Tungsten West PLC (AIM:TUN) saw its shares rise about 10% after it revealed its new plan for bringing the Hemerdon tungsten and tin mine back into production.
Under the revised development plan, the capital expenditure requirements for the Devon-based mine will be lower as will diesel and power consumption.
Shares in the AIM-traded company had lost about two thirds of their value after Tungsten West announced in April that it had decided to pause development work in order to evaluate alternative approaches.
READ: Tungsten West pauses Hemerdon development to review cost saving options
“The uncertainty created by the pause has negatively impacted the share price and this announcement, in our view, should mark a turning point with the follow up announcements set to restore confidence from investors,” said analysts from VSA Capital.
“We highlight that despite this delay the target remains calendar H1 2023 for first production.”
They reiterated their ‘Buy’ recommendation and target price of 100 pence per share.
The shares were up 10% at 23.00p in mid-morning London trading.
Final cost estimates are not yet available, but Tungsten West estimates capital expenditure of between £26mln and £36mln under the new plan. The capex estimate for the original plan had grown to £54mln by April 2022.
“The strategy announced indicates a phased approach that minimises upfront capex,” said VSA Capital. “This gives flexibility then to further upgrade should conditions and performance allow.”
"The focus of the changes has been on reducing the initial capex and minimising exposure to energy; particularly electricity and diesel."
Under the new plan, energy consumption within crushing, ore sorting and the processing plant has been slashed by about 30%.