The explorer added that tungsten concentrate will be produced in larger quantities under the new plan.
Construction of the fast track (FTM) first stage is already underway at the site in Spain, but the process plant will now be designed to handle 1.95mln tonnes of ore annually instead of 0.875mln.
By increasing the capacity of the mine, W says it will now be able to produce 2,500 tonnes per year of tungsten concentrate, instead of the 1,300tpa originally anticipated.
“We found that if we start at 1.95mln, nearly 2mln tonnes…we get very good economics in terms of the mining, low strip ratios and low mining costs which is a great start in terms of the economics,” chairman Michael Masterman told Proactive.
The company expects mining to start in the final quarter of 2016 around the high-grade hole IRC1-40 using an upgrade of the existing concentrator.
“We expect to be mining and producing the hard rock to feed into the plant in the December quarter and producing both tungsten and tin also in the December quarter,” Masterman said.
A ramp-up to full production is expected within 6-12 months from this point and no material increase in the first stage build cost of US$16mln is envisaged.
Masterman is confident about getting the cash required for the first stage and says negotiations are well advanced on how the larger development will be funded in 2017.
"Financing discussions are advanced to reach the production targets for 2016, which we expect to be financed by initial customer off-take contracts.
“Negotiations are progressing well with regard to financing the 1.95 mtpa development in 2017 by either a joint venture or a debt facility.”
What the brokers say
SP Angel said that “there are, no doubt, economies of scale to be derived from the larger throughput and lower stripping ratio”.
House broker Northland Capital has praised the accelerated expansion next year, as well as the fact that no material increase in capex is expected.
Northland adds that the detailed optimisation study is the next thing to look out for, as that should provide investors with “greater clarity on opex, capex and other operational metrics.”
Inside the industry
“Like nearly every other commodity with the possible exception of gold, [the price of tungsten] is down,” says Masterman.
But there is hope. Mines are now closing as pressure on margins becomes unsustainable.
That, says Masterman, clears the way for the next generation of companies.
The recent successful commissioning of Wolf’s (LON:WLFE) Hemerdon mine in the south of England has demonstrated to UK investors that tungsten mines can and will come on stream, not to mention providing a crash course on tungsten itself to the investment community.
Worth remembering too, though, that whereas Wolf’s start-up costs ran to hundreds of millions W’s Fast Track Mine costs are US$16mln.
But while the costs are low, on the crucial numbers La Parrilla delivers.
“We can generate returns to investors,” says Masterman.