Tungsten West PLC (AIM:TUN) told investors it has decided to pause the current Hemerdon mine development plan in order to evaluate alternative approaches to restarting mining operations.
The decision, taken in light of current market conditions, will allow the company to work up revised plans with lower capital and operating costs, and, whilst production rates will also be lower the company expects to retain optionality to expand those rates in the future.
"It's clear we are not alone in that many mining operations, whether in production or development, are feeling the impact of the current unprecedented global economic challenges,” said chief executive Max Denning. “However, as Tungsten West had only recently commenced development it is still in a position to alter its development strategy to take account of these factors.”
Tungsten West highlighted significant and rapid inflation across key consumables for the Hemerdon project – input costs such as steel, cement, explosives, power and diesel – meanwhile, from an operating perspective the price of energy has spiked from 11p per kilowatt hour to 28p per kwh.
As part of the revisions, the company said it will accelerate plans to evaluate on-site renewable energy generation and storage solutions which were previously under consideration among ESG initiatives.
Denning also suggested that the company can look on-site for help.
“We have access to a significant quantity of tungsten, tin, aggregates, processing equipment and knowledge on site,” he added.
“These provide all the key ingredients required to formulate a revised production strategy and successfully bring Hemerdon back into profitable production.”
Tungsten West noted its robust balance sheet which had £28mln of cash at the end of March and said that it has not yet drawn its Orion project finance facility.
The company, meanwhile, highlighted that Hemerdon is the third-largest tungsten deposit in the world and said that the current global political and economic situation illustrates more than ever the importance of securing supply of key critical minerals.