Tungsten West plc said it is to start construction immediately with lower-cost and streamlined production scheduled for H1 2023 at the Hemerdon tin-tungsten mine in Devon.
INFLATION
The decision follows a three-month technical and commercial re-evaluation of options for restarting production, which lead to a new development plan.
The new plan is also in response to power and diesel prices and the “general inflationary environment for construction materials faced by the company”.
Tungsten West conducted a “re-optimisation” of the March 2021 feasibility study (BFS) in light of increasing costs.
The company also received a preliminary independent assessment and approval from consulting metallurgist Mike Hallewell of MPH Minerals Consultancy Ltd.
“The board has now given its approval to proceed with detailed engineering design and to commence construction of the Hemerdon project with immediate effect,” said Tungsten West in a statement.
“The plan continues to envisage restarting production during H1 2023.”
DEVELOPMENT PLAN
Tungsten West said the new plan included a new schedule for increasing production, new crushing strategy, new operating parameters for ore sorting, a re-purposing of equipment within the processing plant, and the production of a different specification of final tungsten concentrate product.
“The result of the plan is a lower cap-ex requirement and a much lower diesel and power consumption whilst still delivering profitable operating margins.
“The company intends to continue investigating trade-off studies, continued value engineering and detailed cost estimates for the project whilst it finalises the detailed design and front-end engineering for the project.”
Hemerdon still has valid planning permission and a pre-stripped open pit along with significant infrastructure.
Tungsten West has refurbished and upgraded the processing plant with large sections of this project now complete.
CRUSHING
Planned refurbishment of the existing primary and secondary crusher building with be replaced with the planned installation of a newly located semi-mobile crushing circuit utilising direct tip into the primary crusher.
The company said that this would reduce capex as well as opex by removing RoM pad double handling of ore.
ORE SORTING
Previously planned seven ore sorters would have accepted 30% of ore mined and rejected 70% as waste, resulting in circa 88% recovery of tungsten at that stage.
The new plan involves four ore sorters which will be run at an “expected 9% accept rate for a circa 76% stage recovery”.
“This allows a lower volume of higher grade ore to be processed at the concentrator stage which again reduces both opex and capex.”
PROCESSING PLANT
Repurposed secondary and scavenger dense media separators will replace current primary dense media separators due to the lower accept tonnages fed into the processing plant. This also “substantially” reduces opex and capex.
Removal of the reduction kiln from the refinery process will see Tungsten West produce a 45% WO-3 concentrate (previously 52%).
“This will result in a slightly lower payability (circa 2 percentage points lower) but this is more than offset by increased recoveries due to the forecast losses in the kiln.
“Approximately 1.4 million litres per annum of diesel consumption is removed by not using the kiln.
“The overall effect of the above changes is to reduce energy consumption within crushing, ore sorting and the processing plant by circa 30%.”
NEW MINE PLAN
The company said that Hemerdon would aim to process 2.1 mtpa of ore in year one, 2.6 mtpa in year two, before increasing to a steady state production of 3.5 mtpa throughput in year three (BFS: year one at 2.7 mtpa rising to steady state throughput of 3.5 mtpa.)
“This targets WO3 in concentrate production of 2,200t, 3,000t, 3,900t, and tin in concentrate production of 320t, 430t and 600t in years 1, 2, and 3 respectively.
“A significant amount of waste stripping is able to be deferred to year 2 under the new mine plan, accelerating time to positive cash flow.”
FINANCES
Tungsten West said it was still receiving final cost estimates and associated definitive construction schedule for the plan.
Internal capex estimate is £26m – £36m range, of which £3.1m has been spent on new equipment (BFS: capex estimate of £35m which rose to £54m in April 2022).
STAFFING
Tungsten West will engage an operations and project delivery consultant to build the Hemerdon project on time and on budget.
FINANCING
The company said that, as at 30 June 2022, it had cash on hand of £22.9 million.
Tungsten West added it was in discussions with financing partners to provide additional capital to execute the development of the project without additional dilution for shareholders.
STREAMLINING
Executive vice-chairman and new chief executive Mark Thompson said he was glad that the company had paused development of Hemerdon to reconsider options.
“I remain convinced of the deep and strategic value of the Hemerdon deposit in light of current geopolitical events where security of supply of critical minerals becomes ever more relevant.
“Our new plan reduces capital expenditure, lowers the ongoing operating costs by streamlining processes for greater energy efficiency, and maximises the operating margins.
“We can do all of this whilst maintaining the optionality to revert to the original plan should conditions allow in the future.”