Tungsten West has sufficient aggregates to offset tin-tungsten production costs, and has a new resource statement of 332Mt with a projection in excess of a billion at Hemerdon mine in Devon.
STELLAR
The aggregates find was a surprise that could give the company a “huge advantage” over local competitors because, as a base metals business, Tungsten West will avoid paying the aggregates levy of £2 per tonne.
“I don’t think it’s any stretch of the imagination to say, actually the tonnages here can be pretty enormous, and the grades can go up, and the economics can go absolutely stellar,” said executive chairman of Tungsten West, Mark Thompson, in an interview with Samso Rooster Talks.
Drakelands Mine, also known as Hemerdon Mine, is the world’s fourth largest tungsten resource and was formerly owned by Australian company Wolf Minerals Ltd who spent some £200 million before collapsing.
Tungsten West is exploring a site 100 metres to the south of Wolf’s focused area where the veins have a much higher tungsten content.
The company employs a technical team from Wolf and is expecting the first drill results in two weeks and the assays in the following month.
AGGREGATES
Mr Thompson, whose background is in trading and investing, added that Tungsten West had bought the mine with the full knowledge of the tin and tungsten but were lucky with the discovery of aggregates.
The company is integrating the aggregates plant into the tungsten plant via a number of conveyors.
“The mine is in an area of the UK which is desperately short of aggregates with very good prices.
“We’re five kilometres from ports, less than a mile from rail, and the granite that we mine for the tungsten and the tin makes exceptionally high value aggregates.
“We have the full suite, from 40 ml clean gravels all the way down to fine sands, which are produced naturally as part of the processing route.”
He said that the company had submitted plans in August for a temporary increase from 150,000 tonnes of aggregates a year to 1.4 million a year which he hoped to make permanent, and thereafter increase it further to 2 to 2.5 million tonnes (Mt) a year.
Tungsten West will start aggregates quite conservatively at 10 to 20% of revenue which by the fifth year will be worth as much as the tungsten.
With the aggregates as a by-product, production costs for tin and tungsten will be zero or even a negative number.
Mr Thompson added that Wolf had concentrated solely on tin and tungsten and failed to focus on any ancillary businesses.
However the site was an extremely valuable aggregates business with stockpiles on the surface worth hundreds of million pounds revenue.
TUNGSTEN
In addition to the aggregates, the company has found tungsten in Wolf’s 3.2 million tailings and has recovered up to 60% – all the tungsten that Wolf mined.
The tailings of 0.2% recoverable tungsten give the company a good chance of making “some very significant early revenue” in the region of $75 million, he added.
The tailings also contain 3Mt of finely crushed granite which can be used as sandfill for concrete (£20/tonne) and mortar (£25/tonne).
Tests are also being done to determine whether the granite can be used in the glass industry (£45/tonne).
HEMERDON VEIN
Mr Thompson added that the Hermerdon vein system was unusual and unique in terms of size and scale.
The rock is the oldest in the UK at 420 million years old with seven massive granite intrusions that have mineralised over time.
There are hundreds of thousands of individual quartz veins which contain all the tungsten at 0.2% and are being targeted by Tungsten West.
MINERALISED KILLAS
In the surrounding area, there are also hundreds of millions, potentially up to a billion tonnes or more, of mineralised killas of 0.1% tungsten.
Tungsten West has invested in technology which scans and detects density of tin-tungsten, revealing tungsten grade of 0.1% to 0.31% which compared “unbelievably” with other global projects.
Mines in Canada have 0.07% and Spanish and Portuguese mines are at around 0.09 to 0.1%.
The granite at the core of the site is double the grade and Tungsten West’s mining reserve grade could end up being between 60 and 100 million tonnes of granite of around 0.2 to 0.21%.
OPERATING MODEL
Tungsten West’s current operating model of revenue at 80% from tungsten, 10% tin, 10% aggregates is likely to be replaced with a new model of 50% tungsten, 5% to 10% tin, and 40 or 50% aggregates.
Mr Thompson estimated that sales of 3,500 tonnes of tungsten a year would bring $65m/$70m revenue, 500 to 800 tonnes of tin ($10million), and aggregate sales of 3.5Mt, at £12/£14 tonne, would bring $50million.
Tungsten West will focus on local markets, the highest value market of Tilbury in London, and the Lowland countries which are below sea level and need aggregates.
Although tungsten prices are at half the level than in 2010 and target industries of oil, gas and motor manufacturing have suffered under the pandemic, Mr Thompson expected the markets and prices to rise as supply chains recover and demand for critical metals increase.
China is the largest producer of tungsten but Mr Thompson claimed that the country’s mines would be soon depleted and there were also environmental concerns.
(Based on an interview on Samso Rooster Talks: bit.ly/3iywtuc)