It's good that WLF is getting in the news over in the UK for all...

It's good that WLF is getting in the news over in the UK for all of the right reasons......sooner or later, the markets here will see just what WLF is all about!

The first mine for over 40 years in the UK, new jobs for over 200 people, finance for the mine sorted out, when other companies are having trouble getting finance, local support from the people around the mine site, as well as the local Government, a mine life of up to 14 years+, and then some.

As Russel says......“What’s not to like?”


Dec 4, 2014

“What’s not to like?” says Russell Clark, midway through a discussion of the Hemerdon tungsten project, currently being built by the company he heads, Wolf Minerals.

“If we were building this in Australia we would struggle”, continues Russell. “We would have to build a camp, a power station, and find water.” But Hemerdon is being built in the UK, on brownfield site and adjacent to some already operational clay pits. Almost everything the company needs is right on hand.

And the bureaucracy isn’t too bad either. Slow, and perhaps inexperienced. But not corrupt. And sensitive to the needs of businesses and communities alike. “The UK is one of the easiest places to do business I’ve ever been”, says Russell.

The only thing that isn’t readily available is qualified mine builders – and that’s because Hemerdon is Britain’s first metal mine for over 40 years. The country’s earlier generation of mine builders are either retired now, or dead.
But Wolf has other pools into which it can dip. It has an Australian listing and plenty of connections there, and in Russell and other board members including, notably Central Asia Metals’ Nick Clarke, a set of individuals who can reach out around the world for any necessary expertise, either at the mining end of the business or at the financing end.

Early shareholders in Wolf have suffered dilution, but in recent years the ability of the Wolf team to move the project forward in terms of financing has been marked. Helped by cornerstone shareholders, the company put together a debt funding package, including bridging finance and off-take deals, back in 2013.
Then, early in 2014 the company raised around £100 million in equity. That’s not bad going, given that there’s supposedly been a buyers’ strike going on for more than a year now.

But it all means that the project is fully funded into production – with a significant contingency – and fully permitted. Sales agreements are in place; the locals are happy. What’s not to like?
One contender might be the tungsten price which, at its current US$320 per metric tonne unit (mtu) is slightly weaker than it was this time last year.

But that slight dip is nothing compared to the catastrophic falls that have taken place in other commodities, like iron ore, oil, copper, coal, or even gold. In that context, and in relative terms, the mildness of tungsten’s price dip is actually another reason to be positive.

And Russell is confident that there’s long-term strength ahead. “This supermetal has no substitute”, he says.
“Demand is increasing by 4,000 or 5,000 tonnes per year. The market’s about 100,000 tonnes, 20 per cent of which comes from recyclables. The Chinese produce around 80 per cent of the world’s tungsten, and I often get asked: Can the Chinese swamp the market? But their mines are getting older and deeper, so we don’t see the market suddenly being swamped by supply. The US strategic stockpile is expected to be exhausted within the next year or two.”
What’s more, because of the dearth of funding world-wide, no-one is building new mines. That will have a knock-on effect that will favour Wolf, at least in the near-term. “We see a lull in supply for the next three years at least”, says Russell.

With Hemerdon set to produce its first metal in the summer, the company could be about to hit a bit of a sweet spot in the market. Hemerdon’s only production will represent around 3.5 per cent of global supply, so it shouldn’t be too disruptive to the price, particularly since that that production represents barely a years’ worth of demand growth.
So what of Wolf’s shares? The thinking has to be that the company will be due the usual production re-rating fairly shortly. There may, as is common in new builds, be teething issues with the plant as it gets going. But that will be the final stretch of a long period of de-risking which is now all but over.

The market there is likely to recognise the impending cash flow and Russell’s willingness – hypothetically – to pay a dividend when the company can support it. On the current calculations the cost of the company’s tungsten production will run at US$170 per mtu all-in, including debt repayment, which even allowing for a 20 per cent discount because the company is selling concentrate, leaves lots of margin on offer at current prices.

Russell puts the revenues at a ballpark US$100 million. All told, it’s hard to find an answer to the question: what’s not to like?

http://minesite.com/2014/12/04/wolf...tion-by-summer-and-making-comfortable-margin/