Tungsten West pauses plan to review Hemerdon costs

Tungsten West plc said that rising inflation had prompted it to pause its development plan and evaluate other cost saving options for restarting Hemerdon tin-tungsten mine in Devon.

SAVINGS

Tungsten West added that any new plan would likely entail a lower capital cost for redevelopment, a reduced operating cost and production rate while retaining the option of increasing the future production rate. 

RISING COSTS

The company added that there had been “significant and rapid inflation across key consumables for the Hemerdon project” since the March 2021 publication of the project’s bankable feasibility study.

Tungsten West attributed the higher prices to geopolitical issues particularly the war in Ukraine, which had also underlined Hemerdon’s importance with its “third largest tungsten deposit in the world”.

“These input costs include steel, cement, ammonium nitrate (explosives), power and diesel,” said the company in a statement.

“Given the scale of the inflationary pressures experienced in the last few weeks, the board of Tungsten West has decided to pause development to re-optimise the project based on new assumptions.”

FEASIBILITY STUDIES

The company said that during the pause it would accelerate feasibility studies for a number of Phase II upgrades previously identified.

These include a scoping study on replacing the current refinery (which produces an iron tungstate concentrate) with a sodium tungstate plant.

Tungsten West added that the hydrometallurgical plant would be more energy efficient and environmentally friendly than the existing pyrometallurgical one.

It would also produce a superior product that trades at a premium to tungsten concentrate and enhance operating margins.

ENERGY PRICES

The company said that power prices at Hemerdon had increased from 11p per kWh to 28p per kwh in the past twelve months.

Tungtsen West is investigating on-site renewable energy generation and storage solutions which were already part of the company’s ESG initiatives.

The company is also urging the Government to fast-track renewable energy projects that support domestic production of critical minerals.

STRATEGY

Tungsten West had £28 million cash as at 31 March 2022 and has yet to draw down on the Orion project finance facility.

Chief executive Max Denning added that other mining companies were also feeling the impact of the current global economic challenges.

“However, as Tungsten West had only recently commenced development it is still in a position to alter its development strategy to take account of these factors and can build on significant project infrastructure and IP within our team.”