Wolf Minerals ready to commence construction of Hemerdon project
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.”