Thor Mining’s Molyhill Tungsten Project Looks A Robust Proposition, Even Ahead Of The Imminent Definitive Feasibility Study.
By Sally White
“ THOR MINING is a company that is not sitting around and waiting for the market to come to it”, says research group Hardman in its latest note. For confirmation, just take a look at what this Australian explorer and developer has achieved over the past few weeks: it’s raised £570,000, has been fielding approaches on off-take agreements, and has increased the resource estimate for its Northern Territories tungsten-moly project, Molyhil, by 25 per cent.
All of that has excited hopes that the company will soon start mining and sent the shares on an upward trajectory to 1.3p. “We have had significant positive news recently”, agrees executive chairman Mick Billing. “These additional funds will help finance the necessary work to continue the momentum of this project, along with the aggressive exploration and evaluation programs we have in progress at the Dundas and Spring Hill gold projects.”
The Molyhil story now seems to be getting better and better. The new resource shows 4.7 million tonnes running down to a 220 metre depth, containing 13,100 tonnes tungsten trioxide (WO3) and 10,400 tonnes molybdenite (MoS2).
Thor had hoped that a fully updated definitive feasibility study for Molyhil would be out by now, but that is being delayed by a couple of weeks as the company awaits results of metallurgical test work. Ahead of that the company has been able to release some of the likely parameters of the project.
It will cost roughly A$69 million to build the proposed 400,000 tonnes per year operation, which will produce tungsten at a cost of around US$115 per metric tonne unit (mtu). The company follows recognised industry expert Roskill in assuming an average tungsten price of US$360 per mtu over the next few years, and hopes to start development work later in the year in order to capitalise as soon as possible on the fat margins that are on offer.
The market has already been warmed up for good news by the announcement of possible improvement in the tungsten recovery processes. Adding a flotation stage after gravity separation produced a 12 per cent hike in the projected recovery numbers to 75 per cent.
Commenting on this news as “very good” the analysts at Hardman did some sums which showed that an increase in tungsten recovery of 12 per cent equates to an increase in revenues of A$7m per year, and a decrease in cash cost after moly credits to around US$109/mtu. “The eventual prize at the end of this string of news should be a new mineable reserve, the ultimate guide on a decision to mine.”
The company also has some flexibility on when it needs to commit to the potential development of underground operation too. But the possibility of an underground phase is certainly growing.
Once the definitive study is out, the next steps will be to secure off-take agreements and funding. Talks on both are well advanced, and just waiting on the final numbers before they can become more detail. But there’s no doubt that demand for tungsten is out there. The tungsten price has come off a little from recent peaks of around US$445 mtu, but it is still trading at historical high levels at around US$437.
Meanwhile, there’s also been progress at Thor’s gold projects. At Spring Hill in the Northern Territories a drilling programme managed to sink six holes before it was disrupted by the early onset of rains. Once season conditions permit, probably by April, Thor will recommence the field programme. However, the company already has sufficient confidence in the resource to commission a scoping study. In addition, the company plans to undertake interpretation and modelling of new and existing data to determine targets for 2012 drilling.
Over at Dundas in Western Australia further geochemical sampling is to be carried out and preparations are being made to follow up the results of that work with air core and RC drilling.
All told, it’s easy to see why the company’s broker, Simple Investments, is surprised that the share price has been so weak. The broker concludes that: “like many others they have suffered in the generic smallcap malaise, but this has arguably been exacerbated by the DFS delay, notwithstanding the positive reason why”. And that issue will be put right very shortly.
THR Price at posting:
2.5¢ Sentiment: LT Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)