What the Brokers Say
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Tungsten Mining NL (ASX: TGN)
Tungsten Mining is an Australian mineral exploration company focused on the development and exploitation of tungsten projects.
Following the establishment of a maiden JORC resource at its flagship Kilba project in the Gascoyne region in Western Australia, the company released the results of an in‐house scoping study which indicated a viable and economically attractive project.
The project is on a granted Mining License and all environmental studies have been completed.
Based on a tungsten price of US$440/mtu APT, average annual production of 154,000 mtu over a seven year mine life, recovery of 80 per cent, capital cost of $56 million and average LOM operating costs of US$212/mtu, the project NPV was $36 million.
Previous modelling by Breakaway confirmed a valuation in line with the company’s estimate.
A shortage of funding slowed down activities over the past 6‐9 months, but following the recent capital raising, drilling will re‐commence and full feasibility studies begin.
Successful capital raising of $4.34 million (before costs) in a subdued small‐resources market seen as a significant achievement.
Proceeds of the capital raising to be used to advance feasibility studies, including further drill outs, metallurgical test work and engineering studies, infrastructure requirements and permitting and marketing.
Australian iron ore company GWR Group Limited has become the largest shareholder, securing a 16.5 per cent interest in the recent entitlement issue.
Additional metallurgical studies carried out in 2013 have indicated the potential for Dense Medium Scalping which, if successful, would effectively reduce the amount of ore to be processed by more than 50 per cent.
Successful implementation of Dense Medium Scalping has the potential to significantly reduce processing plant capital requirements and overall capital and operating costs.
Paul Berndt will stand down as managing director but will continue as a non‐executive director and consultant to the company from 1 August 2014.
Following the recent capital raising Tungsten Mining is poised to recommence drilling and feasibility studies on its flagship Kilba project with the intention of transitioning into production in a short time frame.
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