Tungsten West PLC (AIM:TUN) said capital expenditure requirements for restarting the Hemerdon tungsten and tin mine in Devon will be lower under a new development plan that will also see much lower diesel and power consumption.
The group also announced chief executive and co-founder Max Denning will step down with immediate effect and executive vice-chairman and co-founder Mark Thompson will assume the role.
The AIM-traded company carried out a three-month technical and commercial review of a March 2021 feasibility study in response to higher power and diesel prices and the growing cost of construction materials.
The board has given its approval to proceed with detailed engineering design and to commence construction of the Hemerdon project with immediate effect.
The new plan also envisages restarting production in the first half of 2023.
Final cost estimates and a definitive construction schedule for the new plan are still being received, but the internal capex estimate is within a £26mln to £36mln range. Of this, £3.1mln has already been spent on new equipment.
The capex estimate was £35mln in the 2021 feasibility study, although this had grown to £54mln by 21 April 2022 due to the general inflationary environment.
"In the face of some input costs multiplying in just a couple of months, I am very glad that we were able to pause development of the Hemerdon project when we did,” said Thompson. “I remain convinced of the deep and strategic value of the Hemerdon deposit in light of current geopolitical events where security of supply of critical minerals becomes ever more relevant.”
“Our new plan reduces capital expenditure, lowers the ongoing operating costs by streamlining processes for greater energy efficiency, and maximises the operating margins.”
Changes proposed under the new plan will reduce energy consumption within crushing, ore sorting and the processing plant by about 30%, it said.
Tungsten West, which had cash in hand of £22.9mln as of end-June, said it will seek to raise debt or other non-equity capital to fund the project’s development without additional dilution for shareholders. The company is in talks with financing partners to provide this additional capital.
Hemerdon will aim to process 2.1 million tonnes per annum (mtpa) of ore in year one, versus the 2.7mtpa envisaged in the feasibility study, 2.6 mtpa in year two, before ramping up to steady state production of 3.5 mtpa throughput in year three.
This targets tungsten trioxide in concentrate production of 2,200 tonnes (t), 3,000t, 3,900t, and tin in concentrate production of 320t, 430t and 600t in years 1, 2, and 3 respectively. A significant amount of waste stripping is able to be deferred to year 2 under the new mine plan, accelerating time to positive cash flow.
Senior management will host an investor presentation on 22 July at 2pm to further explain the revised development plan.