculated at circa 7 MW).
Three potential sites suitable for the installation of wind turbines have been identified within the mine boundary, on land owned by the company. “A scoping study has been commissioned into the feasibility of building our own dedicated wind turbine with a private connection into the processing plant, including planning and permitting requirements.”
Progress continues in the plant refurbishment and upgrade, with works within the tertiary crushing circuit now completed. Some 67% of the plant refurbishment programme is now complete. Refurbishment of the on-site lab has been completed and it is now capable of providing internal assay and metallurgical analysis. Earthworks for the installation of the new ore sorting building have been completed.
The royalty sale is with a global mine royalty investment fund; Tungsten West says it is working towards agreeing definitive documentation and meeting conditions precedent to the sale of the royalty as set out in the Term Sheet and which include the completion of customary legal, tax, commercial, financial and technical due diligence; a site visit including necessary representatives or agents of the proposed royalty holder; the good standing of all applicable permits and licences; the company having entered into off-take agreements which meet the Royalty holder’s requirements; the finalisation of appropriate security over project assets; and obtaining all required shareholder, director, or regulatory approvals.
An update to the Feasibility Study of March 2021 commenced in July 2022 to reflect the new plan. The completion of the updated Feasibility Study is a CP for the completion of the royalty sale and is expected to be completed in November 2022. As with the original study it is being independently verified by AMC Consultants.