With the tonnage increase, contained tungsten has grown 10% to greater than 13,100 tonnes, while contained molybdenum has increased 46% to more than 10,400 tonnes.

An updated ore Reserve and mining plan are due in February 2012, based on results from 12,839 metres of reverse circulation drilling, 1,816 metres of diamond drilling and three underground exploration shafts and cross cuts.

Chairman Mick Billing told Proactive Investors the nature of the tungsten intersected could allow for early cash flow.

“The grades near surface are very high tungsten grades indeed, and that suggests to us that we’ll get a very quick pay back on the capital for the project,” Billing said.

This would also depend on the mining plan and Feasibility Study.

In addition, Billing told Proactive Investors that a mine life increase could be on the cards.

“The consistency of the deposit and the grade of the deposit probably allows us to continue to mine the operation for longer than previously planned, so instead of it being a 3.5 to 5 year mine life operation we might get an extra couple of years out of that and that’s an outstanding outcome.”

Mining consultancy Runge Limited prepared the Resource update, and is expected to release a Reserve upgrade for Molyhil next month, along with an updated Feasibility Study.

“We are relatively confident we’ll have that out before the end of February, and while we’re doing that we’re working with a bunch of people to try and secure the agreement for the concentrate so we can sell this stuff,” Billing said.

In addition, Proteus EPCM Engineers is preparing an optimisation addendum to the previous capital and operating cost estimates to reflect the recently announced process improvements.

These improvements lifted the projected metallurgical recovery of tungsten for Molyhil to 75%, up from the previous estimate of 67%.

Of the tungsten in this stream, 30% should be recoverable at relatively low cost.

Following the completion of the Feasibility Study, Thor will need to secure offtake agreements and finance for Molyhil before the company will move to tender for design, construct and EPCM work.

Billing said Thor could be potentially turning the first sod at Molyhil early in the second half of this year.

“If we can commence development early in the second half of this year, and at this stage we’re relatively optimistic that we can, then there’s a construction period of roughly 12 months,” Billing told Proactive Investors today.

“We should be in production in the second half of 2013.”

The firm said it has successfully increased the projected metallurgical recovery of tungsten to 75 per cent compared to the previous estimate of 67 per cent. 

Executive chairman Mick Billing said the improved recovery estimates should make a substantial difference to the Feasibility Study outcomes.

“Ore in the original mining plan will now be more profitable, while additional material not previously considered economic may now be included, providing for a more profitable and longer life operation,” he said.

“In addition, these improved estimates make Molyhil significantly more attractive to potential offtake partners for tungsten and molybdenum concentrates as well as for potential financing arrangements.”

Analyses by the firm’s consultants have concluded that tungsten recovery at Molyhil should increase by subjecting tailings from the tungsten gravity extraction process to flotation. 

This tailings material will contain 27 per cent of the total tungsten in the system. 

Another plus for Molyhil is that 30 per cent of the tungsten in this stream should be recoverable at relatively low cost. 

Importantly for the project and for Thor the estimated value of improved tungsten recovery would be about an additional A$900,000 per annum in gross revenue, per each additional 1 per cent of tungsten recovered.

On current estimates, this would add around a further A$7 million to the annual revenue stream from Molyhil before additional processing costs.

The initial expected revenue stream from the project’s tungsten sales was estimated at US$360 per metric tonne unit. 

The improved recovery would result in a revised cost per metric tonne unit after molybdenum bi-product credits, and prior to incremental extraction costs from this flotation step, of US$109 per metric tonne unit. 

The firm’s consultant engineer will now optimise previously published capital and operating cost estimates. The findings will subsequently be incorporated into the ore reserve and mining plan calculation for the Feasibility Study. These reports are expected next month.

Meanwhile a revised resource estimate, based on last year’s drill results, is due later this month.

On a corporate level, Billing confirmed that Thor has been in discussions with potential offtake partners for a number of months. But these talks are not expected to reach a conclusion until the feasibility study has been completed.

Offtake Discussions

Billing said Thor has been in discussions with potential offtake partners for a number of months.

“We’ve been in some discussions now for several months with a number of people without actually reaching a conclusion with any of them and to a large extent they will not get concluded until we’ve got a Feasibility Study complete and that’s about a month away,” he said.


Hard work paying off

Thor can expect to see the fruits of its labour with the release of its impending revised Resource at Molyhil.

The result of Thor’s hard work is already beginning to pay off with the substantially improved economics of the project.

The company has been hard at it in 2011, keeping the drills turning in a way that has resulted in an increased proportion of finance getting to its exploration programs.

A research report by a U.K. broker has concluded that the results of this labour will become apparent when the revised Resource is published.

Another U.K. research house has recommended Thor as a buy and placed a 3.9p target price on the company, more than triple its current share price.

Thor Mining (LON:THR, ASX:THR) today revealed that directors Michael Billing and Michael Ashton have increased their stakes in the business following the exercise of options.

Between them the two directors exercised more than 4 million options, gaining new shares priced at 2.625 Australian cents each. 

Chairman Billing exercised 2,040,816 options for a consideration of A$53,571.42 while non executive director Ashton exercised 2,050,000 options for a total of A$53,812.50.

Subsequently, including their previous holdings, the directors now hold 1.42 per cent and 2.12 per cent of the company’s existing share capital.

Thor Mining owns an advanced tungsten/molybdenum project, called Molyhil, where the findings of a pivotal assessment are expected later in the current quarter. It also has precious and base metal exploration assets.

Earlier this month Thor revealed that a number of parties are interested in signing off-take agreements for the future tungsten and molybdenum production from Molyhil. These potential partners also made various proposals to provide alternative financing options for the project, it said.

In a stock exchange statement this morning, the company revealed that these putative off-take partners have also proposed “various alternatives for financing the project”.  

“These discussions are ongoing,” it added.

The capital cost, as estimated by Proteus EPCM Engineers, is put at A$66 million and the cash costs at A$80 a tonne.

The update comes at a crucial stage for Molyhil, with a definitive feasibility study and resource extension expected at some point this quarter. 

Thor also said that an independent metallurgical assessment of the planned tungsten processing system for Molyhil has recommended an additional stage in the process. 

This, it reckons, will help to achieve an improvement on the previous 67 per cent recovery estimate.

At Spring Hill, the company’s gold project in Northern Territory, six of the ten diamond drill holes have been completed.

Unearthed from hole SHDD005 was a 0.7 metre section at 36.2 grams per tonne of the precious metal and 0.1 metres at 78.5 grams. The best section from SHDD004 was 31.4 grams per tonne.

Finally, a detailed flora and fauna study was submitted to the Western Australia Department of the Environment to support the proposed drilling programme on the Dundas Gold project.

In a stock exchange statement this morning, the company revealed that these putative off-take partners have also proposed “various alternatives for financing the project”.  

“These discussions are ongoing,” it added.

The capital cost, as estimated by Proteus EPCM Engineers, is put at A$66 million and the cash costs at A$80 a tonne.

The update comes at a crucial stage for Molyhil, with a definitive feasibility study and resource extension expected at some point this quarter. 

Thor also said that an independent metallurgical assessment of the planned tungsten processing system for Molyhil has recommended an additional stage in the process. 

This, it reckons, will help to achieve an improvement on the previous 67 per cent recovery estimate.

At Spring Hill, the company’s gold project in Northern Territory, six of the ten diamond drill holes have been completed.

Unearthed from hole SHDD005 was a 0.7 metre section at 36.2 grams per tonne of the precious metal and 0.1 metres at 78.5 grams. The best section from SHDD004 was 31.4 grams per tonne.

Finally, a detailed flora and fauna study was submitted to the Western Australia Department of the Environment to support the proposed drilling programme on the Dundas Gold project.

Thor acquired a 25% interest in Spring Hill, located in the Northern Territory, from Western Desert Resources (ASX: WDR) in early 2011, and has the right to increase its holding to 80%.

In 2012, Thor plans to continue drill testing extensions to the existing resource along with known mineralisation nearby.

The company will also undertake scoping studies to assess the potential to accelerate mine development.

Callie-style deposit

Thor believes the Spring Hill gold deposit could indicate the presence of substantial sheeted vein mineralisation system similar to that at Leighton Holdings’ (ASX: LEI) giant Callie Gold Mine.

Callie has production and resources totalling more than 5 million ounces of gold at a grade of 5-6g/t gold.

The Tanami Inlier where Callie is located lies a few hundred kilometres south west of Spring Hill, and Thor says the geological characteristics of this inlier are comparable with those of the Pine Creek Inlier where Spring Hill resides.

Iron ore shipments tracking higher

In December, Moly Mines shipped the 1,000,000th tonne of iron ore fines from the Spinifex Ridge Iron Ore Mine. The milestone has occurred within 12 months of the mine’s first shipment on 30 December 2010.

December’s shipment of 91,000 tonnes is the 4th shipment for the December 2011 quarter and sets a quarterly record for tonnes shipped from Spinifex Ridge of 348,000 tonnes.

Over the calendar year mining and crushing operations have exceeded budget by 25%, from single shift day operations. Production for 2012 is expected to reach 1.2 million tonnes.

Moly Mines (TSE:MOL)(ASX:MOL) announced Wednesday that it has signed a preliminary deal with China Development Bank (CDB) for a strategic alliance to finance new mining projects, while also deciding to put its Spinifex Ridge molybdenum-copper project in Australia on hold.

The memorandum of understanding agreement with CDB will see the bank consider providing financial support for projects identified by Moly Mines on similar terms as those in effect under the existing US $454 million syndicated loan deal for the Spinifex Ridge project.

However, at the same time, Moly Mines' board has decided that the Spinifex Ridge project is "sub-economic", citing the continued weakness of global molybdenum prices and the strength of the Australian dollar, factors which are not expected to correct themselves before the expiry of the syndicated facility agreement (SFA) in May 2012.

Consequently, a final investment decision is unlikely to be made within that timeframe, the company said in a statement.

CEO and managing director of Moly Mines, Dr Derek Fisher, said: "Whilst it is disappointing that the economics do not allow us to proceed with the Spinifex Ridge molybdenum/copper mine at this stage, the strategic alliance further cements the excellent rapport we have built with CDB and supports a platform for future growth of the company."

CDB's financial support for new projects is subject to due diligence, internal credit approval and government approvals.

As part of the decision for Spinifex Ridge and for the financing of new projects, CDB has asked Moly Mines to make an initial drawdown of US$210 million under the previously-agreed SFA, which the company intends to repay within one week.

The effect of the drawdown will be to reduce the funding available under the facility to US$244 million. CDB will consider an application by Moly Mines to drawdown these funds for new projects or, if amending the SFA is not appropriate, to enter into further debt facilities as may be required for future projects, the company said.

The group said economic mineralisation potentially extends up to 100 metres below historical resource drilling, with a good correlation between its drilling and historical reverse circulation gold intersections in the upper levels.

Thor added the Spring Hill gold deposit had not been drill-tested at depth greater than 150 metres before and mineralisation remains open at depth on almost all drilling sections.

The explorer completed six diamond holes for a total of 1,574 metres. Grades from the latest drill programme included 4.7m at 5.7g/t gold from 28.6 metres and 5.0m at 2.1g/t gold from 106 metres.

Mick Billing, executive chairman said: "These results provide confidence in the potential for early development of an open pit gold mining operation at Spring Hill and also reinforces our belief that the resource may be substantially larger than initially estimated.”

“More drilling is scheduled for 2012 along with studies to assess the potential for early commencement of mining operation." he added.

Thor’s next steps art Spring Hill are to continue to drill test extensions to the existing resource; drill test known mineralisation nearby; scoping studies to assess the potential for accelerated mine development and to drill test a deeper "Callie style" target.

Thor acquired a 25 per cent interest in Spring Hill in August with an option to increase the stake to 80 per cent. The prospect is situated 150 kilometres south of Darwin in the Northern Territory of Australia.

Addressing shareholders at its annual meeting, executive chairman Mick Billing said previous estimates from the reverse circulation drilling programme may have understated the grades, particularly those likely to be mined within the first two years of operations.

Next steps at Molyhil will be to put in place financing and to seek product off-take (or sales) agreements, he said.

The process has already started and the firm is optimistic development will start during 2012.

Capital costs for Molyhil have been estimated at $66 million, while operating costs are expected to be $79 per tonne. A definite feasibility study is expected to be completed by the end of the year.

At the Spring Hill gold project, drilling is under way until the end of the year with further exploration planned in 2012 once the rainy season is over. Thor owns 25% of Spring Hill with an option to take that stake up to 80%.

“Potential exists for a much larger orebody at depth at Spring Hill using a ‘Callie’ style model based on work done by the Northern Territories Geological Survey,” Billing said.

At Dundas, conditions are challenging, he added, but the firm is committed to continuing as Thor believes there is the potential for it host a significant gold orebody.

Billing concluded: “The progress we have achieved this year gives the board confidence that there is plenty of opportunity for the coming year."

Thor Mining (LON:THR, ASX:THR) shares advanced over 10 per cent today after a positive update on the group’s Molyhil tungsten and molybdenum project in Australia.

The group told investors that it now plans to re-estimate the project’s resources before the end of this year after it received good results from this summer’s drill programme.

The work comprised reverse circulation drilling to test for additional down plunge resource and diamond drilling to enhance confidence in the near-surface resource.

Diamond drilling results have been released, with one hole intercepting 16.4 metres at 0.84 per cent tungsten and 0.56 per cent molybdenum from 43.6 metres, including 2.6 metres at 0.94 per cent tungsten and 0.83 per cent molybdenum and 4 metres at 2.12 per cent tungsten and 0.33 per cent molybdenum.

These results compare favourably with the historical resource grade of 0.32 per cent tungsten and 0.19 per cent molybdenum, and show potential to add to the project’s current resource of 3.75 million tonnes at 0.32 per cent tungsten, 0.19 per cent molybdenum and 28 per cent iron.

Results from reverse circulation drilling at Molyhil were released in October, showing intersections of mineralisation outside the current resource.

“These are very positive results and provide confidence that the value of the proposed Molyhil mining operation has potential to be enhanced,” said chairman Mick Billing. 

“The assay grades from some of these intersections are substantially higher than the average grade of the resource.

“While a revised resources estimate has yet to be produced, and this is in process, we look forward to the outcome with keen anticipation.”

Assessment of the drill assay results is underway with mineral resource consultancy Runge.

Meanwhile, last month capital and operating cost estimates for the first phase of production have been announced as part of a definitive feasibility study (DFS) commissioned in June.

Capital costs have been estimated at $66 million, while operating costs are expected to be $79 per tonne. The DFS is expected to be completed by the end of the year.

Earlier this month Thor announced it had successfully raised £270,000, or A$419,871, through a UK share placement.

The company placed 27 million shares to UK sophisticated clients of Simple Investments at £0.01 per share.

Completion of the placement and receipt of funds is expected to be finalised by 29 November 2011.

Funds raised will be used to help fund the aggressive exploration and evaluation programs in progress at the Dundas (Western Australia) and Spring Hill (Northern Territory) gold projects, and to further fund the Molyhil Tungsten/Molybdenum feasibility study.

At the end of the September quarter, Thor had $1.61 million in cash.

At 8:50 on AIM Thor shares were up almost 12 per cent, trading at 1.175p.

Molyhil Tungsten and Molybdenum Project – Northern Territory

Last month Thor Mining received positive early outcomes from a definitive feasibility study (DFS) on its Molyhil Tungsten and Molybdenum Project, which shows a compelling economic case for the development of the project.

Importantly, current supply shortages of tungsten due to export restrictions from China have seen the tungsten price skyrocket this year, which has added value to the project.

The DFS highlighted potential cash operating margins of A$98 per tonne of ore processed for a phase one pit of 1.4 million tonnes of ore.

Capex is estimated at $66 million for an annual throughput of 400,000 tonnes per year and operating costs of $79 for each tonne of ore mined and processed.

Spring Hill Gold Project – Northern Territory

During the September quarter Thor Mining began a 10 hole diamond drilling program to confirm and extend the existing Spring Hill resource in the .

Additional drilling is planned to follow up high grade intercepts from drilling undertaken in 1989-92 that returned 26 metres at 2.56 grams per tonne (g/t) from 59 metres including 16 metres at 4g/t from 63 metres.

Drill testing these targets is scheduled for the beginning of the 2012 dry season.

Thor Mining is earning up to an 80% interest from Western Desert Resources (ASX: WDR) in the Spring Hill Project.

Dundas Gold Project - Western Australia

Due to persistent wet weather, work at Dundas has focused on progressing permitting for the planned drill testing of the Algron, Bifrost, and Asgard prospects.

A detailed flora and fauna study was submitted to the WA Department of the Environment in support of proposals for the scheduled drilling programs. Approval for the program is still pending.

Approval and commencement of the proposed drill program is anticipated during the December quarter.

Finland-based Ruukki, which supplies speciality alloys to the steel industry from operations in 27 countries, managed to increases its production by 176 per cent to 86,401 tonnes.

Revenue from continuing operations improved 46.1 per cent to €42.4 million, although the firm’s operating loss at the EBITDA level also increased to €2.7 million from €1.6 million in Q3 2010.

The firm’s loss for the period came in at around the same level as for last year at €6.5 million (Q3 2010: €6.4 million)

Commenting on the third quarter Ruukki’s chief executive officer, Thomas Hoyer, commented that the period was significantly affected by the downturn in global economic sentiment and the market for chrome products was an “early casualty”. Charge chrome products were most affected, with prices falling around 15 per cent compared to the previous quarter due to buyers not restocking after the seasonal European summer slowdown, noted Hoyer.

However, Hoyer added that the group’s diversified product range offered “some protection” against the weakening charge chrome prices as demand for Ruukki’s other speciality allow products remained “relatively firm” so that prices were comparable to the second quarter of this year.

“Looking ahead, the outlook for the fourth quarter is bleak, overshadowed by the uncertainty in the global financial markets and in the Eurozone, and the possibility of a global recession cannot be discounted,” said Hoyer.

“In light of this, the group has taken the decision to adjust its production levels accordingly and two of the four furnaces in the FerroAlloys business have remained switched off since July's maintenance shutdown.”

Hoyer also noted that the firm’s strong cash position (it had liquid funds of €74.2 million at September 30) will allow the group to “weather this current slowdown and even potentially take advantage of the distressed pricing of mining assets in the execution of our growth strategy”.

This high grade mineralisation is in addition to the project's current 3.75 million tonne resources - at 0.32 per cent tungsten, 0.19 per cent molybdenum and 28 per cent iron.

Thor unearthed this additional mineralisation through its reverse circulation drill programme. The identified mineralisation is said to have underground mining potential.

The highlighlights of today's drill results included 16 metres at 0.81 percent tungsten oxide and 0.44 per cent molybdenum disulphide;13 metres at 0.38 per cent tungsten oxide and 0.13 per cent molybdenum disulphide; and 21 metres at 0.07 per cent tungsten oxide, 0.19 per cent molybdenum disulphide and 28.5 per cent iron.

“These are very positive results and suggest that the life of the proposed Molyhil mining operation has strong potential to be profitably extended," said chairman Mick Billing.

“While a revised resources estimate has yet to be prepared, and this will follow the receipt of the diamond drill assay results, we look forward to the outcome with keen anticipation” 

Today's results complement drilling assays from 2009 which tested down plunge extensions to the resource, with a best result of 53 metres at 0.23 per cent tungsten oxide and 0.24 per cent molybdenum oxide, the company.

The latest round of results are from the first stage of a two stage drilling program, carried out mid-2011, with six reverse circulation holes to test for additional down plunge resources. In the second stage of the program, six diamond holes were drilled to enhance confidence in the near surface resource.

Changes to the overall resource will be subject to confirmation by resource modelling, which will begin once diamond drill assays have been received.

Thor commissioned a Definitive Feasibility Study for Molyhil in June 2011. In September, the company released capital and operating cost estimates for the first phase of production.

Capital expenditure was estimated to be $66 million for an annual throughput of 400,000 tonnes per year and operating costs of $79 per tonne of ore processed.

The final results of the Definitive Feasibility Study are expected by the end of November.

Thor Mining (LON:THR, ASX:THRO) told investors that it has received the initial findings of the definitive feasibility study (DFS) on the Molyhil tungsten and molybdenum project in Australia.

It said that the early results underline the economic rationale for the development of Molyhil.

 Based on a phase one pit of 1.4 million tonnes of ore the report highlighted potential cash operating margins of AU$98 per tonne of ore processed. Capex is estimated at AU$66million, while the mine would have annual throughput of 400,000 tonnes per year and operating costs of AU$79 for each tonne of ore mined and processed.

Thor said that a revised ore reserve and mining plan in progress and the DFS is expected to be completed next month.

"These are very positive early outcomes and provide us with a great deal of confidence in the results of the feasibility study. While much more work is required, these cost estimates, along with current metal prices, are key to the study outcome,” said chairman Mick Billing.

“The improving commodity price for tungsten, in particular, has added value to Molyhil, and the medium term prospects for tungsten are positive.”

Thor said that potential enhancements to the project include up to 100,000 tonnes per annum of high grade magnetite, which would be mined and extracted as part of the process of producing tungsten and molybdenum concentrates. And potential value of any contribution from this commodity is still being assessed.

The company explained that the next phase of the DFS involves re-estimating the ore reserve and the preparation of a new mining plan for Molyhil.

“The outcome of this work has some potential to vary both the total tonnage of ore to be mined from Pit Phase 1 and also the grade of that ore,” it said. “Following these steps the Molyhil financial model will be updated to reflect all the revisions to operating parameters.”