Peel Hunt visit to site

Timeline to first production in 2015:

• Dry commissioning of components of the plant is ongoing
• First ore feed to the plant will commence in June
• The plant will be handed over by the EPCM contractor by 8 August
• The first contracted sale of concentrate to the off-taker is due September

Key risks: We see lower than average mine development risk for the Hemerdon project as the company has done well to raise more than enough capital and has implemented a fixed price EPCM contract which significantly reduces the financial risk from delays to the construction of the plant. As with any mine development the ramp up of volumes of ore put through the plant will be the key hurdle as the company has to deliver product into the off-take contract from September.
Takeaway from the visit: The construction is advancing well and appears to be on schedule, the mild winter has been kind to the construction team as there have been no significant delays caused by weather. Given the low financial risk through the end of the development process the company appears poised for success. It is pleasing to see hard-rock metals mining returning to the UK and Wolf’s pursuit of best in class operating standards should yield a positive outcome. We also note that the project holds potential for improved economics if the company is able to extend the boundary of the pit beyond the existing approved planning permission and can gain approval to transition from a 5.5 day working week to a 7 day week. Neither of these scenarios require additional capital investment and as such offer potential to have a material impact on the project NPV.