INTERVIEW: Operators to bring UK's Hemerdon tin-tungsten mine to production early in 2022; set sights on IPO

Operations at the Hemerdon tungsten and tin mine in Devon in the United Kingdom could restart early next year, its executive team said, while expecting to go public in the second quarter of next year if prices stay as elevated as they are now.

Executive chairman Mark Thompson and chief executive officer Max Denning of Tungsten West Ltd (TWL) are looking to raise £50 million ($69.4 million) over the next two to three months to restart Hemerdon in 2022, they said in an interview with Fastmarkets.

“For the whole of 2020 and this first quarter, we had been drafting a feasibility study, which is now complete,” Denning said. “We are now going to market to raise the project finance to rebuild the mine and get it up and running.”

“We then expect the restart of the mine to take about nine months, plus three months of commission, so we could be off to races by Q1/Q2 next year,” he added.

The company expects the mine to come to full capacity by the end of 2022, with projected output of 3,800 tonnes per year of contained tungsten and 500 tpy of contained tin.

More metal for undersupplied markets
Hemerdon’s potential restart comes at a time of increased demand and acute supply issues in both the tin and tungsten markets.

“I have never seen a bigger deficit of any metal, nor am I aware of any ever, like than we are currently seeing in tin,” Thompson said. “Demand at the moment is looking like 10% higher than supply. That just never happens. A massive deficit is [typically] 3%.”

There is a similar situation in tungsten, where Thompson projects undersupply for the next decade.

“You can’t have an oil industry if you don’t drill. And the drilling parts [in oil drills] are all made out of tungsten carbide,” he said, adding that tungsten tooling is also used to cut steel - an essential process in the automotive industry.

“China produces 80% of the world’s tungsten, mainly out of old mines,” he noted. “Our understanding is that the grades are going down and the costs are getting deeper. And outside of China there just aren’t that many places where tungsten occurs, so there aren’t many projects out there.”

Tungsten West expects to be able to reduce the supply pressure in the metal - it hopes to account for 4% of world tungsten supply once the Hemerdon mine comes into full operation.

“But the market grows [at a rate of] about 2.5% a year so we’re looking at big deficits again,” Thompson added.

By-product credits
TWL was formed in May 2019 to acquire the mine, which closed in 2018 after Wolf Minerals’ UK subsidiary - which had controlled the mine and put it into operation in late 2015 - failed to secure further funding and fell into administration.

The installation of the redesigned processing plant that TWL devised and getting production up and running again will cost around £35 million, Thompson and Denning said. The company secured £20 million in a first fundraising round, half of which was to buy the operation out of receivership.

One of the innovations at the redesigned site is an X-Ray transmission ore sorting system that scans each ore pebble with a laser and an x-ray for mineral content in a similar way to how airport security X-Ray scans work, thus reducing the need to crush the ore.

“We love this from a sustainability perspective because it means we use a lot, lot less energy - it means we only feed about 1.5 million tonnes through the processing plant rather than 3.5 million tonnes,” Thompson said.

This will reduce the company’s energy consumption and its waste production: Thompson estimates that around 70% of the mined ore will be rejected because of its lack of mineral content. But TWL has reached an agreement with local authorities to sell the this ‘rejected’ ore as aggregates, which are used in concrete, thus adding a revenue stream for TWL and lowering its production costs.

With tin and aggregate credits, Hemerdon will produce at breakeven-basis tungsten price of $108 per tonne, which would be close to $160-170 per tonne without the credits.

Plan to go public
The executives expect to release the company out of private hands as soon as the mine proves to be viable.

“The current plan is as soon as we're in production and everything's working we will IPO. Probably in Q2 of next year, we're looking to bring it to the market,” Thompson said. “But if the tungsten price keeps going up, we might bring it earlier, listing at the end of this year.”

Tin’s cash LME price reached near-10-year highs of $31,230 per tonne in mid-March, while Fastmarkets assessed the benchmark ammonium paratungstate (APT), 88.5% WO3 min, cif Rotterdam and Baltimore price, used across the tungsten supply chain, at $270-275 per mtu on Friday March 19, up from the previous week’s assessment of $268-275 per mtu.

The market is at its highest in two years. It reached a peak of $452-470 per mtu in June 2011.

Ewa Manthey in London contributed to this report.

Archie Hunter

archie.hunter@fastmarkets.com

Ana de Liz

ana.de.liz@fastmarkets.com

Published

Archie Hunter

Ana de Liz

March 19, 2021

16:44 GMT

London