THE CONFERENCE CALLER: Wolf Minerals (ASX: WLF) is set to cut the tape to open commence work at the company’s Hemerdon tungsten and tin project, located near the port of Plymouth in Devon in the United Kingdom.

“It is an awesome thing the team has achieved,” Wolf Minerals managing director Humphrey Hale told The Roadhouse at the RIU Sydney Resources Round Up.

“We have off takers in two different continents, our bankers are in three different countries in Europe, the project is in the UK, our corporate office is in Perth, Australia.

“Our senior shareholders, who want to be part of the deal, are located in Denver, USA and New Zealand, and the project has a German government guarantee.

“To top it all off it is tungsten in the UK.”

Wolf completed a definitive feasibility study at the project in 2011, which confirmed the technical and commercial viability of a three million tonnes per annum open pit mining operation with a 10 year mine life, with available resources to take that out to 14 years.

The project currently boasts a measured, indicated and inferred resource of 401.4 million tonnes at 0.13 per cent tungsten and 0.02 per cent tin.

The total proven and probable ore reserves are 26.7 million tonnes at 0.19 per cent tungsten and 0.03 per cent tin.

Wolf has put in place a total funding package for the Hemerdon project of approx. $212 million (around £139 million) to fund development.

This includes finalisation of £75 million in senior debt facilities plus a US$82 million funding package from Resource Capital Funds.

“It has taken us a while to pull all the documentation together, but we have signed our senior debt deal of £75 million,” Hale said.

“We have signed a binding off take agreement for 80 per cent of the tungsten production and signed and awarded our EPC contract – fixed price fixed term.

“We are about to sign our mining contract and we will be drawing the RCF Bridge Facility and royalty very soon.

“Essentially we will be building the Hemerdon project in three to four weeks’ time.”

One aspect of the project, which is probably its most obvious, that many people have had difficulty in digesting is that the Perth-based company has opted to develop and operate a mine located, not only outside WA but beyond Australia all together.

“Initially they think it is an underground project and that it is a small-scale operation in Cornwall,” Hale remarked.

“It’s none of those – it’s world class and is going to be one of the biggest tungsten producers in the world outside of China.

“It’s in Devon – not Cornwall – and it is a modern openpit mine with a low strip ratio.”

The size and location aside, Hale said the most important thing about the project to note at this stage is the closing out of the finance deal.

“It’s a huge deal as it validates everything,” he said.

“The cash flow generates the debt portion, the signing of the bank deal demonstrates the validity of the due diligence, the £75 million bridging and royalty package reinforces the due diligence of a much closer timetable.

“As a company with a market cap of $55 million we have $200 million worth of funding – based around tungsten.

“I was asked to run a tungsten company called Wolf Minerals with three tenements in New South Wales and we have ended up with tin and tungsten in England.”

THE CONFERENCE CALLER: The Musgrave Minerals (ASX: MGV) story is pretty much at its beginnings but it would appear the company has opened with an interesting beginning.

The company has a suite of tenements that includes the nickel-copper-PGE Musgrave project, which intersects the borders of Western Australia, South Australia, and the Northern Territory.

Musgrave’s other main project is its Joint Venture with Terramin Australia at Menninnie Dam, where it is focusing on silver-lead-zinc-gold.

What else does a junior exploration company need, you may ask?

Cash is usually the answer to that question and Musgrave has the ideal answer with $10 million sitting in the bank.

“There are a few key elements to the Musgrave Minerals story,” the company’s managing director Robert Waugh told The Roadhouse at the RIU Sydney Resources Round Up.

“We listed two years ago on the back of six cornerstone investors combing their tenements together in the Musgrave region.

“From there we have identified a number of targets. We have gone through a process to drill test those targets and have continued to develop our processes to identify more.”

Waugh explained the company had worked hard on increasing the quality of its Musgrave targets since it commenced its exploration activities, which has resulted in the identification of some high-quality targets at Mt Woodruff, Deering Hills and Moorilyanna.

“Our focus on the Musgrave side of things is on nickel-copper-sulphide,” Waugh said.

“Our project at Deering Hills has a number of high-quality targets in the order of one to two kilometre long geochemical anomalies that are coincident with magnetics and gravity.

“Some are coincident with airborne EM and we are doing ground EM over the next couple of months to get those in a position to drill by August.”

Is that your main project focus?

Deering Hills, along with Mt Woodruff are the company’s two main focus points in the Musgrave.

Mt Woodruff is in a similar position to Deering Hills in that Musgrave has identified one to two kilometre long airborne EM anomalies, coincident stream sediment geochemistry, with magnetics and gravity, which it considers also suggests these are high-quality targets.

“We have collected ground geochemical data and we are now waiting on those results, which we anticipate being back in around two to three weeks,” Waugh said.

“Again – that should be drill ready for around August.”

While all this has been happening at the Musgrave project the company has also been drilling at the Menninnie Dam project, in particular at the Tank Hill target from which it recently released an intersection from of 6 metres at 4.9 per cent zinc, 62 grams per tonne silver, and 1.2 grams per tonne gold.

“It is only early days at Tank hill, but that’s a positive sign for us,” Waugh said

“We have the drill rig back out there drilling at the moment, so that should give us a better indication of what we are seeing there in terms of potential along strike and down dip.”

Waugh said the company had been greatly encouraged by what it has seen so far from its projects.

“We love the Musgrave Province,” he said.

“We feel it has a significant amount of potential and we also like Menninnie Dam and its links to silver potential, similar to Investigator Resources and what it has achieved at the Paris project.

“Both regions are still very much underexplored at this stage, but that is what we’re about – early-stage greenfield opportunity and discovery.”

WHAT THE BROKERS SAY: Interesting news and views from across the Resource Analyst universe.

NRW Holdings Ltd (ASX: NWH)

NWH has won a new contract for RIO Tinto (ASX: RIO) to provide earthworks on the Nammuldi project worth $180 million over 37 weeks and a $67 million contract (subject to FID) on the Roy Hill project.

These contracts help revive a depleted order book. The RIO work, whilst welcome, is later than we were anticipating (refer research March 25) and we are pulling back our 2013 forecasts to the lower end of guidance or $80.5 million.

2014 continues to be difficult to forecast and is very much leveraged to Roy Hill proceeding, which will not be news to anyone.

On balance we see 2014 earnings in the range of $70 million to $80 million provided Roy Hill proceeds and closer to $50 million if it doesn’t.

Nevertheless, NWH is now trading approx. at NTA, on a PE of 4.3x (low end) 2013 guidance.

Consequently, in our view, all but a catastrophic downgrade (refer below) is well priced.

Key Points:

• NWH has recently won a $180 million contract for RIO on its Nammuldi project, commencing May 2013 and lasting for 37 weeks.

• In addition, NWH won a $67 million contract to provide various earthworks around the Roy Hill mine (subject to FID).

• The market has responded consistent with its general lack of enthusiasm towards the mining services sector, and based on all but the most severe of sensitivities, NWH offers significant value.

• That said, delays in the award of the RIO work, together with possible further delays on a Roy Hill green light have resulted in us pulling back both 2013 and 2014 NPAT forecasts by approx. 7 per cent to $80.5 million in 2013 (from $86.7 million) and $73 million in 2014 (from $79.3 million).

• 2014 continues to be difficult to forecast, and without Roy Hill 2014 will prove a scramble, but the idea there is nothing to do seems overly pessimistic, particularly as by our estimation there is circa $600 million locked away as is (excluding Roy Hill entirely).

• Based on the current overhead structure, $600 million revenue wouldn’t generate much 2014 NPAT profit, however with depreciation running at circa $50 million per annum, still generates plenty of cash.

• That said, NWH, even in a challenging environment, will win further work in the normal course.

• In the meantime NWH trades around NTA and if it pays another 8 cents at the full year, will yield 13 per cent during 2013.

Recommendation: Buy

 Consolidated Tin Mines (ASX: CSD)

Consolidated Tin’s major shareholder Snow Peak Mining has now completed the acquisition of the ‘Kagara Central Region project’, which includes a one million tonnes per annum (Mtpa) processing plant and a highly prospective land package.

CSD is well advanced with a PFS assessing the economics of modifying the plant to process tin ore (sourced from the CSD’s flagship Mt Garnet tin project) at the plant.

Consolidated Tin (ASX: CSD) continues to make steady progress in its ambition of becoming the next Australasian tin producer, boosted by a strong relationship with Snow Peak Mining.

Snow Peak Mining recently paid $40 Million for the Kagara Central Region project, which includes a 1Mtpa processing plant and a highly prospective land package.

CSD has agreed to manage the re-commissioning of the 1Mtpa Mt Garnet processing facility (scheduled to re-open Sept. 2013) with ore to be initially sourced from the existing Baal Gammon and Balcooma/Surveyor mines, in return for a 10 per cent free carried interest in any short term profit made.

A pre-feasibility study is well underway (due for completion in Sept. 2013) assessing the economics of processing ore from Consolidated Tin’s Mt Garnet tin project at the Mt Garnet concentrator.

In its current configuration, the plant is not set up to process tin ore and as such, modifications to at least one of the existing 0.5Mtpa circuits will be required (at a fraction of the cost of constructing a stand-alone plant).

On the basis of a positive PFS, a JV company will likely be formed with Snow Peak and CSD each contributing their relative assets.

Each company will then contribute to funding on a pro-rata basis for any plant modifications and upgrades.

Recommendation: Speculative BUY

Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.

THE CONFERENCE CALLER: The resources conference season is well and truly underway but with the number of events scattered across the calendar, how do junior companies decide which forum offers them the best value?

Next week The Roadhouse heads to Sydney to attend the RIU Sydney Resources Round-Up, kicking off a couple of months of air flights, hotels and handshakes, as we keep abreast of what’s happening in the junior resources sector.

The recent proliferation of events in the conference space has now become an issue for companies, especially in the current economic mood where decisions on how and why they spend their cash are more important than ever.

In an open letter to the industry, long-time participant in the resources conference arena, Vertical Events managing director Stewart McDonald acknowledge the recent growth within his industry and that companies were being more selective in which events they attend.

“Times are tough for the junior minerals and oil & gas exploration sector and I know everyone is tightening their belts and questioning the value of attending resources conferences,” McDonald said.

“The bottom line is that there are too many resources conferences and many of them don’t deliver value to the companies that participate in them.”

We contacted a few company executives to canvass their ideas on the matter and received some fairly straight-forward responses, probably due to our willingness for them to remain nameless on this occasion.

“We also noted the proliferation of conferences a number of years ago, and then found some were more well attended than others (read: some were very poorly attended),” one respondent executive said.

“Notwithstanding the reason that some conferences were poorly attended were due to factors such as the cyclic market downturn, commodities being on the nose investor-wise.

“We have found that Stewart and Doug’s [Vertical Events] conferences were the best run and best attended.

“Pro-active Investors’ investor’s sessions – I like these smaller forums a lot – in Perth and Sydney, and will support these going ahead.

“I also attend Diggers and Dealers, although I think it has outgrown the junior explorer, but it is almost compulsory attendance.

“I would like to see a Junior Diggers run in parallel.

“I usually present at the AMEC Conference in Perth – for support, but it is far from the best.”

Our candid correspondent said he liked to see consistency at events, acknowledging the RIU conferences have a history of this.

He said they are usually supported by good companies, have investors in attendance and are well organised.

“RIU also tries to keep down the number of ancillary industry booths and attendee’s,” he said.

“I’m there to see our story promoted and it is a little frustrating being bailed up by pump salesmen and HR people – albeit both are necessary.”

Another executive told The Roadhouse he often found it more effective to conduct one-on-one broker road shows and investor seminars, such as those run by Proactive Investors, Symposium and others.

However, he did mention these events face the same challenge as conferences in that often he just gets to meet with the same old “tired” investors who go from one seminar free lunch or cocktail hour to another.

“The other conferences that we have attended from time to time are AMEC (Perth), Sydney Resources Roundup, Melbourne Resources Roundup and Brisbane Mining,” he said.

“We’ve also attended a couple of the Mines & Money conferences in London, Hong Kong and Singapore.

“It would be fair to say that these really depend on the market sentiment at the time as to whether they are successful.

“Sometimes they do not attract any investors or brokers, so we are just talking to ourselves – that is others in the industry – which is a waste of time and money.

“As a company our goal is to meet and talk with new investors, and if a conference can’t attract those people, then we’re not really interested.

“The conference organisers have to work a lot harder in that regard.

“They charge us a lot of money to present and exhibit, and we often don’t get value for money.”

We don’t claim to be overly-scientific at The Roadhouse but a we took a quick straw poll of a few company executives to see which events were ranked in their Top Five must attend events.

Some ranked more than five others ranked less. The chart below shows how each company ranked its preferences from 1 being highest to 5 (one case 7) the lowest.

Although our survey was not exactly spread over the entire industry it does indicate where some companies go to be seen and that what they are mining and where they are doing it can have some bearing on the decisions they make.

In his open letter to the sector McDonald claimed Vertical Events had, “pioneered the Mining Resources Convention” and that the company had been doing so, “Long before the ‘resources boom’ made conferences fashionable.”

“When Vertical Events began its business, there were very few resources industry conferences and virtually nothing that focussed on the junior exploration sector,” McDonald said.

“Over the past 14 years, the resources conference market we helped to create has become swollen by events promoted by opportunists riding the wake of the ‘resources boom’.

“These opportunists promise great things, but routinely fail to attract decent audiences and most importantly, fail to provide value for money to sponsors, exhibitors and participants.

“It’s no wonder in these tough times; many people are now questioning the value of attending conferences at all.”

A further respondent to The Roadhouse survey agreed there certainly are a lot of conferences out there and that it would be possible to travel the world simply by attending resource conferences.

This executive heads a junior Australian gold producer with a focus on the Australian retail market, which means he is more domestic in his frequent flyer point accumulation only attending conferences in Australia.

“My top five as far as effectiveness for promotion of our company to our target audience are: Sydney Gold Symposium, Gold Coast Resources Showcase, Brisbane Mining, RIU Melbourne Resources Round-Up, and Diggers & Dealers,” he said.

“At the Sydney Gold Symposium you get a lot of gold bugs, retail investors; it is a very interesting conference if you want to find out about investing in gold.

The Gold Coast Resources Showcase attracts a lot of very astute retail investors, well-funded retirees who are genuinely interested in discussing your business.

“Also, as it takes place before the end of financial year these investors can soak up end of financial year selling.”

Like most of the junior executives who responded to our questions this executive also claimed his company to be too small to get a look in at Diggers & Dealers.

He did however, acknowledge its effectiveness to simply attend as a delegate to maintain industry contacts and source potential acquisitions adding the company became aware of a project another company was divesting, which it subsequently acquired.